Dubai: Profit for the UAE’s biggest listed steel and building materials company – Emirates Steel Arkan – nearly doubled to Dh152.17 million, with sales of steel driving sizeable gains in the first three months of Q1.
Another boost for the ADX-listed company was breaking into new export markets and higher margin products, with revenues up at Dh2.4 billion from Dh2.04 billion a year ago.
Going forward, the company will also have benefits emerging from the reduction in net bank borrowings by a ‘further Dh130 million’, which means a debt-to-equity ratio of 0.12 as at end March. It was 0.32 end December 2021, at the time of the merger between Emirates Steel and Arkan Building Materials. (On direct costs borne by the company at the end of the first quarter, the tally has risen to Dh2.13 billion from Dh1.86 billion a year ago.)
“As we move into our second full year of operations as a combined entity, our strategy remains to lead the way in promoting UAE-made steel and building materials,” said Saeed Ghumran Al Remeithi, Group CEO. “(And) thereby bolstering our international presence as a sustainability champion.
The higher margins and efficiencies from the expanded business reflect the ‘anticipated improvement in performance which we envisaged at the time of the strategic combination of Emirates Steel with Arkan’, the CEO added.
“We have sold more to North African customers, particularly in Egypt through recent quarters. There have been sales to the USA too, Europe as well."
“I am not going to go into what global steel prices should be - There is a lot of pressure piling up on the raw materials, iron ore and scrap."
“But I can say one thing, the spread between what we sell and what we produce at is good. That’s what matters.”
- Saeed Ghumran Al Remeithi, Group CEO
A second-half boost?
The UAE's construction sector is up for a second-half 2023 boost, with a new wave of offplan launches in the local property markets offering much by way of traction. Steel prices continue to rule on the higher side, and further export orders will line up quite favourably for Emirates Steel Arkan. The company expanded into three new markets for the commodity in Q1, while maintaining marketshare in the UAE.
Profit from the steel division for Q1-23 was Dh137.5 million against Dh61.1 million last year, working out to a 125 per cent increase.
More to the product mix
During the period, it also exported Glass Fiber Reinforced Plastic (GRP) pipes to three projects in France.