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Alro reports a preliminary net profit of RON 244 million for 2008.
Wed, 02/18/2009 - 01:00- Turnover of RON 1,968 million
- Net profit of RON 244 million before impairment charges
- Rigorous programme of cost reduction
- Reduction in headcount by 936 employees
Post period
- Shut down of one pot line reflecting decrease in demand
- Strengthening of sales organization
Slatina, 18 February, 2009 – Alro SA (BSE: ALR), the largest aluminium producer in Central and Eastern Europe, today announces its preliminary unconsolidated results for the year ended 31 December 2008, according to Romanian Accountancy Standards. The Company reported a preliminary net profit of RON 244 million (approx USD 97 million), and a turnover of RON 1,968 million (USD 781.3 million).1 The Company’s total primary aluminium production for last year was over 288,000 tonnes.
Alro had significant gains in the first part of the year, followed by lower income for Q4 2008, reflecting the deterioration in international market conditions. There was strong demand for aluminium in the first half of 2008, reflected in high market prices, up to a record of USD 3,200/tonne. The prices for raw materials increased significantly during the same period. By the end of 2008, aluminium prices had fallen by as much as 56%. Although the cost of raw materials started declining, the effects start to show in the financial results after 3-6 months.
Due to the deteriorating market conditions, Alro implemented a rigorous plan to reduce production costs, focusing on its core activities and services, its crucial business assets and on ensuring the highest levels of product quality and short delivery times. The Company also decreased employee numbers. At the end of 2008 Alro employed 3,392 people, 936 less than at the end of 2007.
The Company invested almost USD 50 million, in 2008, upgrading processing facilities, replacing rectifiers and supporting environmental protection projects. In 2008, Alro modernised the Cold Rolling Mill, thus improving the quality of flat rolled products. These investments in modern equipment allows the Company greater flexibility in adapting the product mix to meet customer needs and meet requests for half-commercial tolerances in high value added products. Between 2002 and 2008, Alro has invested over USD 245 million in technological and environmental projects.
Last year, the Company paid taxes overall taxes of approx. USD 72 million.
The Company has also received NADCAP certification (National Aerospace and Defence Contractor Accreditation Programme), recognizing the conformity of Alro’s processes with the rigorous international requirements of the aerospace industry.
The costs reduction programme will continue this year, with a total production cut of 65,000 tonnes, an additional decrease in number of employees is under evaluation. Alro is actively reducing raw material costs, and is renegotiating contracts with suppliers, where appropriate. Moreover, the aluminium producer is strengthening its sales organization, and has appointed Mr. William Berger as Alro’s new sales director. Mr. Berger has over 20 years experience in the aluminium industry, having previously been a team leader for worldwide implementation of customer relationship management in the Alcan Business Group “Engineered Products” and managing director for Austria and Eastern Europe of Pechiney Handelsges.m.b.H., respectively Alcan International Network Ges.m.b.H. Austria.
Commenting on the financial results, Marian Nastase, Vice President of the Board at Alro said:
“Alro registered good results last year, though the Company’s performance has been affected by the slowdown of the international markets, during the last quarter of 2008. The development strategy we implemented over the past years has allowed us to take the necessary measures to maintain the Company’s position under difficult market conditions. 2009 will be a challenging year as aluminium consumers, auto-manufacturers and building companies are heavily hit by the crisis.
We will continue to focus on higher value added products, closely cooperate with our customers and continue to monitor the market to be ready to react in a timely manner should the market deteriorate further. Having a strong balance sheet, a fair debt level and sufficient financial liquidity, while continuing to pursue cost reduction opportunities, we are confident that Alro will manage the current international downturn and, subsequently, take advantage of the market recovery.”
Notes
1. The financial results do not include potential charges for impairment of assets. The final impairment analysis might impact the net profit
