Alro reports preliminary net profit of RON 230 million for 2011

Thu, 02/16/2012 - 10:04


Financial and operational highlights*

  • Turnover of RON 2.24 billion, based on improved market conditions during 9M 2011
  • The company accrued profit tax of RON 51.73 million
  • RON 85 million modernization programme worth aimed at increasing productivity and efficiency
  • Cost of utilities higher by RON 192.53 million compared to 2010

Slatina, 16 February 2012 – Alro SA (BSE: ALR, “Alro”, or the “Company”), the largest aluminium producer in Central and Eastern Europe, today announces its preliminary unconsolidated results for the year ended 31 December 2011, in accordance with the Romanian Accounting Standards. The Company reported turnover of RON 2.24 billion in 2011, up from RON 1.81 billion in 2010. Its net profit for 2011 increased to RON 230 million from RON 159.78 million in 2010, in particular due to favourable market conditions during 9M 2011. Alro paid a profit tax of RON 51.73 million in 2011, up from RON 33.24 million in 2010.

“Alro capitalized on its strategy of continuous improvement and of focus on higher value added products, and was able to remain profitable”, said Marian Nastase, Vice-President of the Board of Alro Slatina. “Our competitive costs structure and major investments allowed us to improve our results significantly when the international aluminium market increased, but also to stay profitable when unpredictable external factors impacted our activity”.

The Company’s total casted aluminium production was approximately 261,000 tonnes in 2011, up from 241,000 tonnes in 2010. Processed aluminium production increased to 54,600 tonnes in 2011, from 44,000 tonnes in 2010. Alro also increased overall investments from about RON 27 million in 2010, to over RON 85 million in 2011. The Company continued its programme of increasing its wire rod production capacity, reducing consumption of utilities, and streamlining its efficiency.

The results of the investment programme and improved market conditions had a positive impact in 9M 2011, when the Company reported net profit of RON 222.44 million on turnover of RON 1.7 billion, compared to net profit of RON 131.45 million on turnover of RON 1.33 billion in 9M 2010. However, the financial results were negatively impacted by both international and local factors during the last three months of 2011. As a result, Alro’s net profit for Q4 2011 decreased to RON 7.61 million on turnover of RON 538.5 million, from net profit of RON 28.32 million on turnover of RON 475.53 million in Q4 2010.

The 70% decrease in profit for Q4 2011, compared to Q4 2010, was the result of two main factors: the decrease in the price of aluminium on the London Metal Exchange (“LME”) and the increase in utilities costs, derived mainly from the acquisition of electricity from the spot and balancing market.

At the international level, the aluminium price on the LME increased to as much as USD 2,800/tonne in 2011, from a peak of USD 2,450/tonne, in 2010. Moreover, the lowest price available in 2011 was above USD 1,900/tonne, compared to 1,800 USD/tonne in 2010. However, international market conditions deteriorated slightly in 4Q 2011, with aluminium price decreasing towards the end of the year. Thus, aluminium ended 2011 below USD 2,000/tonne, compared to USD 2,450/tonne at the end of 2010.

Besides the decrease in the price of aluminium, Alro dealt with a local factor with significant impact of the Q4 2011 results – the price of electricity, determined by the draught. Due to the Force Majeure declared by Hidroelectrica, in Q4 2011, Alro received 50% or less of the required electricity from the power producer. As a result, Alro was forced to purchase a significant quantity of energy on the Day Ahead Market and from the Balancing Market. These are short term, unpredictable supplies of energy that typically incur high costs.

As a result, the costs of utilities increased by almost RON 49 million, in Q4 2011, compared to Q4 2010, and by an overall RON 192.53 million in 2011, compared to 2010.

In order to ensure long-term viability of its business, Vimetco, Alro’s majority shareholder, continues its efforts to become energy independent in Romania. At the end of 2011, Vimetco Power Romania finalized the first step of the bidding process for the general contractor for its own power plant in Tulcea. It is anticipated that the project for the power cogeneration plant of 250 MW at Alum Tulcea will have the financial support of EBRD and commercial banks.

**The financial results do not include potential costs with impairments on assets and other potential impairments. The final analysis of the impairments might have an impact on the net profit


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Notes to the Editors:

Alro is subsidiary of Vimetco N.V., a global, vertically-integrated primary and processed aluminium producer. Alro is 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 EU (Hungary, Poland, Greece, Germany and Romania). Alro also exports to the US 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.

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