Alro in H1 2014: higher sales of processed aluminium, despite low international market

Financial highlights (separate and consolidated figures)

Alro Group

Sales of RON 1.02 billion, as compared to RON 1.06 billion, in H1 2013

• EBITDA RON 20.6 million, compared to a negative one of RON 1.8 million
• Adjusted net loss^* RON 89 million, compared to an adjusted net loss* of RON 90 million, in H1 2013
• Primary aluminium production of 127,605 tonnes, as compared to 124,648 tonnes, in H1 2013
• Processed aluminium production of 48,828 tonnes, as compared to 48,518 tonnes, in H1 2013 

Alro S.A.

Sales of RON 966 million, as compared to RON 1.02 billion, in H1 2013

• EBITDA RON 3.04 million, compared to a negative EBITDA of RON 32 million, in H1 2013
• Adjusted net loss^* RON 80 million, compared to an adjusted net loss* of  RON 17 million, in H1 2013
• Primary aluminium production of 127,605 tonnes, as compared to 124,648 tonnes, in H1 2013
• Processed aluminium production of 39,738 tonnes, as compared to 37,869 tonnes, in H1 2013
• Primary aluminium sales of 70,304 tonnes, as compared to 71,168 tonnes, in H1 2013
• Processed aluminium sales of 39,256 tonnes, as compared to 36,711 tonnes, in H1 2013 

Slatina, 14 August 2014 – Alro S.A. (BSE: ALR, “The Company” or “Alro”), one of the largest aluminium producer in Central and Eastern Europe, announces today its financial results, in accordance with the International Financial Reporting Standards (IFRS), for the six months ended 30 June 2014.

In H1 2014, the Company reported an adjusted net loss^* of RON 80 million, compared to an adjusted net loss* of RON 17 million, in H1 2013. The turnover for H1 2014 was of RON 966 million, compared to RON 1.02 billion, in H1 2013. Alro Group registered an adjusted net loss* of RON 89 million for the six months ended 30 June 2014, compared to an adjusted net loss* of RON 90 million reported in H1 2013.

“Two major factors continued to impact Alro’s results during this half year as well: the international aluminium market, where the demand is still weak, while, locally we faced the high costs for energy”,said Marian Nastase, Chairman of the Board of Alro. “However, based on the latest developments, we are hopeful that the improvement of the market will continue. Moreover, the latest legislative changes implemented at the EU level regarding energy taxes demonstrate the preoccupation for the European industry. These two factors, accompanied by our strategy to increase competitiveness and improve the efficiency of our operations give us the confidence to continue our long-term development strategy for Romania.”

In H1 2014, Alro Group reported a total production of primary aluminium of 127,605 tonnes, a level similar to the one registered in the previous year (H1 2013: 124,648 tonnes). The Group processed aluminium production was close to a level of 49,000 tonnes, while the alumina production registered a slightly decrease in H1 2014, to 169,778 tonnes, compared to 203,320 tonnes in H1 2013. In H1 2014, Alro S.A. reported a slight increase in the primary aluminium production compared to H1 2013, by 2% (i.e. by 2,960 tonnes more) and an increased downstream production of 5% (by 1,900 tonnes more). This mix is the result of Alro’s strategy of focusing on the production of high value added products, both in the primary and processed aluminium sectors. In H1 2014, Alro S.A. primary aluminium sales were of 70,304 tonnes, compared to 71,168 tonnes, in H1 2013, and the sales volume of processed aluminium increased from 36,711 tonnes in H1 2013, to 39,256 tonnes, in H1 2014.

While the production increased slightly in H1 2014 compared to H1 2013, the revenues decreased mainly due to the lower aluminium price on the London Metal Exchange (LME). In H1 2014, the average LME was of 1,753 USD/tonne, compared to 1,918 USD/tonne, in H1 2013. Another factor that negatively affected the operational results was the high energy costs. However, positive signs were visible started with the second quarter of this year, as the Romanian Government approved a decision to implement a support scheme to exempt large electricity consumers from the payment of up to 85% of the green certificates quota, decision that was submitted to the European Commission for approval.

In its attempt to mitigate the costs increase, Alro Group continues to rely on investing in high performance equipments and more efficient operations in terms of cost and well-trained employees, as the management considers that these are the elements what will make the difference, given the increased competitiveness and the players’ struggle for survival in this industry. During H1 2014, the positive effects from commissioning the capacity for recycling aluminium scrap started to become visible, Alro being able to produce liquid aluminium by using only 5% of the energy necessary to produce electrolytic aluminium.

The other companies within the Group also focused on investments and aimed to up-grade the existing equipments and to increase the efficiency of their operations. Vimetco Extrusion completed in H1 2014 an investment of RON 19 million for increasing its competitiveness.

Alro Group is committed to maintain its strategic direction of improving its operations efficiency and this is why it considers a priority in the industry in which it develops its business to secure its energy on the long-term basis and at competitive prices, while increasing and diversifying the output of high value added products.

EBITDA: earnings before interest, taxes, depreciation, amortization and impairment

^*Adjusted net result: Net result minus non-current assets impairment, plus/ minus the loss/ profit from derivative financial instruments that do not qualify for hedge accounting, plus/ minus deferred tax.

Given the significant impact generated by the mark to market of the derivative financial instruments that do not qualify for hedge accounting, the management of Alro considers the Adjusted Net Result as a more relevant indicator for the financial performance of the Company.

For further information please contact:

www.alro.ro

Notes to the Editors:

Alro S.A.

Alro is a subsidiary of Vimetco N.V., a global, vertically-integrated primary and processed aluminium producer. Alro is one of the largest aluminium producer in Central and Eastern Europe measured by volume with an installed production capacity of 265,000 tonnes per year.

The main markets for the aluminium manufactured by Alro are within the European Union (i.e. Hungary, Poland, Greece, Germany and Romania). Alro also exports to the U.S.A and Asia. Alro is ISO 9001 certified for quality management and has NADCAP as well as EN 9100 certificates for aerospace production organizations. Alro’s products adhere to the quality standards for primary aluminium on the LME, as well as international standards for flat rolled products.

The contents of the website www.alro.ro are not incorporated into, and do not form part of, this announcement.

Alro Group

The companies that are part of Alro Group are: Alro, the aluminium producer, Alum the alumina producer, Sierra Mineral Holdings I Ltd. the bauxite producer, Vimetco Extrusion the extruded profiles producer. Having this structure, the Group ensured an integrated production chain, securing the raw materials for Alro.