Qatar Aluminium Manufacturing Company Q.P.S.C. (QAMC) Earnings Call Transcript

Good afternoon. Thank you for standing by, and welcome to the Qatar Aluminium Conference Call. My name is Angela, and I will be your conference operator today. I'd like to remind everyone that this call is being recorded. Now I would like to hand the call over to Dana. You may begin.

Hello, everyone. This is Dana Sowaidi from QNB Financial Services. I would like to welcome everyone to Qatar Aluminium Manufacturing Company's Third Quarter 2026 Financial Results Conference Call. On this call from Qatar Energy's Privatized Company Affairs, we have Abdulla Yaqoob Al-Hay, Manager; Saoud Abdulaziz Alabdulghani, Head of Investor Relations and Communications; and Ahmad Zakri, Assistant Manager, Financial Operations. I will now turn the call over to Saoud to discuss the company results. Please go ahead.

Thank you, Dana. Good afternoon, everyone. Thank you for joining us. Before starting, I would like to remind everyone that this call is purely for the shareholder of QAMCO and no media representative should be attending this call. Additionally, please note that this call is subject to QAMCO's disclaimer statements as detailed on Slide 2 of the IR presentation. Moving on to the call, on Sunday, 25th October, QAMCO published its results for the 9-month period ended 30 September 2026. And during today's call, we'll present those results and discuss the key financial and operational highlights. Kindly note that the Microsoft Teams link provided will display the Investor Relations presentation as we discuss the results. Today in this call, we have Abdulla Al-Hay, Manager of Privatized Company Affairs; Ahmad Zakri, Assistant Manager of Financial Operations; and myself, Saoud Alabdulghani, Head of Investor Relations and Communications. We'll structure this call as follows. First, I'll provide a brief overview of QAMCO ownership structure, its competitive strength and overall governance structure. Secondly, Ahmad will provide an overview of the macroeconomic environment, followed by a summary of the financial and operational highlights for this period. To start with the ownership structure of QAMCO is made up of Qatar Energy, which has 51% shareholding and the remaining 49% making up the 3/4 in the [indiscernible] and held by various domestic and international institutions, corporates and individuals. Qatar Energy being the founding shareholder and parent company of QAMCO provides all of the head office function through a service level agreement, while the operation of Qatalum, the JV, are independently managed by its own Board of Directors and senior management team. QAMCO holds a 50% stake in Qatalum, which produce more than 670,000 tonnes of high-quality aluminum per year, mainly for customers in Asia, Europe and North America. Qatalum facility includes a carbon plant, casthouse, port and storage facility as well as a gas-fired power plant. Qatalum's manufactured products include standard ingots, value-added casthouse products such as extrusion ingots and primary foundry alloys. All of which are serve-- all of which serve customers across key international markets. In terms of competitive strength, QAMCO joint venture is considered to be a low-cost aluminum smelter with a state-of-the-art production facility, assured feedstock supply via long-term agreement with a strong focus on health, safety and environment. In addition, Qatalum has a diversified customer base, a strategic location close to key markets and a strong record of competitive EBITDA margin and operating cash flow generation. The IR presentation provides additional details on the governance structure of QAMCO, including detailed aspects of QAMCO corporate governance. I'll now hand over Ahmad to continue the presentation.

Thank you, Saoud. Good afternoon, everyone, and thank you for joining us. Let me begin with an overview of the broader market environment. During the first 9 months of 2026, global commodity markets, including aluminum, continued to be affected by the regional conflict. Persistent disruptions created a challenging operating environment and contributed to heightened market volatility. Despite these conditions, activity across key end-use sectors, including infrastructure, construction, automotive, manufacturing and energy transition projects continue to support aluminum demand. Aluminum prices, therefore, remained relatively strong during the period, reflecting the metals continued importance to the global industrial supply chain. Across the industry, producers remained focused on operational efficiency, cost optimization and maintaining flexibility in navigating this increasingly complex environment. Turning to our operations. The joint venture continued to operate at reduced capacity during the period due to regional disruptions and associated logistical constraints, resulting in lower production and sales volumes. Against this operating environment, QAMCO reported a net profit of QAR 276 million for the 9-month period ended 30th September 2026, equivalent to an earnings per share of QAR 0.05. This represented a decline of 48% compared with the corresponding period of 2025. The decline was primarily driven by lower sales volumes, reflecting reduced operating rates and ongoing shipping constraints. Higher average selling prices partially mitigated the impact, but these were not sufficient to offset the reduction in volumes. Operating costs also decreased, mainly reflecting lower sales volumes and reduced raw material costs. QAMCO's share of revenue from the joint venture decreased by 48% year-on-year to QAR 1.4 billion, while its share of EBITDA declined by 32% to QAR 602 million. Importantly, despite the lower earnings, EBITDA margins improved significantly to 44% compared with 34% in the corresponding period last year, supported by stronger aluminum prices and lower input costs. The company also continued to maintain a strong financial position. As at 30th September 2026, cash and bank balances, including QAMCO's proportionate share of cash held by the joint venture stood at QAR 1.85 billion, providing the company with a strong liquidity position. Looking specifically at the third quarter of 2026, QAMCO's net profit increased by 458% compared with the second quarter of 2026, primarily driven by a 143% increase in sales volumes. This improvement was partially offset by a 7% decline in average selling prices and higher operating costs during the quarter. Health, safety and operational excellence remained key priorities for the joint venture throughout the period, alongside continued focus on asset reliability and business continuity. In summary, the first 9 months of 2026 presented significant operational and logistical challenges. Nevertheless, QAMCO continued to demonstrate the resilience of its business model, supported by favorable aluminum pricing, lower raw material costs, strong EBITDA margins and a robust liquidity position. With that, I will hand the call back to Saoud for his closing remarks.

Thank you, Ahmad. With that, we conclude our call. We'd like to thank our investors for their continued trust and support, and we look forward to speaking with you again during the next earnings call.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.