Emirates Steel Arkan (ADX: EMSTEEL) (the “Group”), the largest publicly traded steel and building materials company in the UAE, today announced its net profit rose to AED 508.5 million in 2022, boosted by strong demand from international customers and the steps taken by the Group to enhance operational efficiencies following the merger of Emirates Steel and Arkan in the fourth quarter of 2021.
The Group’s net profit for the full year 2022 was AED 508.5 million compared to a pro-forma loss of AED 636.7 million in FY21, supported by the Group’s expansion of its international export footprint by 25% to 70 countries, from 56 in 2021. Revenue for FY22 rose to AED 9.5 billion, versus pro-forma AED 8.6 billion in FY21, EBITDA increased to AED 1.16 billion, a 51% year-on-year advance from pro-forma AED 770 million in FY21.
In the fourth quarter of 2022, the Group’s net profit amounted to AED 125 million, compared to an impairment charge driven loss of AED 518 million in 4Q21. Revenue in 4Q22 was AED 2.3 billion, compared to AED 2.4 billion in 4Q21. The Group’s 4Q22 EBITDA was AED 300 million, showing a continuing growth on the AED 269 million achieved in 3Q22.
The Group’s “Namaa” cost reduction and transformation program, launched in 2021, continued to yield positive results, contributing some AED 400 million to the Group’s EBITDA. At the same time, due to increased profitability and strict working capital controls, the Group’s net bank borrowings decreased 52% to AED 1.1 billion as at 31 December 2022 compared to AED 2.3 billion as of 31 December 2021.
Hamad A. Al Hammadi, Chairman, Emirates Steel Arkan, said: “The first full year results of the Group clearly demonstrate the value of combining Emirates Steel and Arkan, which has created a UAE steel and building materials champion that is globally competitive. Despite the global economic headwinds, the increasing reach of our products is testament to consumers’ trust and preference for ‘Made in UAE’ products.
Meanwhile at home, the Group is also actively supporting ‘Operation 300 billion,’ the UAE’s Industrial Strategy, which will enhance prospects for greater levels of economic diversification. We are extremely proud to be supporting the continuous rise and development of the UAE economy, which is forecast to grow at a faster pace than the global economy in 2023 and set to provide compelling new opportunities for the Group.”
Eng. Saeed Ghumran Al Remeithi, Group Chief Executive Officer, Emirates Steel Arkan, said: “2022 was a transformational year for the newly established Group, and it is gratifying that our focus on boosting output and reducing costs has borne fruit. More importantly, we have been able to exceed many of our production targets without ever losing sight of ensuring the most rigorous health, safety and environmental protocols across our plants.”
“Looking ahead to 2023, we will continue our drive to enhance shareholder value by growing regionally and internationally while developing a wider range of products, including environmentally friendly steel, and increasing the use of scrap in our plants. We are also studying options for producing flat steel as part of our strategy to diversify our client base and add manufacturing industry customers to our existing strong base of construction customers. The strength of our financial position and the further savings we expect to realize this year will also allow us to rapidly capitalize on emerging opportunities, giving us greater confidence to continue our expansion plans.”
“During the year, the Group made significant progress in mapping its comprehensive Net Zero plan following the appointment of a global sustainability advisory firm. The Group is working closely with its advisors to ensure its Net Zero plan is fully aligned to the UAE’s carbon reduction targets.”