Production Volumes Surge Amid Market Challenges

EMSTEEL, one of the largest publicly traded steel and building materials manufacturers in the Middle East region, has demonstrated remarkable operational resilience in the first quarter of 2025. The company achieved a significant 17% increase in finished goods steel production compared to the same period in 2024, while finished goods steel sales volume surged by 21% year-on-year to reach 811 thousand metric tons. This impressive growth occurred despite challenging market conditions, including a 6% drop in average steel prices globally. The company's strategic decision to convert all semi-finished products into finished goods, rather than selling approximately 100 thousand metric tons of billets as it did in Q1 2024, proved advantageous in serving customer demand. The Emirates Cement division also contributed to this operational momentum with a 17% increase in sales volumes, further solidifying the Group's market position in the UAE's active construction sector.

Financial Performance Demonstrates Strategic Agility

Despite headwinds from lower global steel prices and the strategic shift away from semi-finished product sales, EMSTEEL delivered AED 2.2 billion in revenue for Q1 2025, representing a modest but significant 1% increase compared to the previous year. The company's EBITDA reached AED 266 million with a margin of 12.3%, compared to 13.7% in Q1 2024. This slight margin compression was largely attributed to lower steel prices, though the impact was substantially offset by improved capacity utilization across production facilities. The Emirates Steel division remained the primary revenue generator, contributing AED 1.96 billion and producing AED 226 million in EBITDA. Meanwhile, the Emirates Cement division recorded AED 205 million in revenue and AED 40 million in EBITDA. The Group's profit before tax stood at AED 94 million, with net profit after tax amounting to AED 86 million. EMSTEEL also maintained strong liquidity with AED 881 million in cash on hand as of March 31, 2025, an increase from AED 823 million at the end of December 2024, providing substantial financial flexibility for ongoing strategic initiatives.

Strategic Investment Enhances Production Capabilities

In a bold move to strengthen its competitive position, EMSTEEL has launched an ambitious AED 625 million Asset Enhancement Programme focused on expanding its high-value product portfolio. This comprehensive initiative includes significant upgrades to the company's rolling mills, with particular emphasis on developing production capabilities for ES600 and ASTM Grade 80/100 rebars, premium products that command higher margins in the construction market. Additionally, the programme includes plans for installing a new 500,000 metric tons per annum wire rod outlet, further diversifying the company's product offerings. These strategic investments are designed to shift EMSTEEL's production mix toward more sophisticated, value-added steel solutions that can better withstand price fluctuations in commodity steel markets. The Asset Enhancement Programme represents a pivotal component of the Group's long-term strategy to enhance operational efficiency while simultaneously moving up the value chain in steel manufacturing.

Innovative Logistics Partnerships Secure Supply Chain Resilience

EMSTEEL has significantly strengthened its raw material supply chain through strategic agreements with Hafeet Rail Infrastructure LLC and Minerals Development Oman. These partnerships will enable sustainable cross-border transportation of up to 4.2 million metric tons of raw materials annually from Oman to the UAE. This logistics innovation represents a major advancement in regional industrial cooperation and provides EMSTEEL with more reliable access to essential inputs for steel production. By securing efficient transportation channels for raw materials, the company reduces supply chain vulnerabilities and potential production disruptions. The rail-based logistics solution also offers environmental benefits by reducing the carbon footprint associated with material transportation compared to traditional road freight. This initiative demonstrates EMSTEEL's holistic approach to operational excellence, addressing not only production capabilities but also the critical upstream components that support manufacturing consistency and cost efficiency.

Renewable Energy Integration Advances Sustainability Goals

In a landmark move toward sustainable energy adoption, EMSTEEL has partnered with Yellow Door Energy to develop what will become the UAE's largest industrial solar photovoltaic rooftop project. The ambitious 31.5 MWp installation will span 40 facility roofs in Abu Dhabi's Industrial City of Abu Dhabi 1, with commissioning targeted for 2026. This renewable energy project represents a significant step in EMSTEEL's decarbonization journey, directly addressing the carbon intensity of its energy consumption. Once operational, the solar installation will substantially reduce the company's reliance on grid electricity, lowering both operating costs and environmental impact. This initiative demonstrates EMSTEEL's practical commitment to integrating clean energy solutions into its industrial operations, setting a benchmark for renewable energy adoption in the region's manufacturing sector while supporting the UAE's broader energy transition objectives.

Leadership Vision Emphasizes Long-term Value Creation

Commenting on the company's performance and strategic initiatives, Eng. Saeed Ghumran Al Remeithi, Group Chief Executive Officer of EMSTEEL, emphasized the company's focus on sustainable growth and operational excellence. "EMSTEEL's performance in Q1 2025 underscores our ability to deliver consistent value through operational excellence and strategic foresight. Amid a shifting global landscape, we continue to invest in innovation, sustainability, and regional partnerships that future-proof our business and reinforce our commitment to the UAE's industrial growth," stated Al Remeithi. He further highlighted that the company's strategic investments across decarbonization, production upgrades, regional logistics, and solar infrastructure demonstrate a long-term vision for sustainable, shareholder-driven growth. This leadership perspective reinforces EMSTEEL's commitment to balancing immediate operational results with forward-looking investments that position the company for sustained success in an evolving industrial landscape, where environmental responsibility increasingly aligns with business performance and market competitiveness.

Key Takeaways:

• EMSTEEL achieved a 21% increase in finished steel sales volumes to 811 thousand metric tons in Q1 2025, delivering AED 2.2 billion in revenue despite a 6% drop in global steel prices

• The company has launched an AED 625 million Asset Enhancement Programme focused on high-value products, also announcing ambitious targets to reduce greenhouse gas emissions by 40% in steel and 30% in cement operations by 2030

• Strategic partnerships with Hafeet Rail Infrastructure and Minerals Development Oman will secure sustainable transportation of 4.2 million metric tons of raw materials annually, while collaboration with Yellow Door Energy will create the UAE's largest industrial solar rooftop project at 31.5 MWp