My company is Aluminium Bahrain.
I am happy to have a different company to the one we had in ACCT11059 because it means I get to researching a new company instead of working with the same one. I enjoy the process of finding information about my company.
I was initially overwhelmed when I saw my company was an aluminium smelter because I know nothing about the industry. I was even more overwhelmed that it is in Bahrain and it trades in Bahrain dinar. Where and what the heck is that? I then remembered my anxiety when I received a UK construction company, Bellway, in ACCT11059, and I remembered how much I enjoyed researching that company by the end of the assignment.
Aluminium Bahrain is an aluminium smelting firm in Bahrain in the Middle East. The Kingdom of Bahrain is an island in the Persian Gulf just North of Qatar and 25 km off the North East coast of Saudi Arabia. It is connected to Saudi Arabia by a 25 kilometre long bridge. Bahrain has a high human development index and was recognised by the World Bank as a high income economy. Bahrain’s currency is the Bahrain dinar (BHD) and 1 BHD is equal to 3.14 AUD so the currency is very strong.
Aluminium Bahrain, or Alba as they call themselves, is an aluminium smelter company. This means they extract aluminium from its oxide, alumina, and then they make products out of the aluminium which they sell to downstream industries. Downstream industries are industrial firms that process the output of other firms into a finished product. Alba produces billets, slabs, foundry, ingots and liquid aluminium from the aluminium they extract. Examples of the end products from Alba’s output are:
- Billets are sold to aluminium extrusion suppliers who use the versatile properties of aluminium alloys to create profiles in all shapes and sizes. They are used mainly in building applications like structural components and window frames.
- Slabs are cast in rolling mills to produce foil stock which is then re-rolled into household foil or packaging materials used mainly by pharmaceutical industries. Other types of slabs are rolled into plates or sheets for use in general engineering and building industries.
- Foundry alloys are used by automotive components manufacturers to cast wheels and engine blocks.
- Standard Ingots are re-melted and then cast into various products used in the construction industry, transportation, electrical goods and household appliances to name a few.
- Liquid molten metal is sold primarily to Midal Cables, one of the worlds leading cable and rod manufacturers. The liquid takes around 5 hours to solidify and can be transported to customers near Alba who can then cast their products directly without having to re-melt the aluminium.
They export their product and the distribution of sales is;
- Americas 11%
- Europe 17%
- Asia 17%
- Bahrain 45%
- Other MENA (Middle East and Northern Africa) 10%
They have a very interesting and informative corporate video which shows the company’s commitment to health and safety and their commitment to their employees and the community.
I found Alba’s annual report to be very informative and easy to read. I feel like they are quite transparent and aim to show honesty and integrity to their stakeholders. The company started in 1968 with the first production in 1971 with a maximum capacity of 120,000 metric tonnes per annum. In 2016 they had a record setting year with a production of 971,420 metric tonnes. They appear very successful and are expanding to add a 6th pot line to bring their capacity to 1.5 million metric tonnes per annum, which will make them the largest single-site aluminium smelter in the world.
Alba’s sales in 2016 were BD669 million (US$1,704 million) with a net profit of BD48 million (US$129 million) down from 2015 due to lower LME (London Metal Exchange) and premium prices.
In 2017 there have been articles in the media about China’s illegal output and Beijing’s noxious smog. China has a limit on capacity because of environmental protection and air pollution control and has allegedly been overstepping that capacity. There has also been talk of a third of China’s capacity being cut during the winter heating season, which starts in November, to ease the air pollution problem, and this talk has forced the price of aluminium to go up. It will be interesting to see Alba’s annual report for 2017 to see what impact this had on the company. I have included some media links below and the effects it has had on aluminium price.
Chinese Aluminium Smelters – February 2017
Chinese Aluminium Smelters – July 2017
Chinese Aluminium Smelters – August 2017
I would love to compare companies with others in my unit so please let me know if you would like to discuss.
Angela
My Accounting Journey 
You have a great understanding and knowledge of your company for Assignment 1, Aluminium Bahrain. What you have written is very informative and delivered professionally. I feel like I have a complete knowledge of your company also from what you have written.
Am looking forward to comparing our companies.
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Hi Teena
Thank you. Sounds great. Let me know when you are ready and have something for me to look at for your company.
Angela
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Hi Angela,
I should have my company done tomorrow. Would be happy to compare them. Very well presented.
Cheers,
Tobias
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Hi Tobias
That sounds great. Let me know when you have it done.
Angela
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WOW! great understanding Angela! I am from Gladstone and here we have an industry called QAL, Queensland aluminium limited we have similar production activities as your company so i can really relate to your firm. Also you have such a unique location for your firm i would of loved to have a firm similar to this one! When looking through you annual reports and comparing to mine we both have lots of pictures and colours which i guess keeps us as readers engaged. But i also found yours a little bit easier to read as mine as underlying and non-underlying totals where as yours just has the total for the year. I hope all is going well with the assignment i cannot wait to see your draft overall.
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Hi Rachelle
When I looked through your company annual report I thought that it is very much geared towards marketing, especially in the pages before the financial statements. There is a lot of information about the products, which is great, and it looks very professional. Lots of pictures and stats to get through though. I had not seen underlying and non-underlying before but it seems pretty straightforward when you read the notes but does make it more complicated. My company in ACCT11059 was similar to yours with company and consolidated financials but I find Aluminium Bahrain are much more straight to the point and they only have consolidated financials. I am from Bundaberg, just down the road from you. I got a little fright when I saw my company but researching them has been exciting.
I am looking forward to seeing your draft too.
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Hi Angela,
wow what an effort. I love reading through your blog, very details which shows me how much effort you put into understanding your firm. I am very jealous because your firm looks so much more interesting than mine. The annual report is a lot more engaging and and fun to look at. My company is Cathay International Holding Ltd, which is a Hong Kong based investment company that has many subsidiary in the pharmaceutical industry. Another interesting point I have notice from reading your financial report is that it has emphasise on training and development of its staffs. However, my financial report doesn’t have many information regarding training and development of its staffs like most other firm’s statement. My financial report is mainly focusing on its performance review and its subsidiary.
Please have a read through my blog and leave some feedback of what you know and don’t understand about my company. As well as if you would be able to answer some of the questions that I have for my company.
My blog: https://learnaccounttogether.blogspot.com.au/
Regards,
Minty.
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Thank you Minty. I really did enjoy researching Alumnium Alba. I also noticed how much they focus on their staff and they believe that is why they are so successful. I am going to head over to your blog now and have a look at your company and we can compare them after I have had a look.
Angela
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Hi Minty
for some reason I can’t put a comment on your blog as it won’t let me publish my comment. We can discuss our companies here though.
Pharmaceuticals, healthcare and hotels. A strange combination. Your company is interesting, I must say. The annual report is very long and not very exciting and they have a lot of information about the products and reasons why they are not performing well. If I was a stakeholder in this company, I guess that is information that I would want to know because the group of companies is showing a loss. They seem to think that they have spent what they have to and now things are going to start looking up for them. I hope they are right because I wonder how long they can keep losing money and still stay in business. I was shocked to see in the Income Statement that they spend 26% of their revenue on selling and distribution costs and another 24% on administrative expenses. Those two use up half their income! They do seem to have enough assets to cover their liabilities at this stage though. Another thing I noticed is that their retained earnings balance is -62 million. I am sure the shareholders would love this company to turn around soon and start making a profit.
The main difference I noticed between your company annual report and mine is that my company is making a profit and things look a lot more positive. They are concentrating on how to improve something that is already working where your company seems like they are trying to explain themselves. What do you think?
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Hi Angela, I totally agree with you, Angela. What a wonderful analysis. There are many things that you have noticed but I have clearly missed. Thank you for pointing out some of their massive spending for my company. I have yet to understand why they have spend so much when they clearly are not making enough profits. Yet, the company are taking some actions in the hope to turn this trouble around. Such action is to dispose of some of shares the company holds, and other measures such as diversification strategy by expanding into other areas of pharmaceutical includes healthcare and cosmeceutical products, in the hope to mitigate the business risks and improve profitability. I am not too sure how effective is their strategy, because more products means more costs. But we just got to hope and see what this company can do. Pharmaceutical, healthcare and hotels is an odd combination, I wonder if that is part of their strategic plans or is it because they’ll just invest in whatever in the hope to make profits? What do you think?
I have mentioned earlier that your annual report is so much more comprehensive and interesting. The company have reported about their training and development programs, safety health and environment, and corporate social responsibility. Which is very common in most company’s annual report, however in my company annual report there seem to be missing. Even for my last company, LogiCamms, I remember they also these specific information in their annual report. I wonder why that is? I feel as though Cathay is more focused on profits, investment and shares rather than management. Or perhaps, because is the head of the Group, so the management structure does not fall under the same principal. May be they all have a separate annual report?
Your company seems to be making so much profits when comparing to mine. Your Gross profit is 82,379,000 BHD which equals to 218,333,182.65 USD. That’s a massive difference in comparison to my company when the gross profit is only just 57,282,000 USD. It is so interesting to learn more about different company, as well as hearing other people point of view.
p.s I think I have fixed my blog so it should be find to comments.
Love to hear more from you.
Kind regards,
Minty.
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Hi Minty
I think Cathay need to do something to turn the company around. I would hope they are concentrating on the products they know they can make money out of in order to start making a profit. Then they can continue concentrating on other products that they may think will be profitable in the future. Maybe because they are running at a loss overall they think they need to concentrate more on profitability and products than on their employees and the community. You brought up some very interesting points above. Alba do seem to be doing very well. Their gross profit is down in 2016. In 2015 it was US$273 million and in 2016 it was US$218 million, The price of aluminium fell quite a bit in 2016. Cathay’s financial statement are fairly easy to read and they have been presented well for investors to understand what is going on in the company. They haven’t tried to put so much in to confuse interested parties. Are you happy with your firm or would you have preferred another firm?
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I am definitely happy with my firm because I get to see more on how international company actually operates. It is also very valuable to actually compare it with your company just to see where they have went wrong and what strategic plans they are looking at in order to reverse the situation back around.
What about you? Are you happy with your firm?
From what you said that the profit has gone down since 2015, so do you reckon that the reason for this is the drop in aluminium price alone or is there another factor that comes into play?
Minty.
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Hi Minty
I am very happy with my firm too. I think it is a very exciting industry and I love how they value their people so much and believe their success is largly due to their people. I do think the downturn in profit since 2015 has been mainly due to aluminium price. I think they know that because the price of aluminium is so volatile and their profit margins are quite small they have to produce volume to keep the profits up, and that is why they are expanding. It will be interesting to see their financial reports in the next few years because they are taking out huge loans to cover the expansion and their liabilities are going to be more than their assets for a while. I am thinking I may have a look at their annual report for a few years to see how it goes.
Angela
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Hi Angela,
First of all, awesome effort on your blog so far.
You have a great detailed understanding of your company, and now after reading this I feel like I do to (after googling the definition of smelting HAHA)! Well done.
I have just posted my company blog if you’d like to check it out and leave some feedback?
It might be great for comparison as it is construction materials based – Adelaide Brighton.
My blog – https://kb-elizabeth.blogspot.com.au/p/assign.html
I look forward to hearing from you.
Thanks,
Kyara
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Hi Kyara
I tried to leave you a message on your blog but it wouldn’t let me. Thank you for your kind words.
Well done with your company information. You have given us some great information and great links to media coverage on your Adelaide Brighton. They are similar to Aluminium Bahrain in that they are proactive in regards to trying to minimise their environmental impact. I love the fact that they have a land care program. I was shocked to see the financial impact the power outages in SA had on the company. Aluminium Bahrain also have major problems if there are power outages because the aluminium goes hard and they have to start the process all over again. They have their own power plant onsite to combat this problem. I see they produce lime and that lime is used in the production of alumina. I guess Aluminium Bahrain must use lime as well then.
It was great reading about your company.
Angela
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