• Group achieves Q1 net profit of AED 72.6 million on revenue of AED 2.04 billion
• Arkan Group adopts interim brand “Emirates Steel Arkan (ADX: EMSTEEL)”
Emirates Steel Arkan (ADX: EMSTEEL) (the “Group”), the largest publicly traded building materials company in the UAE, today announced its first quarter results.
The Group reported revenues of AED 2.04 billion for the first quarter of 2022, compared to AED 233.5 million in 2021. The robust earnings reflect the positive impact of the merger in Q4 2021 of Arkan and Emirates Steel, the largest integrated steel manufacturer in the Middle East. Net profit was AED 72.6 million compared to AED 1.2 million for the same period in 2021, boosted by enhanced operational performance and higher sales volumes. The Group expects 90% of full year revenues in 2022 to derive from Emirates Steel and 10% from the Arkan operations.
Commenting on the results, Hamad Abdulla Mohamed AlShorafa Alhammadi, Chairman, Emirates Steel Arkan, said: “The foresight of the merger of Emirates Steel and Arkan and the impact of the management changes that we have made are clearly evident in the strong financial metrics that the merged entity has delivered in the first quarter. The Group’s management has made great strides in enhancing efficiency and unlocking the full potential of the combined entity. As the largest building materials company in the UAE, Emirates Steel Arkan will play a key role in accelerating the nation’s industrial development, strengthening the ‘Made in the UAE’ brand and supporting the country’s increasingly diversified economy.”
On a stand-alone basis, Emirates Steel reported net profit of AED 61.1 million during the first quarter, a 265% increase on Q1 2021, bolstered by higher exports of rebar, sections and sheet piles to regions including Asia and North America. Rebar sales rose by 8% to 462,000 metric tonnes in the first quarter due to increased demand in Asian markets. At the same time, sheet pile sales grew by 410% in the quarter due to enhanced export sales to North American markets. Meanwhile, each of Arkan’s business units was profitable in Q1. On a standalone basis, Arkan delivered a net profit of AED 11.5 million, an increase of 942% year-on-year.
In the first quarter, a programme was implemented to enhance the organisational structure of the Group to accelerate the integration, find new synergies and bring about greater efficiencies. The Group also appointed the global sustainability advisory firm, ENGIE Impact, to assess Emirates Steel Arkan’s footprint and create a detailed road map to accelerate the Group’s Carbon Net Zero programme. In the coming quarters, Emirates Steel will also begin marketing ES600, its new light-weight ultra-high-strength rebar, designed to allow its construction customers to build more with less raw materials, thereby reducing the carbon footprint of construction projects.
Commenting on the results, Eng. Saeed Ghumran Alremeithi, Group Chief Executive Officer, Emirates Steel Arkan, said: “The Group’s strong results underscore the rapid achievements realised following the strategic combination and the organizational changes rolled out in the first quarter. Our enhanced operational efficiencies and proactive approach to sales were supported by improved levels of demand and higher prices. In the coming quarters, we will work to meet the needs of our increasingly broad customer base in the construction and manufacturing sectors by diversifying our innovative product range and further enhancing our marketing and sales capabilities. Despite an increase in geopolitical tensions, the outlook for the second quarter is favourable and the efforts we have made to improve the performance of our business units will continue to provide opportunities for further growth.”