UAE’s Emirates Steel Arkan posts $76.4m in H1 profit

UAE steel and building materials manufacturer Emirates Steel Arkan reported $76.4m (Dhs280.5m) in first-half net profit compared to Dhs279.9m a year ago, driven by the continued improvement of revenues and profits from the building materials division.

The robust profitability in the first half of 2023 is associated with continued high demand for the company’s steel products, and stable margins despite reductions in commodity steel prices, supported by a continuing increase in the manufacture and sale of value-added products, Emirates Steel said in a bourse filing.

The group’s revenues in the first six months of 2023 dropped to Dhs4.43bn from Dhs4.61bn during the same period in 2022 due to a global supply-demand imbalance that temporarily pushed up the sales prices for the group’s products last year.

The company’s steel division’s revenues reached Dhs3.95bn in H1 2023 and it reported a profit of Dhs225m.

#EmiratesSteelArkan’s continuous focus on innovation, sustainability, and efficiency has resulted in a solid performance throughout the first half of 2023. Learn more about our financial results through this video pic.twitter.com/kUIdEbxaOw

— Emirates Steel Arkan (@EMSteelArkan) August 1, 2023

Similarly, the building materials division’s revenues in the first half of 2023 reached Dhs475.8m, up 9 per cent year-on-year while the division’s profit more than doubled to reach Dhs56m from $20m last year amid growth in the UAE construction sector.

“This performance was delivered by focusing on higher-value-added products with improved margins and enhanced efficiencies. Better capital control and targeted capital expenditure have also strengthened our balance sheet to support our ability to drive our growth strategy forward,” said Saeed Ghumran Al Remeithi, Emirate Steel Arkan’s group CEO.

Emirates Steel’s earnings before interests, taxes, depreciation and amortisation (EBITDA) reached Dhs612m in H1 2023, up 3 per cent compared to the same period a year ago and up 6 per cent quarter-on-quarter, driven by enhanced efficiency levels across the group.

The EBITDA margin for the period was 13.8 per cent compared to 12.9 per cent reported in H1 2022. The group further slashed its net bank debt from Dhs1.1bn to Dhs644m, resulting in a net debt-to-EBITDA ratio of 0.5 as of June 30, 2023.

Emirates Steel partnered with the Abu Dhabi Department of Economic Development, AD Ports Group, ITOCHU and JFE Steel as the company continues to build the foundation for a new low-carbon iron supply chain.

It also unveiled ‘Namaa’ 2.0, the second stage of the group’s continuing transformation program to deliver greater efficiencies and EBITDA optimisation initiatives.

Emirates Steel joins hands with Al Jazeera Steel

Meanwhile, signed an MoU with Oman’s Al Jazeera Steel Product Company to establish a strategic framework for collaboration, further benefitting from joint product expertise and seizing new opportunities in the steel business ecosystem.

The partnership comes as Al Jazeera Steel is building a medium-section rolling mill in Khalifa Economic Zones Abu Dhabi amid plans to introduce a tube mill and heat-treated alloy round bars. Emirates Steel will supply semis, including billets, blooms and beam blanks to Al Jazeera Steel’s upcoming factory in Abu Dhabi or existing factory in Sohar, Oman as part of the partnership.

The two entities also agreed to research options for collaboration in the promotion and marketing of finished products involving light and medium sections from Al Jazeera Steel and heavy sections from Emirates Steel.

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