Abu Dhabi-based Emirates Steel Arkan, the UAE’s largest steel and building materials manufacturer, reported strong performance in the first nine months of 2023 with Dh6.48 billion in revenues and net profit of Dh387.6 million despite global headwinds.

Strong demand from the UAE’s construction sector, stable margins amid a dip in global prices, and continuing increase in the manufacture and sale of value-added products for both the domestic and export markets have resulted in a third-quarter net profit of Dh107.1 million.

“The steel sector globally is under pressure. But we have maintained our profitability year-on-year quarter-on-quarter. We are happy with the performance we have delivered,” Eng. Saeed Ghumran Al Remeithi, Group CEO, told Khaleej Times in an interview.

According to the group’s financial results, revenue from the steel division totaled Dh5.81 billion during the first nine months and profit from the division amounted to Dh295.3 million. Meanwhile, revenue from the building materials division was Dh670.7 million for the period, with a profit of Dh92.3 million. The net profit for the nine-month period was Dh387.6 million, compared to Dh383.2 million during the same period last year.

Globally, the steel industry has been under pressure because of a decline in Chinese construction activities and uncertain market conditions in Europe.

“Globally, steel is not in a great place. This is driven by geopolitical factors. The Chinese economy is critical to the steel sector. If China slows down, they start exporting, and prices come down. Europe is suffering in terms of power and uncertainty. So, globally, steel is facing a challenging period. This has been the case throughout the second half of 2022 and continued into 2023.”

Strong domestic demand

Al Remeithi noted the financial results underscore the group’s resilience and agility to continue improvements in its revenue and profits.

“The demand in the UAE is strong. So we’re in a very privileged position at the moment in terms of demand levels for construction. So, while the global steel sector is going through a tough time, real headwinds, Emirates Steel Arkan, with a diversified portfolio, with a strong domestic market, we’re maintaining our profitability.”

Al Remeithi underlined that the group has been able to reduce net bank debt by more than 60 per cent and bolster its balance sheet to help “navigate through all the headwinds”.

EBITDA for the nine months was Dh884 million, up by 3 per cent on the same period in 2022. The EBITDA margin for the period was 13.6 per cent versus 12.1 per cent reported in the same period of 2022. The group has reduced its net bank debt by 61 per cent from Dh1.1 billion to Dh424 million, resulting in a net debt-to-EBITDA ratio of 0.36 as of September 30, 2023.

“We remained committed to prioritising higher-value-added products, while delivering greater efficiencies and optimising EBITDA through our Namaa 2.0 transformation programme,” Al Remeithi said.

Decarbonisation goals

In the past nine months, Emirates Steel Arkan has successfully delivered the first order of the new U-type sheet piles family product, highlighting the group’s unique position as the region’s sole producer of hot-rolled sheet piles and providing an opportunity to attract new foundation, marine, and civil customers, increasing market share and supplying the sector with distinctive low-carbon products. It has become a member of the global not-for-profit multi-stakeholder standard and certification initiative ‘ResponsibleSteel’ to drive socially and environmentally responsible production of net-zero steel globally.

“We continue to work on realising our decarbonisation roadmap, aiming for a 40 per cent reduction in carbon emissions by 2030 and achieving net zero emissions by 2050. This commitment involves leveraging our growing portfolio of low-carbon products, developing our cross-border supply chain, and fostering partnerships; enabling the group to drive its decarbonisation efforts forward.”

The group’s steel and building materials have been used in some of the UAE’s most iconic construction projects, including the Burj Khalifa, Emirates Palace, Etihad Towers, Yas Island, and more.

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