investor relations presentation - aluminium · pdf filepresentation q2 2015. disclaimer 2 ......

Aluminium

for the world

INVESTOR RELATIONSPRESENTATION

Q2 2015

DISCLAIMER

2

This document has been prepared and issued by and is the sole responsibility of Aluminium Bahrain B.S.C. (the“Company”). The document is being supplied to you solely for your information and for use at the Company’s presentation.No information made available to you in connection with the presentation may be passed on, copied, reproduced, in wholeor in part, or otherwise disseminated, directly or indirectly, to any other person. This document and its contents aredirected only to the intended audience. It is being made on a confidential basis and is furnished to you solely for yourinformation. By accepting this material the recipient confirms that he or she is a relevant person. This document must notbe acted on or relied on by persons who are not relevant persons. Any investment activity to which this document relatesis available only to relevant persons and will be engaged in only with relevant persons. If you are not a relevant person youshould not attend the presentation and should immediately return any materials relating to it currently in your possession.Forward-looking statements speak only as at the date of this presentation and Aluminium Bahrain B.S.C. expresslydisclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in thispresentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not toplace any undue reliance on such forward-looking statements. You should not base any behaviour in relation to financialinstruments related to the Company’s securities or any other securities and investments on such information until after it ismade publicly available by the Company or any of their respective advisers. Some of the information is still in draft formand has not been legally verified. The Company, its advisers and each of their respective members, directors, officers andemployees are under no obligation to update or keep current information contained in this presentation, to correct anyinaccuracies which may become apparent, or to publicly announce the result of any revision to the statements madeherein except where they would be required to do so under applicable law, and any opinions expressed in them are subjectto change without notice. No representation or warranty, express or implied, is given by the Company, its undertakings oraffiliates or directors, officers or any other person as to the fairness, accuracy or completeness of the information oropinions contained in this presentation and no liability whatsoever for any loss howsoever arising from any use of thispresentation or its contents otherwise arising in connection therewith is accepted by any such person in relation to suchinformation.

Aluminium

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3

01IndustryHighlights

CONTENTS

02ALBAHighlights

03Q2 2015Results

04IndustryPerspectivesin 2015

052015ALBA Priorities

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Aluminium

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01INDUSTRY HIGHLIGHTS

Industry Highlights - Q2 2015

World consumption up by +5% YoY

Asian demand up by 6% YoY supported by softer consumption in China (+7% YoY) on the back of government stimulus policies

North America continues to have a firm demand growth (+6% YoY) mainly in the transport sector

MENA demand remains healthy (+4% YoY) - driven by infrastructure spending in Saudi Arabia

Europe consumption up by 1% YoY on the back of the transport and packaging sectors

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Global Physical Demand Still Growing

5


World production up by 7% YoY

Chinese output up despite slower demand growth (7.8 million metric tonnes, +14% YoY) supported by new capacity ramp-ups from both greenfield & brownfield expansions

World market in deficit with China (-416 Kt) & (-487 Kt) without China

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Production Evolution

6


LME inventories at 3.5 million metric tonnes in June

2Q15 cash-average was $1,769/t with LME ranging between $1,642/t on June 29 (lowest since July 2009) and $1,919/t on May 1

Sharp decline in physical premiums ($/t)

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LME & Premiums

7

Major Japanese Ports (MJP) US Midwest DDP Rotterdam

100

300

500

FY 2014 Q1 2015 Q2 2015

407 388

210100

250

400

550

FY 2014 Q1 2015 Q2 2015

510 505

276

100

300

500

FY 2014 Q1 2015 Q2 2015

500428

213

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02ALBA HIGHLIGHTS

Alba Highlights - Q2 2015

Launch of Summer ‘Safety Jungle Campaign’

Line 6 Expansion project approved during EGM in June 2015 and will increase capacity by 514,000 metric tonnes (mt)

Production up by 3.1% YoY due to strong operational performance

Value-Added Sales at 66% versus 65% of total shipments in Q2 2014

Physical premiums up by 47% YoY; however, expected to decline sharply in Q3 2015

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Operational Highlights & Achievements

9

Alba Highlights - Q2 & H1 2015

Adjusted EBITDA up due to solid physical premiums, higher overall sales & favourable plant performance

Q2: US$128 million up by 32% YoY

H1: US$272 million up by 42% YoY

Adjusted Net Income up driven by higher EBITDA levels


H1: US$178 million up by 107% YoY

Q2 2015 Free-Cash Flow favourable due to higher EBITDA


H1: US$141 million down by 11% YoY

Alba Board recommends an interim dividend of US$ 21 million to be paid in September 2015

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Financial Key Performance Indicators

10


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Project Titan - Improve Cash Cost of $150/t by January 2016H1 2015: Project Titan on Track with Projected Savings of $129/t

11

100

129150

Project Titan - US$ per MT

2014 Target YTD June2015

January 2016 Final Target

1. Savings from Project Titan represent the annual $cost per mt improvement once all projects are fully implemented2. Actual project implementation dates are on a project by project basis

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12

Cash, Net Debt & Net Debt to EBITDA

Maintain Sound Balance Sheet & Ready for Line 6 Financing

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

894

613513

362

184

159

265

164

172

179

1.25

0.4

Net Debt Cash Net Debt to EBITDA

1.60

1.05

1.0


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03Q2 2015 RESULTS

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Favourable Management Performance & Higher Premiums

14

300

400

500

600

478

525

0

35

5

7

Q2 2015 vs. Q2 2014 - Metal Sales Bridge (US$M)

Product MixLMEMetal Sales

Q2 2014Pricing Power Metal Sales

Q2 2015Volume

Q2 2015 ResultsAluminium: Industry Expecting Strong Headwinds in 2nd Half with Significant Drop in All-in-Prices

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15

200

225

250

230 232

5

2

5

2Q15 vs. 2Q14 -Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

200

500

318

468

Sales Q2 2014

ValueAdded

Sales Q2 2015

LiquidMetal

CommodityQ2 2014 Q2 2015


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16

Q2 2015 vs. Q2 2014 - Direct Cost Bridge (US$M)

Direct CostQ2 2014

RMPrice

Alumina Sales Cost

RMCons.

EnergyCons.

Inventory Change

One-OffCosts

Cost Analysis 2Q15 vs. 2Q14

200

300

400

500

400 397

3615

2

110 9

11

Direct CostQ2 2015

Line-6Costs

Plant Spending


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Favourable Management Performance Adjusted EBITDA Margin at 24.1%

17

Q2 2015 vs. Q2 2014 - EBITDA Bridge (US$M)

EBITDA Q2 2014Adjusted

Metal Sales

DerivativesOther Sales Direct Cost Selling Expenses

EBITDA Q2 2015Adjusted

50

100

150

200

97

128

4732

1

4 13

EBITDA 18.8%

EBITDA 24.1%

Adjusted EBITDA includes impact of actual realised derivative payments


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Cash Flow Bridge - 2Q15 vs. 1Q15 Maintain Solid Cash Flow

18

Q1 2015 to Q2 2015 Cash Flow Bridge (US$M)

Cash Balance

1Q15

CF from

Operations

Payment to

Shareholders

WCChanges

CAPEXSpent

Net Debt Service

Cash Balance

2Q15

Free Cash Flow (US$M)

50

125

200

275

143

128

17

300

40

184

0

80

78 81

Q2 2014 Q2 2015

Operating & Investing Cash Flow


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Sound Management Performance

Financial Summary Q2 2015 Q2 2014 H1 2015 H1 2014

Average Cash LME (US$/MT) 1,769 1,798 1,785 1,753

Total Sales (US$M) 530 515 1,080 1,001

EBITDA (US$M) 128 97 272 191

EBITDA% 24.1% 18.8% 25.2% 19.1%

Net Income/ (Loss) (US$M) 79 41 178 86

Gain/ (Loss) Unrealised Derivatives (US$M) 3 - 9 6

Adjusted Net Income/ (Loss) (US$M) 76 41 169 80

Adjusted Net Income% 14.3% 7.9% 15.6% 8.0%


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04INDUSTRY PERSPECTIVES IN 2015

Industry Perspectives in 2015

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Physical Demand to Remain Relatively Healthy

21

Key factors to be observed:

LME prices to remain volatile with continued pressure from Chinese exports and stronger US dollar

Physical premiums expected to continue to decline into Q3 and level-off in Q4

Further production curtailments are to be expected in Europe & North America

LME price expected to range between $1,600/t - $1,700/t for the 2nd half of 2015

Industry Perspectives in 2015

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Raw Materials Price Trends

22

Alumina spot index expected to slightly soften

Green Petroleum Coke prices to remain relatively stable

Alumina Fluoride (ALF3) and Liquid Pitch prices to remain at current levels for the next 6 months

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052015 ALBA PRIORITIES

2015 Alba Priorities

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Sustain Performance Gains & Prepare for Line 6 Expansion

24

Continuous Focus on Safety, Training & Development Initiatives

Deliver on Project Titan

Sustained Focus on Value-Added Sales

Gear for Line 6 Expansion Project

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06APPENDIX

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26

LMEMetal SalesH1 2014

Pricing Power Metal Sales H1 2015

Volume

500

700

900

1100

937

1,056

34

1

77

9H1 2015 vs. H1 2014 - Metal Sales Bridge (US$M)

Product Mix

H1 2015 ResultsAluminium: Industry Expecting Strong Headwinds in 2nd Half with Significant Drop in All-in-Prices

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27

1H15 vs. 1H14 - Sales by Product Line Bridge (MT’000)

Premium Above LME Trend US$ Per MT

Sales H1 2014

ValueAdded

Sales H1 2015

LiquidMetal

Commodity H1 2014 H1 2015400

500

456 460

26

4

100

300

500

315

480


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28

H1 2015 vs. H1 2014 - Direct Cost Bridge (US$M)

Direct Cost1H14

RMPrice

Alumina Sales Cost

RMCons.

EnergyCons.

Inventory Change

One-OffCosts

Cost Analysis 1H15 vs. 1H14

400

550

700

850

780 789

46 11

0

1427 11

7

2

Direct Cost1H15

Line-6Costs

Plant Spending


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Favourable Management Performance Adjusted EBITDA Margin at 25.2%

29

H1 2015 vs. H1 2014 - EBITDA Bridge (US$M)

EBITDA H1 2014Adjusted

Metal Sales

DerivativesOther Sales Direct Cost Selling Expenses

EBITDA H1 2015Adjusted

150

250

350

191

272

119

40

9 3

14

EBITDA 19.1%

EBITDA 25.2%

Adjusted EBITDA includes impact of actual realised derivative payments


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Cash Flow Bridge - H1 2015 vs. FY 2014 Maintain Solid Cash Flow

30

FY 2014 to H1 2015 Cash Flow Bridge (US$M)

Cash Balance

FY 14

CF from

Operations

Payment to

Shareholders

WCChanges

CAPEXSpent

Net Debt Service

Cash Balance H1 2015

Free Cash Flow (US$M)

100

200

300

400

500

179

270

80

49

56

79

184

80

160

158

141

FY 2014 H1 2015

Operating & Investing Cash Flow


31

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For More Information, Contact Us on:

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