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

Hello, and thank you for standing by. Ladies and gentlemen, welcome to Qatar Aluminum. Please note that this call is being recorded. [Operator Instructions] Thank you. Now I would like to hand the call over to Dana. You may now begin.

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

Thank you, Dana. Good afternoon, everyone, and thank you for joining us today. Before starting, I would like to remind everyone that this call is purely for the shareholders of QAMCO, and no media representatives should be attending this call. Additionally, please note that this call is subject to QAMCO's disclaimer statement as detailed on Slide #2 of the IR deck. Moving on to the call. On Thursday, 6th of August, QAMCO published its results for the 6-month period ended 30 June 2026. And during today's call, we'll present these results and provide an update on key financial and operational highlights. Kindly note that the Microsoft Teams link provided will display the Investor Relations deck as well as discuss the results. Today on this call, we have Ahmad Zakri, Assistant Manager of Financial Operations; and myself, Saoud Alabdulghani, Head of Investor Relations and Communications. We will structure this call as follows. First, I'll provide a brief overview of QAMCO's 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 of this period's financial results. To start with, the ownership structure of QAMCO is made up of Qatar Energy, which has a 51% shareholding, and the remaining 49%, making it listed on the Qatar Stock Exchange and held by various domestic and international institutions, corporates and individuals. Qatar Energy, being the founding shareholder of QAMCO, provides all the head office functions through a service level agreement, while the operation of Qatalum, the JV, is independently managed by its own Board of Directors along with the senior management team. QAMCO holds a 50% stake in Qatalum, which produces more than 670,000 tonnes of high-quality aluminum per year, mainly for customers in Asia, Europe and North America. The facilities include a carbon plant, casthouse, port and storage facility as well as a gas-fired power plant. Qatalum's product train includes standard ingots and value-added casthouse products such as extrusion ingots and primary foundry alloys, serving customers across key international markets. In terms of competitive strength, the 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, a strong track record of competitive EBITDA margins and a healthy share of operating cash flow generation. Ahmad will provide additional details on the government structure of QAMCO, including detailed aspects of QAMCO corporate governance. I now hand over to Ahmad to continue the call.

Thank you, Saoud. Good afternoon, everyone. Thank you all for joining us today. The macroeconomic environment during the first half of 2026 continues to be shaped by the ongoing regional conflict, which impacted global commodity markets, including the aluminum industry. Continued disruption to trade flows, together with shipping and logistics challenges, contributed to market volatility throughout the period. Despite these challenges, underlying demand for aluminum remained resilient, and this is supported by continued activity across infrastructure development, construction, automotive and energy transition projects. All of this contributed to continued upward pressure on aluminum prices during the period and reinforced the role of aluminum in this critical industrial period. In this environment, producers focus on operational discipline, cost management and flexibility to navigate an increasingly complex and uncertain macroeconomic landscape. From an operational perspective, the joint venture operated at reduced production capacity during the period due to the ongoing regional conflict and related shipping constraints. This resulted in lower production and sales volumes. However, these impacts were partially mitigated through the adoption of alternative logistics solutions. Against this backdrop, QAMCO reported net earnings of QAR 219 million for the 6-month period ended 30th June 2026. This translates to an earnings per share of QAR 0.039, which represents a decrease of 36% compared to the same period last year. The decline was mainly attributable to lower sales volumes, reflecting reduced operational activity and ongoing shipping constraints, which outweighed the positive impact of higher average selling prices. Operating costs also declined, primarily driven by reduced sales volumes and lower raw material costs. Share of revenue from the joint venture declined by 45% to QAR 932 million. Meanwhile, the share of EBITDA decreased by 24% to QAR 437 million, while EBITDA margin improved to 47% compared to 34% in the first half of 2025. This was supported by higher average selling prices and lower input costs. Despite the challenging operating environment, QAMCO maintains a strong financial position. As of 30th June 2026, cash and bank balances, including QAMCO's proportionate share of cash held by the joint venture, stood at QAR 1.8 billion, demonstrating the company's strong liquidity position. On a quarter-on-quarter basis, QAMCO's net profit declined by 95% in the second quarter of 2026 compared to the first quarter of 2026, mainly due to a 79% drop in sales volumes. This impact, however, was partially offset by a 19% increase in average selling prices and lower operating costs during the period. Moving on, health and safety remains a core priority for the joint venture, with a strong focus on maintaining the highest operational standards, reflecting the joint venture's commitment to asset reliability and operational excellence. In summary, the first half of 2026 was a challenging period from a logistics standpoint. However, QAMCO's results also demonstrate the resilience of the business model, supported by higher aluminum prices, lower raw material costs, strong EBITDA margins, and a healthy liquidity position. With that, I now hand back the call to Saoud for 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.

Thank you. Thank you all for joining. You may now disconnect.