Eng. Saeed Al-Rumaithi: Emirates Steel – Arkan is expanding in 3 new markets

9 August 2023
1:35 pm
Front news, Members news, Steel News

Saeed Al Rumaithi, CEO of Emirates Steel Group – Arkan, confirmed that the company aims to demonstrate the flexibility of its results in the face of any market turmoil and to continue improving the company’s profitability.

Al-Rumaithi said in an interview with Al-Khaleej: “The group owns 65% of iron sales in the local market, and during the first half of this year, our sales were distributed among the local market by 55%, while we exported 45% of our products to international markets under the Made in UAE label.

Saeed Al-Rumaithi, CEO of Emirates Steel Group – Arkan «Emsteel» confirmed that the company aims to demonstrate the flexibility of its results in the face of any market turmoil and to continue improving the company’s profitability.

Al-Rumaithi added, “The group announced the adoption of a new operating model based on the establishment of two separate business units, the Emirates Steel unit and the building materials unit, with the aim of benefiting from the common strengths of the steel and building materials business.”

Dialogue text:

What are your expectations for the company’s performance in the current year, following the growth it achieved last year?
In general, we are optimistic about the company’s performance for the current year, but it can be described as cautious optimism, due to market fluctuations, and our goal is to show the flexibility of the overall financial results in the face of any market turmoil and continue to improve the company’s profitability, which we achieved during the first half of 2023, which witnessed an increase In profits before interest, taxes, depreciation and amortization by 6%, on an annual basis, to rise to 612 million dirhams, with an improvement in the profit margin for the same period, which reached 13.8%, compared to 12.9% in the first half of 2022, and this is a clear indication of the continuous improvement of levels Efficiency across all units of the group.

How much is the company’s share of the local market, and how are the operations of expanding and spreading regionally and globally for your products?
The group owns a 65% share of iron sales in the local market. Our sales were distributed, during the first half of this year, between the local market by 55%, while we exported 45% of our products to international markets under the “Made in the Emirates” sign, which comes in light of the role The company plays in supporting the strategy of the Ministry of Industry and Advanced Technology «300 billion», which aims to increase UAE exports to global markets, and the group is proud of marketing its products to more than 70 countries, and we are constantly looking for different new options, and the decision to enter any new market is usually What is motivated by more beneficial and profitable deals, above any other consideration.

What are the most important developments that occurred in the company to keep pace with the growth in demand for iron of all kinds, and how did you succeed in creating new types such as S600, and the advantages it enjoys?
The increase in profitability in the first half is related to the continued high demand for the group’s products, and the stability of profit margins despite the decline in iron commodity prices, in light of the continuous increase in the manufacture and sale of value-added products in the local and export markets, supported by the boom in construction activities. The group announced the adoption of a new operating model based on the establishment of two separate business units, the Emirates Steel unit and the building materials unit, with the aim of benefiting from the common strengths of the steel and building materials business.

The group continued to lay the foundations for providing a new supply chain for low-carbon iron, as it signed a memorandum of understanding in this regard with the Department of Economic Development in Abu Dhabi, the Abu Dhabi Ports Group, and the two Japanese companies, Itochu and GFE Steel.

The group launched the “Namaa 2.0” program as the second phase of the continuous transformation program, which aims to enhance efficiencies and initiatives to improve profits, before interest, tax, depreciation and amortization. It succeeded in marketing the innovative low-carbon and high-strength rebar ES600, which was used in two real estate projects in the Emirate of Dubai.

This product helps reduce the carbon footprint of the group’s steel production operations, which is already 45% less than the average carbon footprint in the world’s iron industry, by reducing the quantities of iron required in construction operations.

We continue to work with our partners to develop a comprehensive plan to reach net zero emissions by 2050 in our operations in line with international carbon reduction targets.

What are the most important projects that you cooperate in implementing by supplying the iron required to build them this year?
We are proud of our contribution to a number of the largest and most distinctive projects in the United Arab Emirates, most notably the Expo 2020 exhibition and Burj Khalifa, and we are currently participating in a group of new development projects, including Etihad Rail, the Guggenheim Museum Abu Dhabi, and the fourth expansion facility, Borouge 4, in the company’s production complex. Polyolefins in Ruwais, Abu Dhabi, and we also started supplying iron products to the giant “NEOM” project in the Kingdom of Saudi Arabia, and we are proud of our contribution to this exceptional project.

The group expanded into three new markets, exporting glass-reinforced plastic (GRP) pipes to three projects in France.

What are the most important products of the company and the volume of its production, and are there products that you are in the process of increasing their manufacture due to the high demand for them?
Emirates Arkan Steel is a leading regional supplier of specialized steel products for the construction sector, which includes rebar, steel wire coils, plates, base plates, and heavy and large structural sections, used in the largest construction projects, and we remain the only manufacturer of hot rolled sheets and plates in the Middle East.

Our cement factories have a production capacity of 4.6 million tons of cement and 3.1 million tons of clinker annually, in addition to many types of building blocks, paving and flooring tiles, and other various building materials.

Our high-quality products, which we export to more than 70 countries, are used in a variety of building structures, from homes and retail outlets to airports and oil refineries. Due to their strength and aesthetics, our products have been used in the construction of some of the most famous structures and buildings in the world, starting with From the Burj Khalifa, the tallest building in the world, to the Sheikh Zayed Grand Mosque, an impressive feat of architecture, to the stunning Louvre Abu Dhabi.

What about your efforts to increase your market share in the local market, and to meet the increasing demand in light of the various projects announced?
“Emsteel” owns a large share in the local market, as it meets 65% of the needs of this market in terms of reinforcing steel, iron wire coils, and heavy structural sections, and we continue to study new growth opportunities that contribute to advancing the industrial development sector in the UAE, and enable us to move forward In international expansion plans.

We signed a non-binding memorandum of understanding with Abu Dhabi Ports, ITOCHU and JFE Steel of Japan to cooperate in establishing an integrated complex for the supply chain of low-carbon iron in Abu Dhabi. The complex aims to produce raw materials with low carbon emissions, including hot pressed iron «HBI», iron Low carbon emissions, to meet the growing demand for environmentally friendly steel products, and to promote a sustainable industrial ecosystem in the United Arab Emirates.

The establishment of the low-carbon iron supply chain complex is of great strategic importance to the economy of the Emirate of Abu Dhabi, and enhances the industrial capabilities of the UAE, as it shows commitment to promoting innovation, sustainability and economic diversification. We also recently signed an agreement with Al Jazeera Steel Products Company, to establish a strategic framework for cooperation. The agreement covers the medium-sized rolling mill of Al Jazeera Steel Company in the Khalifa Economic Zones in Abu Dhabi (Kizad), and its current facilities in the Sultanate of Oman. This will help us consolidate our market share, consolidate our collective knowledge and experience, seize new business opportunities and bid for upcoming projects.

Recently, there has been talk about the company’s plans to buy shares or enter into strategic partnerships in companies specializing in iron and steel. Have you found such investment opportunities suitable?
We are always looking for all possible investment opportunities locally and internationally, as long as it makes sense for our portfolio and our investors. At the present time, we have not taken any decisions in this regard, but we will inform the market in the event of any material developments that require more details.

How much is the Emiratisation rate estimated in the company, and is there an intention to train and qualify citizens to work in the industrial sector and prove their competence in it?
We have come a long way in the field of nationalizing jobs, as the nationalization rate in the group is more than 20%, and female employees constitute 7% of our Emirati employees, and through our contributions to enhancing the added national value, Emirates Steel provides more than 600 job opportunities for the sons and daughters of the Emirates.

We are proud to honor Emirates Steel at the “Make in the UAE” awards ceremony, with the award for the best level of Emiratisation in the industrial sector. This honor is an achievement that reflects the company’s commitment to the efforts to localize the iron and steel industry, in addition to the success of the company’s strategy in attracting Emirati competencies to work in the industrial sector. This approach is in line with the objectives of the National Strategy for Industry and Advanced Technology, which aims to promote Emiratisation and sustain economic growth in the UAE. We collaborate with prestigious educational institutions such as Khalifa University, Abu Dhabi University and Abu Dhabi Vocational Education and Training Institute to offer scholarships, internships and research and development programs for young nationals.

What are your efforts to enhance shareholders’ confidence in Emirates Steel and achieve the best returns for them?
We will continue to enhance shareholders’ confidence in the company, focusing on products with higher added value, improving profit margins, and enhancing operational efficiency, and affirm our commitment to achieving decarbonization and sustainability goals by increasing the operational efficiency of our facilities, reducing the energy consumption used in manufacturing our products, and adopting clean and renewable energy, In addition to establishing partnerships with regional and international institutions, to create a new supply chain for low-carbon steel in the UAE, we also intend to reduce carbon emissions by 40%, by 2030, and achieve net zero emissions by 2050, and today we are taking great steps to translate this ambition into reality.

EBITDA for the period was AED 612 million, up 3% over the first half of 2022, and up 6% over the second half of 2022, as a result of enhanced efficiency levels across the Group. The profit margin, before interest, tax, depreciation and amortization, was 13.8%, compared to 12.9% in the first half of 2022.