Alro reports net profit of RON 15 million for the first half of 2012

Financial and operational highlights

• Turnover of RON 1.06 billion (USD 316million*), from RON 1.14 billion (USD 381million**) in 1H 2011
• Net profit of RON 15.19 million (USD 4.5 million*), compared to RON 177.4 million (USD 59.5 million**) in 1H 2011
• Primary aluminium production of 124,567 tonnes, from 130,458 tonnesin 1H 2011
• Processed aluminium output of 34,227 tonnes, up from 28,946 tonnesin 1H 2011

Slatina, 31 August 2012 – Alro SA (BSE: ALR, “The Company” or "Alro"), the largest aluminium producers in Central and Eastern Europe, today announces its financial results of the first half of 2012 ended 30 June 2012, in accordance with Romanian Accountancy Standards. In the first half of 2012, the Company reported a net profit of RON 15.19 million (USD 4.5 million*), compared to a net profit of RON 177.4 million (USD 59.5 million**) in the first half of 2011. The turnover for the first half of 2012 set at RON 1.06 billion (USD 316million*), compared to RON 1.14 billion(USD 381 million**) in the first half of 2011.

In the first half of 2012, Alro continued its focus on high added value products, increasing its processed aluminium output to 34,227 tonnes, from 28,946 tonnes, in H1 2011. The total output of primary aluminium for the first half of 2012 was 124,567 tonnes, down from 130,458 tonnes, in H1 2011.

“The decrease in aluminium demand and prices from the first half of this year, coupled by the shortage in energy supply impacted our results”, Marian Nastase, Vice President of the Board of Alro said.“However, thanks to our optimal production structure, vertical integration and cost control strategy, we maintained our profitability under very difficult conditions”.

In the first half of 2012, the international aluminium market entered a descendent trend, with new lows for the year, at the end of the period, impacting the entire industry. Aluminium reached an average of USD 2,079/tonne on the LME, down by almost USD 500/tonne (USD 2,550/tonne) compared to the same period of 2011.

Moreover, during the first half of the year, due to the force majeure declared by Hidroelectrica, Alro received approximately 50% of the required electricity from the power producer. As a result, for a part of H1 2012, Alro had to purchase a significant quantity of energy on the Day Ahead Market and from the Balancing Market, which typically incur high costs.

The Company also witnessed the insolvency declared by its main power supplier, Hidroelectrica. In this context, the two parties negotiated the contractual clauses and reached an agreement for 3 TWh/year of green energy until 2018, with a new pricing formula, which is based on a series of factors including the aluminium price at the London Metal Exchange and the evolution of the energy market with a floor and a cap levels. The change in fair value in the energy supply contract also impacted Alro’s financial results for the half year.

In the first half of 2012, Alro continued its focus on high added value products, and improved quality. Thus, the Company increased the sales of processed aluminium to 33,000 tonnes, from 26,500 tonnes, in H1 2011, registering a higher turnover for this segment, despite the low international quotations. Alro also In the first half of 2012, Alro continued its programme of improving energy efficiency of the business, and finalised investments worth USD 15 million in this field.

Alro integrated its production chain, securing the supply of raw materials from its own bauxite mines in Sierra Leone, and the energy supply, until 2018, following the renegotiation of its contract with Hidroelectrica. The majority shareholder also took the necessary steps towards building its own power plant in Tulcea, finalising the shortlist of contractors. All these measures ensure the predictability of costs for the aluminium smelter and the security in supply, allowing the Company to pursue its long term development strategy in Romania.

* Average exchange rate for 1H 2012 1USD = 3.36 RON

** Average exchange rate for 1H 2011 1USD = 2.98 RON

For further information please contact:

www.alro.ro

Florenţa Ghiţă
Premium Communication
Bucharest
Phone +40 (0) 21 411 01 52
Email florenta.ghita@premiumpr.ro
 

Notes to the Editors:

Alro SA is subsidiary of Vimetco, a global, vertically-integrated primary and processed aluminium producer. Alro is the largest aluminium production facility 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 SA are within the EU (Hungary, Poland, Greece, Germany and Romania). The Company also exports to the US and Asia. Alro is ISO 9001 certified for quality management and has NADCAP as well as EN 9100 certificate for aerospace production organizations, its products respecting the quality standards for primary aluminium on the London Metal Exchange – LME, as well as the 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.