ALRO Group registered a consolidated turnover of over RON 2.1 billion in H1 2022

Wed, 08/10/2022 - 09:07

• LME quotations continued to increase in the first part of 2022, reaching an average of USD 3,082 in H1 2022, higher by 37% compared to H1 2021;
• Aluminium demand continued to grow in Q1 2022, with emphasis on sophisticated products, while in Q2, it started to slow down;
• ALRO Group’s net profit was RON 15.3 million in H1 2022, compared to a net loss of RON 47.6 million registered in H1 2021;
• The unsustainable steep prices on the energy market forced ALRO Group to take decisive measures meant to preserve the Group’s assets value and its history of more than 60 years;
• ALRO's downstream subsidiary, Vimetco Extrusion, extruded the first billet using the new state-of-the-art aluminium profile extrusion press, following an investment of approximately EUR 10 million

Slatina, 10 August 2022– ALRO S.A. (BVB: ALR, “the Company” or “ALRO”), one of the largest vertically integrated aluminium producers in Europe, measured by production capacity, announces today its consolidated and separate financial results for the six months ended 30 June 2022. The Group’s turnover increased to RON 2.1 billion in H1 2022, compared to RON 1.5 billion, thanks to the higher demand for aluminium on the international markets and improved LME levels. The Group’s EBITDA1also increased to RON 219.6 million (H1 2021: RON 144 million). The net result was a net profit of RON 15.3 million in H1 2022 (H1 2021: net loss of RON 47.6 million), as a result of swift and decisive measures implemented at the Group’s level to mitigate the effects of the unsustainable energy prices.

“In H1 2022, the demand slowed down, new highest levels of inflation and record levels for interest rates materialized, all these adding further pressure on the companies and forcing us to prove adaptability and change our business model starting in 2022. Accordingly, we decided to temporarily suspend the production activity of three electrolysis halls at ALRO beginning January 2022 and the entire alumina production at ALUM, starting August 2022”, said Marian NĂSTASE, Chairman of the Board of Directors, ALRO. “We took these decisive steps considering several technological measures that allow a quick and efficient restart when energy market conditions return to normal. Hence, at ALRO, the new business model applied in H1 2022, which means buying cold primary metal from the market to maintain or even increase the processed products output while adjusting the production of the less profitable direct aluminium products, proved successfully. Therefore, we achieved increased sales for processed aluminium products, taking advantage of the strong demand for plates for the aerospace sector and extruded products,”added Marian NĂSTASE.

Market Update

The aluminium price continued to show mainly quotations over 3,000 USD/tonne in Q1 2022, while in Q2 2022, a descending trend was visible with values around 2,500 USD/tonne in June. The average for the first half of 2022 was 3,082 USD/tonne, higher by 37% than in H1 2021, when the average was 2,246 USD/tonne. In 2022, the highest LME value was 3,985 USD/tonne recorded in March, while in H1 2021, LME reached a maximum level of 2,565 USD/tonne in May 2021.

In the first half of 2022, the local and worldwide markets were affected by an energy crisis, deepened even more by the conflict in Ukraine. The increase in electricity prices, starting with the second half of 2021 and the first quarter of 2022, have severely impacted Europe’s aluminium producers, with several European aluminium smelting plants reducing their production or even closing down completely.

The energy crisis was even more prominent in Romania, with prohibitive prices for electricity and gas. Thus, the electricity price increased from 60 EUR/MWh in Q1 2021, exceeding 500 EUR/MWh for Q2 2022. The same trend followed the natural gas as well, going up from 18 EUR/MWh in Q1 2021 to over 180 EUR/MWh for Q2 2022. Moreover, the Romanian market has registered a consumer shortage of electricity and natural gas. The price of the CO2 emission certificates also increased from approx. 25 EUR/certificate at the end of 2020 up to over 90 EUR/certificate.

Financial and Operational Review

The Group’s sales in H1 2022 were RON 2.1 billion, higher by 39% compared to the ones from the similar period of 2021 (respectively RON 1.5 billion). The Group benefited in H1 2022 from the increase in the demand for plates and extruded products, the Group’s highest profitable products, from the upward trend of the LME quotations and the favourable exchange rate.

The Group continued its investment programme aimed at reducing the electric power dependence by increasing the quantity of molten metal from recycled scrap and supporting, increasing the operational reliability of the critical equipment, and improving the energy efficiency of its equipment and technological processes.

ALRO’s Investment Programme for the year 2022 of almost USD 23 million comprises investment projects necessary for achieving the quantity of metal following the new business model adopted by the Group for 2022.

Moreover, in June 2022, ALRO’s downstream subsidiary, Vimetco Extrusion, extruded the first billet using the new state-of-the-art aluminium profile extrusion press, following an investment of approximately EUR 10 million (the amount spent in H1 2022 was RON 41 million and RON 4 million in H1 2021). This new press supports the Group's strategy to increase its production capacity for high-value-added aluminium products, thus offering its customers a broad portfolio of customised solutions.

Besides investments in technology and product quality, ALRO was forced to take decisive measures to preserve the Group’s assets value and partially mitigate the surge in energy costs. Thus, ALRO reduced the primary aluminium production by 60% by temporarily suspending the activity of three electrolysis potrooms, while ALUM suspended its production activity starting August 2022.

ALRO faced a challenging H1 2022, but as one of the major companies in Romania, and a pillar of the society, we have also offered humanitarian aid to refugees in Ukraine for RON 300,000. ALRO and ALUM donated medicines, medical goods, items for personal use and fuel for refugees, children and adults. ALRO also joined the campaign launched by the Romanian Government, "Ukraine - Together we help more", while ALUM supported the actions of local authorities to accommodate refugees. Furthermore, in March 2022, ALRO and Vimetco Extrusion endorsed the establishment of "Blue Dot" support centres specially designed for refugee children and their families, offering immediate and long-term solutions. Thus, ALRO joined the UNICEF in Romania campaign with RON 200,000, and Vimetco Extrusion supported this initiative with RON 100,000.

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 and at the below link:

1 EBITDAEarnings before interest, taxes, depreciation, amortization and impairment.            

Figures for ALRO and ALRO Group included in this press release are reported based on the interim condensed consolidated and separate financial statements of ALRO and its subsidiaries (further named Condensed financial statements) for the 6 months ended 30 June 2022, are unaudited and have been prepared in accordance with IAS 34 Interim financial reporting as adopted by the European Union (EU). The accounting policies are in accordance with the Ministry of Public Finance Order no.  2844/2016, with subsequent amendments, which 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, and except for the provisions of IFRS 15 Revenue from contracts with customers regarding the revenue from taxes of connection to the distribution grid.

For further information, please contact:

www.alro.ro

Florența Ghiță

Bucharest

Phone: +40 744 644 004

Email: investor.relations@alro.ro

Notes to the Editor:

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, Vimetco Trading – aluminium sales. Having this structure, the Group created an integrated production chain assuring the raw materials for ALRO.

ALRO

ALRO is subsidiary of Vimetco PLC (Republic of Cyprus), a global, vertically-integrated primary and processed aluminium producer. The structure of ALRO’s shareholders is: Vimetco PLC (54.19%), Paval Holding (23.21%), Fondul Proprietatea (10.21%) and others (12.38%).

ALRO is one of the largest vertically integrated aluminium producers, by capacity, in Europe, having an installed production capacity of 265,000 tonnes per annum of electrolytic aluminium, 47,000 tonnes per annum of recycled aluminium and the Cast-House has a total cast aluminium capacity of 332,000 tonnes per annum and processing facilities of 130,000 tpa of hot and cold rolling facilities and extrusion shop.

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.

Starting from 18 March 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 BET-TR, the total return version of BET. ALRO’s shares have been listed on the Bucharest Stock Exchange since October 1997 and ALRO represents the first company in the aluminium industry present in these two indices.

Since 2020, ALRO and Vimetco Extrusion are members of ASI (Aluminium Stewardship Initiative), an international association that contributes to enhancing sustainability in the global aluminium sector.