Emirates Steel Arkan Q1 net more than doubles to $41.45mln

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UAE - Emirates Steel Arkan, the largest publicly traded steel and building materials company in the UAE, has seen its first-quarter (Q1) net profit shoot up 110% to AED152.2 million ($41.45 million). This is compared to a net profit of AED72.6 million in the first three months of 2022.

The strong performance in Q1 2023 was driven by several factors, including increased volumes from the Steel division, the penetration of new export markets, and increased sales of value-added products with enhanced margins.

Revenue from the Steel division totalled AED2.14 billion for Q1 2023, from AED1.81 billion in the corresponding period in 2022. Profit from the Steel division for the first three months of 2023 was AED137.5 million as compared to a net profit of AED61.1 million for the same period in 2022, an increase of 125%.

Cement and Blocks

Revenue from the Cement and Blocks division was AED211.2 million for the first three months of 2023, compared to AED183.2 million for the equivalent period in 2022. The division’s profit was AED10.6 million as compared to a profit of AED9.3 million for the same period in 2022.

The combined business recorded quarterly revenue of AED2.41 billion compared to AED2.04 billion during the same period in 2022, an increase of 18%.

EBITDA for the period was AED320.0 million, up by 41%. The EBITDA margin for the period was 13.3%, reflecting an enhancement of 2% on the 11.2% reported in Q1 2022, with the enhancement primarily being driven by the Steel division.

Net bank borrowings reduced by a further AED130 million in the quarter, resulting in a debt-to-equity ratio of 0.12 as at 31 March 2023 compared to 0.32 as at 31 December 2021 immediately following the merger.

The group’s ‘Namaa’ transformation programme continues to deliver efficiencies and revenue optimisation.

Operational highlights

Higher profitability in Q1 is associated with both enhanced volumes and margins, supported by a continuing increase in the manufacture and sale of value-added products for both domestic and export markets, bolstered by an upturn in construction activities and higher demand for residential developments in the UAE and the wider GCC region.

Emirates Steel Arkan expanded into three new markets for steel in Q1 and successfully exported Glass Fibre Reinforced Plastic (GRP) pipes to three projects in France, while maintaining its market share of steel in the UAE.

Eng Saeed Ghumran Al Remeithi, Group CEO, said: "Emirates Steel Arkan continued its strong financial performance in the first three months of 2023 with a doubling of net profit year-on-year. This was driven by our entry into new markets, our focus on higher-value-added products with improved margins supported by favourable cost and pricing conditions, and further efficiencies achieved in our expanded business whilst remaining focused on our sustainability mission. This reflects the anticipated improvement in performance which we envisaged at the time of the strategic combination of Emirates Steel with Arkan.

Leading the way

“As we move into our second full year of operations as a combined entity, our strategy remains to lead the way in promoting UAE-made steel and building materials, thereby bolstering our international presence as a sustainability champion. We are committed to reducing our carbon emissions by 40% by 2030 and achieving Net-Zero emissions by 2050, which demonstrates our dedication to addressing climate change.”

Emirates Steel Arkan is actively contributing to the UAE's industrial strategy ‘Operation 300 billion’ by delivering market-leading products to local industries, creating job opportunities for UAE nationals, and enhancing its sustainable practices.