Emirates Steel Arkan’s Q2 profit surges on sales

ABU DHABI: Emirates Steel Arkan, the largest public steel and building materials company in the UAE, swung to a profit in the second quarter on rising sales volumes and commodity prices. The company, formed after the merger of Emirates Steel and Arkan Building Materials last year, posted a net profit of $56.43 million in the three-month period ended June, it said in a statement on Tuesday to the Abu Dhabi Securities Exchange, where its shares are traded.

It attributed the results to higher sales volumes and elevated prices, enhanced operational efficiency and a supportive commodity market environment. “Ever since our merger last year, the group has been reporting strong revenue and profit growth in all three quarters,” group chief executive Saeed Alremeithi told the National. “Clearly, operational efficiencies resulting from the merger and high commodity prices have helped.”

In the second quarter, the company’s revenue rose more than 13 times to $700.2 million.

“During the second quarter, the management continued the integration of Arkan and Emirates Steel, creating increased opportunities for growth and employment,” said chairman Hamad Alhammadi. “The group is also actively supporting Operation 300bn, the UAE’s industrial strategy, which will enhance prospects for new business.” “During the first half of 2022, the group enhanced the efficiency of its plants [and] that brought about significant cost savings,” Alremeithi said. “We have in place a process of prudent raw materials inventory management and keep finished product volumes at low levels to take advantage of and manage the risks associated with increasing price volatility.”

During the first six months of the year, Emirates Steel Arkan significantly reduced its debt burden by bringing down the net debt-to-equity ratio to 21 per cent at the end of June, from 32 per cent at the end of December. “Profitable trading income, very tight working capital control and inventory management helped us to achieve significant cost efficiencies to reduce our debt ratio,” chief financial officer Stephen Pope said. —Agencies