National Aluminium Products Company SAOG (NAPI) Earnings Call Transcript & Summary

Hi. Good afternoon. Welcome, everybody, for joining today's session. Myself, Raees Ahmed, I'm the CFO of National Aluminum Products Company, along with me, Ms. Jalila Al-Harthy is there. She is our Deputy CEO. And along with us, there are certain team members also included in our today's discussion session. So we will be presenting today the Half Yearly Results of National Aluminum Products Company, SAOG. So let's begin with the discussion. So for the First Half of 2026, the summary of our results is that the revenue has gone up by 28%. The revenue reached OMR 15.6 million as compared to last year. And the causes are mainly the LME, which has gone up. And together, the quantity that dispatch has increased. The EBITDA has increased by 68%, which reached to OMR 1.06 million. The net losses reduced by 91%. It was OMR 48,000 only as compared to last year [ OMR 523,000 ]. So the summary is that growth accelerated and operating performance improved materially in this half of the year of results. Now before proceeding, I'll just be having this disclaimer. This presentation is provided for information purpose only and may change without prior notice. While NAPCO strives to ensure accuracy and reliability, no expressed or implied warranty is given regarding accuracy, completeness or suitability for any purposes. The content may not include all material information about the company. NAPCO accepts no responsibility or liability for errors, inaccuracies or omissions. Distribution, reproduction or dissemination in whole or in part without the explicit written consent of the management is strictly prohibited. NAPCO reserves the rights to take legal action against unauthorized distribution or use. The information and the opinion in this document do not constitute investment advice or a financial recommendation. Individual should seek the professional advice and conduct their own due diligence before making any decision based on the presentation. By accessing or reviewing this presentation, you acknowledge and agree to the terms and conditions that we have presented. So let's begin. NAPCO. As you know that NAPCO is basically a 40 years -- more than 40 years old company established in 1984. It's basically a public listed company. Along with this, a new public listed company also established in KSA last year. It was the only listed company. Now we have another listed company, which is Al Tayseer in Saudi Arabia. Our legacy for more than 40 years, have been successful. I would say that delivery of the projects, renowned projects, not only the GCC, rest of the world, we have provided a number of our products in renowned, I would say that projects in all over the world itself. So what we sell is basically our portfolio comprised of main 5 products, which is mill finish and wood finish, thermal break, anodizing and powder coated. These are our main product categories that we are supplying currently to our customers. So a broad portfolio finished portfolio is several architecture and structure applications, not only that, but also in the automotive sectors. These applications are being used also. Now the first half year results basically have multiple, I would say, that factors that has caused the change in the result itself, namely the price and trade conditions set backdrop in the first half itself. The 3 factors shape H1 2026 basically are mainly the geopolitical condition, aluminum prices and U.S. tariffs. The geopolitical condition, you can know that what's basically going on in the current scenario in which the prices has gone up, not only for the raw material prices, also the other consumable items and packing items. Not only that, the logistic cost has gone up because of the oil prices that have gone up. So all those factors has caused a very stressed situation not only to NAPCO to other companies also in which the cost factor was the main concern, which the company has [Foreign Language] managed and addressed properly in this particular first half of the year itself. So you could see that in the graph on the right side, the prices reached to a onetime of $3,800 in the month of June. It was 1 day price itself, but the average price for this particular year reached to $3,670 at that time. So it started from $2,900 and reached to $3,800. And you people can understand that when this is a scenario in which the company which has very tight liquidity situation, so the higher prices put much pressure towards the buying ability of the company. But however, despite these challenges, company managed to perform and brought a good results, which you can see subsequently in our coming slides. The actual 2026 financial results, revenue and earnings improved while short-term borrowings declined. I will give you the reason why it's declined. The LME and volume drove growth. The core revenue is basically increased by 25%. It's reached OMR 13.46 million versus OMR 10.79 million last year. The average LME reached to $3,386 it was $2,538, so there's a jump of 33%. The scrap sales, which are byproduct, I would say, increased by 57%, reached OMR 2.14 million, which was OMR 1.36 million last year. So the mix of volume, aluminum pricing and scrap sales supported a strong top line. So this is what the result that we have at the top line itself. So revenue in total increased by 28%. Our core product along with the scrap itself and margin reached to 8.02%. So you could see the jump of revenue reached OMR 15.60 million, which is 28%. Gross profit reached OMR 1.25 million, up by 44%. The GP reached to 8.02%, which was 7.17% last year. So the scrap sales increased by 2.14 million, up by 57% year-on-year basis itself. The next slide is basically about the net loss. So net loss has reduced by 91%. We reported a loss of OMR 521,000 last year same period 6 months in 2025 where we have reported 48,000 in there itself. And the fact that we have just mentioned that increase in the quantity itself, increase in the sales itself, obviously, the LME prices on the one side has put a pressure on the buying, but on the other side has brought a good revenue for the company. So our EBIT reached to OMR 628,000, which was only OMR 219,000 last year. It was -- so the jump is 186%. EBITDA reached to OMR 1.06 billion versus OMR 632,000 last year, up by 68%. EBITDA margin reached to 6.80% as compared to 5.21% last year. So this is what the basic summary that we have for the income statement. So cost control strategy that we have put in. Our general administration expenses reduced by 7%, reached to OMR 381,871. Selling distribution increased by almost 8% to 9%. The reason is basically increase in dispatches also. The production got increased or dispatches increased ultimately. And obviously, the logistics part in which the cost of logistics has gone up. So that has contributed increasing the distribution cost part. So net financing cost is reduced by 9% because this year, we have done the restructuring with 3 banks in the month of March itself. And last year, the rates that we were having the challenge of 7.5% from the various bank, which got reduced to 6% this year. So this has caused a substantial reduction in the net financing cost to 9%. So this is one of the major, I would say, contributor in enhancing the profit -- the margins of the company itself. So this is the summary that we have, which I have explained in the summary form in the previous slides. So you could see that revenues reached to OMR 15.6 million as compared to OMR 12.147 million, OMR 3.453 million ahead. Cost of sales OMR 14.349 million as compared to OMR 11.276 million, which is OMR 3.073 million. So you could see that the revenue increased by 28%. The cost of sales increased by 27%, which is not proportionate. There is a substantial, I would say, 1% enhancement is there compared to it. So gross profit OMR 1.25 million as compared to OMR 870,000, which is OMR 380,000 more, which is 44% up. The other income is OMR 35,000 as compared to OMR 11,000, which is normal for our industry itself, OMR 23,000. As I mentioned that general administrative OMR 385,000 as compared to OMR 409,000 reduction in OMR 24,000, selling and distribution OMR 272,000, OMR 253,000, so OMR 19,000 increased basic which I mentioned earlier. The net financing cost, OMR 677,000, which we reported OMR 741,000 last year. So you could see that there is a drop of loss from OMR 521,000 last year to OMR 48,400 this year. There is a substantial decrease of 91%. So you could see the summary, EBIT OMR 628 as compared to OMR 219 last year, OMR 1,060,000 EBITDA, OMR 632 -- so the percentages are mentioned in the slide desk. Okay. Moving towards the next slide of balance sheet, summarizing it. Our total assets reached OMR 23.7 million, so which is enhanced by 10%. And obviously, when the revenue got up, so there are certain factor of current assets got up, especially the receivable side, which has gone up by 27%, which is almost proportionate to the increase in the revenue itself. The current asset rose to 21%, mainly 2 factors, receivables and inventory. Inventory has gone up by 17%. The noncurrent assets basically 10.7 million, down by 2%. Depreciation is the main factor in which the asset has gone a little bit down. The cash position, the cash is down by 39% to reach OMR 359,000 and obviously, the reason that we utilized more cash in buying our raw material because of the increase in the LME raw material prices and other metal prices also. Moving towards short-term borrowing fell by 60%. The main reason that we have done the restructuring of our loan with 3 banks. So that's basically -- it's sort of a reclassification. It's not something that we have paid. So the short-term loan basically is converted into a long-term loan for the 3 banks. So that's why it has shortfall by 60%. So equity remained negative by -- increased by 1%, which is basically OMR 48,000 loss that we have incurred. So we are still having a negative equity of OMR 4.78 million. Noncurrent liabilities reached OMR 18.2 million, which is basically the factor that I have explained that we have done the restructuring of short-term loan converted into a long-term loan for a period of 10 years. So that has reflected in the noncurrent liability. Current liabilities is OMR 10.32 million down by 39%. Bank borrowings fall by 60%, so 60%, which I mentioned. Bank borrowings reached to OMR 3.54 million, which was OMR 8 million last year almost at OMR 5.53 million is gone up into the noncurrent liability part. So this is basically our detail, I would say that it is self-explanatory that noncurrent is OMR 10.71 million as compared to OMR 10.92 million. Inventory is OMR 2.64 million as compared to OMR 2.240 million, basically, as we have enhanced the product, so the inventory requirement has gone up. So there was an increase. Similarly, the receivables reached OMR 10 million as compared to OMR 7.9 million, which is 27% high, as I mentioned, because of the increase in revenue -- sorry, the cash balance is down by OMR 232,000 because of the buying of raw materials and all that. Equity reached to OMR 4.78 million, OMR 4.36 last year, so OMR 48,000 negative increase because of the loss itself. Similarly, for total noncurrent liabilities reached to OMR 18.19 million, which was OMR 9.6 million. So mainly there's a restructuring loan that has happened. So this has basically caused the enhancement of noncurrent liability. On the other side, you could see that bank borrowing reached to OMR 3.53 million as compared to OMR 8.89 million. Similarly, the accounts payable reached to OMR 5.852 million and OMR 7.031 million. The reduction is OMR 1.176 million again, basically the interest factor, which we did not pay to the bank itself. It also capitalized in the long-term loan part. So it's not something that we have paid to the supplier. It's basically the accrual part of interest that has incorporated into the noncurrent liability or I would say, the loan itself. So you could see that our total liability and equity reached to OMR 28.514 million total liabilities. So net total liability and equity reached to OMR 23.729 million because of the losses. So if I just summarize with the key ratio for 4 key ratios, financial ratios, the gross profit reached to 8.02%, EBITDA margin 6.80%. And after a long time, the company has performed this after 4 to 5 years, I would say, a long journey that company has recovered and reached that position. EBIT margin reached to 4.03% and interest coverage 0.93%, which is almost equal to 1, I would say. We have reached to that level that we can service our interest to the bank itself. I will summarize my presentation with these 4 basically lines. Total revenue increased 28% to OMR 15.6 million, supported by volume and LME pricing. Net losses narrowed to 91%. EBIT increased 186% and EBITDA rose to 68%. Liquidity, interest coverage improved to 0.93% and short-term borrowings declined by 60%. Total assets grew 10%. Term loan restructuring extended the debt maturity profile. So this is what the presentation that basically of the half year results that we have. So I would further summarize that NAPCO entered to the second half for 2026 with the stronger revenue, higher operating earnings and materially reduced net losses while continuing to manage the liquidity and balance sheet pressure that we are facing, and we expect to continue to face because of the current, as I mentioned, the geopolitical situation that is continuing and consistent at this point of time. And we are optimistic that it will be resolved. Once it is resolved, there will be a consistency we can see until unless we will be facing the similar challenge, what we are facing at this point of time. So I will invite all the people who are attending if they have any sort of questions -- with regards to the presentation itself, myself and my team Ms. Jalila and other are ready to address your queries if you have any. Dear attendees, if you have any query, questions related to our financials for the first half of year 2026 results. So I'm here to respond for any related query related to the company's performance or any future related projects. So we are here to address the queries. If nobody has any questions, so I would like to end the discussion sessions. And once again, I would say thank you to everyone who attended this session, and we are looking forward of good, I would say, progress of this company itself. So thank you very much to all of you for attending the session. Have a nice day.

Thank you.

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