UAE steel and building materials manufacturer Emirates Steel Arkan has reported a first-half net profit of $76.4M (AED 280.5M), compared to AED 279.9M in the previous year. The increase in profit was driven by improved revenues and profits from the building materials division.
Emirates Steel attributes its strong profitability to high demand for its steel products and stable margins, despite reductions in commodity steel prices. The company’s focus on value-added products and increased sales of such products contributed to the positive financial results.
During the first six months of 2023, the group’s revenues declined to AED 4.43B from AED 4.61B in the same period in 2022 due to a global supply-demand imbalance that caused temporary price increases for their products last year.
The steel division’s revenues in H1 2023 reached AED 3.95B, with a reported profit of AED 225M. Similarly, the building materials division’s revenues rose by 9 per cent year-on-year to AED 475.8M, and its profit more than doubled to reach AED 56M from $20M last year, driven by growth in the UAE construction sector.
Saeed Ghumran Al Remeithi, Emirate Steel Arkan’s group CEO, attributed the positive performance to a focus on higher-value-added products with improved margins and enhanced efficiencies. The company also strengthened its balance sheet through better capital control and targeted capital expenditure, supporting its growth strategy.
Emirates Steel’s earnings before interests, taxes, depreciation, and amortization (EBITDA) reached AED 612M in H1 2023, a 3 per cent increase compared to the same period the previous year. The EBITDA margin for the period was 13.8 per cent, up from 12.9 per cent in H1 2022.
The company reduced its net bank debt from AED 1.1B to AED 644M, resulting in a net debt-to-EBITDA ratio of 0.5 as of June 30, 2023.
Initiatives for Sustainability
Emirates Steel partnered with the Abu Dhabi Department of Economic Development, AD Ports Group, ITOCHU, and JFE Steel to establish a new low-carbon iron supply chain. The company also unveiled ‘Namaa’ 2.0, the second stage of its transformation program aimed at delivering greater efficiencies and EBITDA optimization initiatives.
Additionally, Emirates Steel signed an MoU with Oman’s Al Jazeera Steel Product Company to establish a strategic framework for collaboration, according to Gulf Business.
The partnership aims to leverage joint product expertise and explore new opportunities in the steel business ecosystem. Al Jazeera Steel is building a medium-section rolling mill in Khalifa Economic Zones Abu Dhabi and plans to introduce a tube mill and heat-treated alloy round bars.
As part of the partnership, 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. The two companies also plan to explore collaboration in promoting and marketing finished products involving light and medium sections from Al Jazeera Steel and heavy sections from Emirates Steel.