May 22, 2016 / 2:31 PM / 4 years ago

UPDATE 1-Bahrain sovereign fund Mumtalakat 2015 net profit hurt by charge

* Net profit in 2015 was $76.3 mln vs $243.6 mln in 2014

* Fund records $583 mln impairment on goodwill - CEO

* Cites lower metal prices at Alba (Adds CEO comments, context)

By David French

DUBAI, May 22 (Reuters) - Bahraini sovereign fund Mumtalakat posted a 68.7 percent drop in 2015 net profit on Sunday, as lower metal prices at the state-owned investor’s aluminium business forced it to take impairment losses.

The fund holds the state’s stakes in Bahraini companies including Aluminium Bahrain (Alba) and telecoms company Batelco, although it has been expanding its international portfolio in recent months with a number of new deals.

Net profit in 2015 was $76.3 million against $243.6 million in the previous year. The decline was because of an adjustment on goodwill against Alba totalling $583 million as a result of lower aluminium prices, Chief Executive Mahmood al-Kooheji told Reuters.

Aluminium firms globally have been struggling with slumping London Metal Exchange (LME) prices for the metal caused by heavy supply from Chinese producers. Alba’s 2015 net profit was 38 percent lower than the previous year.

The impact of the impairment was partially offset by a higher contribution from its share of profit from associates and improved operational performance at Gulf Air.

“Undoubtedly the lower oil price reduced its operating costs but I think it really goes down to the restructuring we have done,” Kooheji said, referencing the airline’s ongoing reorganisation which has resulted in cuts to routes and jobs.

Mumtalakat was continuing to search out new transactions despite the challenging market conditions which had continued into 2016, Kooheji said.

The fund last week announced it would acquire a stake in a $250 million portfolio of commercial real estate assets in the United States. It announced a deal to buy 49 percent of Spanish aluminium firm Aleastur in November.

Mumtalakat was looking at Europe, the U.S. and the Gulf region for potential investments and could announce something as soon as the second quarter, Kooheji said without elaborating.

Editing by Keith Weir

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