Target Information

Emirates Global Aluminium (EGA) stands as the world’s largest premium aluminium producer, solidifying its position in the global market with impressive financial results and sustainable growth strategies. In 2024, EGA reported record alumina and hot metal production, resulting in an adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of AED 9.2 billion ($2.5 billion), a notable increase from AED 7.7 billion ($2.1 billion) in 2023. This growth was driven by increased market prices and exceptional production levels, despite challenges such as rising alumina costs and decreased bauxite output.

In its pursuit of innovation and sustainability, EGA has been advancing in low-carbon aluminium production and enhancing its aluminium recycling operations. The company has achieved significant milestones, including a record Emiratisation rate of 44.5%, aligning with UAE's industrial strategies while ensuring employee safety, which remains a top priority with the lowest recorded injury rate to date.

Industry Overview in the United Arab Emirates

The aluminium industry in the United Arab Emirates is pivotal to the nation’s economic growth, characterized by robust demand and commitment to sustainability. EGA plays a crucial role in this vibrant sector, contributing significantly to local and global markets. Recently, there has been a rising demand for low-carbon aluminium, expected to triple by 2040, positioning EGA strategically to capitalize on this trend.

Market dynamics were influenced in 2024 by geopolitical tensions and fluctuating energy prices, which led to higher aluminum prices on the London Metal Exchange. The average price of aluminium rose from $2,264 in 2023 to $2,392 in 2024, cushioning EGA's revenues despite regional market volatility.

Moreover, the introduction of a nine percent corporate tax in the UAE from January 2024 is expected to create a new financial landscape for local firms. This initiative, while introducing additional tax responsibilities, aims to enhance the overall economic framework of the country.

As global preferences shift towards sustainable and recycled materials, EGA is committing resources to develop its global aluminium recycling business further. With substantial progress in establishing a recycling facility and strategic acquisitions, EGA is poised to meet the projected doubling in demand for recycled aluminium by 2040.

Rationale Behind the Deal

The rationale for EGA's ongoing strategic investments and phased growth in low-carbon aluminium production is rooted in both market demand and environmental stewardship. The company’s focus on sustainability is evident in its joint ventures with entities such as the UAE renewable energy firm Masdar, aimed at enhancing aluminium decarbonization.

Furthermore, EGA's acquisitions of Leichtmetall and a majority stake in Spectro Alloys mark a significant step in diversifying their operations and expanding into the secondary aluminium market, which is anticipated to yield considerable returns as global trends favor eco-friendly materials.

Investor Information

EGA has maintained a strong financial position, with substantial cash flows that support its growth strategies. In 2024, the company recorded a net profit of AED 2.6 billion ($715 million), despite facing challenges such as an impairment of AED 1.8 billion ($488 million) related to the Guinea Alumina Corporation.

Alongside this, EGA has consistently rewarded its investors with substantial dividends, maintaining a AED 3.67 billion ($1 billion) payout in 2024, which matches the previous year’s figures, highlighting its commitment to shareholder value and sustainable financial health.

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From an investment standpoint, EGA's robust financial performance coupled with its proactive approach to sustainability positions it as a compelling opportunity in the industrial sector. The company's strategic move towards expanding low-carbon and recycled aluminium production is likely to cater to the increasing market demand and support long-term profitability.

Additionally, EGA's resilience in managing operational challenges and maintaining a strong balance sheet reflects effective management practices that enhance its attractiveness to investors. The ability to generate strong cash flow and reduce debt further indicates a solid financial foundation.

The company’s forward-looking strategy, combined with its achievements in Emiratisation and local procurement, reinforces its commitment to economic development in the UAE. This alignment with national priorities fosters a favorable operating environment that could result in scalable growth opportunities.

Overall, EGA is well-positioned for future success, particularly with its innovative approaches and expansions in the low-carbon aluminium space, making it a potentially valuable investment in the evolving industrial landscape.

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