ALRO Group registered a net profit of RON 235 million in 2018

ALRO GROUP

ALRO S.A.

Slatina, 25 March 2019 – ALRO S.A. (BVB: ALR, “the Company” or “ALRO”), one of the largest vertically integrated aluminium producers, by capacity, in Europe, announces today its consolidated and separate financial full-year 2018 results. ALRO Group registered a net profit of RON 235 million, in 2018, compared to a net profit of RON 391 million, in 2017. The adjusted net profit was of RON 250 million, in 2018, compared to RON 403 million, in 2017. ALRO reported a net profit of RON 226 million, in 2018, compared to a net profit of RON 318 million, in 2017. The adjusted net profit was of RON 227 million, in 2018, compared to RON 355 million, in 2017. The Group’s turnover increased to almost RON 3 billion, from RON 2.7 billion, in 2017.

"2018 was a reference year in all 58 years of ALRO’s continuous activity, as we successfully concluded the largest private placement of shares on the Bucharest Stock Exchange, one that we believe will bring medium and long-term benefits to both the Company and its investors, by improving the liquidity and visibility of ALRO on the Romanian and international capital markets. Moreover, this transaction brings Romania closer to its target of being upgraded to the status of an Emerging Market, while the Company’s free-float on the Bucharest Stock Exchange was increased and a new shareholders’ structure is in place starting from the end of 2018. As a direct result, at the beginning of 2019, ALRO entered the BET and BET-TR indices, being one of the 16 companies included in the BET index. ALRO’s shares have been listed on the Bucharest Stock Exchange since October 1997, and following this decision ALRO becomes the first company in the aluminium industry present in the two indices",said Marian NASTASE, Chairman of the Board of Directors of ALRO. "Moreover, in 2018, we remained focused on our long-term strategy of becoming a Green Factory, Next Generation Factory, Innovating and Sustainable and we continued to invest in state-of-the-art technology. We kept our focus on highly sophisticated products for aircraft and automotive industries, and along with higher aluminium prices, we managed to improve our revenues and report a 9% higher Group’s turnover in 2018. The capital market recognized our strong business strategy, and ALRO’s share price increased by 150% since the beginning of 2017 ".

Market Update

During 2018, the aluminium price registered a steady growth trend, the year’s average reaching 2,110 USD/tonne, compared to 1,969 USD/tonne in 2017, with the peak in April, when it soared to 2,603 USD/ tonne, compared to 2,246 USD/tonne, the highest value for the previous year, reached in December 2017. The end of 2018, however, brought a slow-down in LME quotation, when it dropped under 2,000 USD/tonne.

The aluminium industry turmoil during the first part of 2018 added unpredictability, but offered in the same time opportunities for increasing the deliveries to Europe, while the sanctions against Rusal by the US Government were in place.

In respect of the Romanian energy market, there are possibilities to further improve. Currently approximately 40% of the national electricity consumption is covered by supply from transactions done on the day ahead market (PZU), which leads to severe price distortions. As PZU market is highly volatile, during the last five years the spot prices have reached very high levels, thus having a negative impact on final consumers, particularly on energy-intensive users, such as ALRO. Higher energy prices further translate into higher production costs for the Company and let limited room for keeping our competitiveness on international markets.

Financial and Operational Review

EBITDA margin was above 16%, with a level of RON 486 million in 2018, compared to RON 566 million earned in 2017. The year-on-year improvement in line with the focus on HVAPs and supported by higher alumina and aluminium sales prices, was partially offset in 2018 by higher costs for raw materials and utilities purchase prices, in line with the prices on the dedicated markets.

Cash from operations in 2018 was RON 319 million, cash used in financing activities was RON 373 million and cash used for investing activities was RON 63 million. ALRO Group invested up to RON 305 million in return-seeking capital projects which will also enhance the Group’s profitability and competitive position.

ALRO remains one of the most attractive companies on the Romanian capital market as it managed to constantly deliver strong dividends to reward its shareholders and in 2018 a distribution of dividends of more than RON 694 million was approved by the General Shareholders Meeting.

In 2018, ALRO continued its focus on supplying high and very high value-added products (HVAPs and VHAVPs) in both the primary aluminium and the processed aluminium segments. Thus, the sales of primary aluminium increased from 151,000 tonnes, in 2017, to 153,000 tonnes in 2018, while the processed aluminium sales slightly decreased in 2018, to 78,000 tonnes, from 82,000 tonnes, mainly due to the fact that, last year, ALRO initiated a modernization program for one of its rolling mills. However, thanks to the Company’s flexibility in allocating capacity among different product types, ALRO limited the interruption’s impact and managed to compensate the lower sales of certain processed aluminium products, as it steered the sales and output efforts towards other aluminium products, and ensuring a product mix that ensure advantageous profit margins. The technological upgrade is part of the Group’s capacity expansion plans for value added flat rolled products (towards 120,000 tpa).

In respect of the other Group’s subsidiaries, during 2018, in SMHL, our bauxite subsidiary we managed to obtain a higher production by 9%, while in Alum, the alumina production increased by almost 21% in 2018, as compared to 2017 and Vimetco Extrusion continued to be one of the main choices for extruded products clients in 2018.

Significant Events

The capital market also recognized the Company’s sound development and strong long-term strategy, thus ALRO successfully closed the largest private placement of shares on the Bucharest Stock Exchange at the end of 2018. Thus, Vimetco N.V. continues to be the majority shareholder holding 54.19%, Paval Holding became the second largest shareholder with a holding of 23.21%, Fondul Proprietatea continues to hold 10.21% and the other minority shareholding represent 12.39%. As a direct result of this transaction, at the beginning of 2019, the Index Committee of the Bucharest Stock Exchange approved the inclusion of ALRO (code ALR) in BET, the main index of the market, and in the BET-TR, the total return version of BET, starting from 18 March 2019. The BET index will thus include 16 companies, which is a first time in the history of the local capital market, and it represents an unprecedented diversification of the sectors reflected by the index.

These financial results are available in a separate document on the Company's website, Investor Relations category, Reports section: http://www.alro.ro/en/reports

¹EBITDA: Earnings before tax, other financial gains and losses, amortisation and impairment

² Adjusted Net Result: Company’s net result plus/(minus) non-current assets impairment expense/(income), plus/ (minus) the loss/(gain) from derivative financial instruments that do not qualify for hedge accounting, plus/(minus) deferred tax expense/(income).

Figures included in this press release are audited and present the individual and consolidated financial results of ALRO and ALRO Group that have been prepared in accordance with the Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, is in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union (EU), except for IAS 21 The effects of changes in foreign exchange rates regarding functional currency, except for the provisions of IAS 20 Accounting for Government Grants regarding the recognition of revenue from green certificates, except for the provisions of IFRS 15 Revenue from contracts with customers regarding the revenue from taxes of connection to the distribution grid and except for the accounting treatment of interim dividends, which, according to the Ministry of Public Finance Order no. 3067/2018, are recorded in the consolidated statement of financial position at 31 December 2018 as receivables on the position 'Other current assets' and as liabilities on the position 'Other current liabilities'. These exceptions do not affect the compliance of the financial statements of the Group and the Company with IFRS.

For further information, please contact:

www.alro.ro

Florența Ghiță

Bucharest

Phone: +40 744 644 004

Email: investor.relations@alro.ro

Notes to the Editors:

ALRO Group

The companies part of ALRO Group are: ALRO S.A. – manufacturer of aluminium, Alum S.A. – producer of alumina, Sierra Mineral Holdings I, Ltd. – bauxite mining, Vimetco Extrusion S.R.L. – extrusion business line, Conef S.A. – holding and management company, Global Aluminium Ltd. – holding company and Bauxite Marketing Ltd - marketing. Having this structure, the Group created an integrated production chain assuring the raw materials for ALRO.

ALRO

ALRO is a subsidiary of Vimetco N.V., a global, vertically-integrated primary and processed aluminium producer. ALRO is one of the largest vertically integrated aluminium producers, by capacity, in Europe, having an installed production capacity of 265,000 tonnes per year.

The main market for ALRO products is represented by the European Union; the Company exports its products to the USA and Asia, as well. ALRO is ISO 9001 certified for quality management and has NADCAP and 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.