Alro SA

05/14/2019 | Press release | Archived content

ALRO registered a consolidated turnover of over 767 million lei in Q1 2019 despite lower aluminium quotations in international markets

Tue, 05/14/2019 - 09:24

ALRO GROUP

Indicator

Q1 2019

Q1 2018

Processed aluminium production (tonnes)

27,748

28,405

Primary aluminium production (tonnes)

70,746

71,274

Alumina production (tonnes)

118,580

134,163

Bauxite production (tonnes)

571,764

592,428

Sales (thousand RON)

767,439

749,242

EBITDA1(thousand RON)

94,725

132,856

EBITDA margin (%)

12.3%

17.7%

Adjusted net result2 (thousand RON)

812

93,645

Net result (thousand RON)

-9,065

124,621

ALRO S.A.

Indicator

Q1 2019

Q1 2018

Processed aluminium production (tonnes)

22,616

22,193

Primary aluminium production (tonnes)

70,746

71,274

Processed aluminium sales (tonnes)

22,641

21,032

Primary aluminium sales (tonnes)

38,549

40,008

Sales (thousand RON)

674,225

667,852

EBITDA1(thousand RON)

57,614

104,492

EBITDA margin (%)

8.5%

15.6%

Adjusted net result2(thousand RON)

-16,764

79,130

Net result (thousand RON)

-26,144

110,519

Adjusted net result2 per share (RON)

-0.023

0.111

Net result per share (RON)

-0.037

0.155

Slatina, 14 May 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 financial results for the first quarter of 2019. The Group's turnover increased by 2.4% to RON 767.4 million in Q1 2019 compared to RON 749.2 million in Q12018. In the first quarter of 2019, ALRO Group registered a gross profit of RON 105 million (Q1 2018: RON 167 million) and an operating result (EBIT) of RON 59 million in Q1 2019 (Q1 2018: RON 101 million).

'In the first three months of 2019, ALRO Group recorded an increased turnover YoY, with higher revenues generated mainly by the processed aluminium segment and steady income from the primary aluminium segment, in line with our strategy of increasing, in the total production output and deliveries, the share of high and very high value-added products for more sophisticated industries, such as aerospace and automotive', said Marian NASTASE, Chairman of ALRO's Board of Directors. 'At the same time, we continued, in Q1 2019, our investment programme in research & development areas, with the aim to improve the output and products' quality, while reducing the overall consumption rates and, thus ensuring a sustainable long-term growth of our business' added Marian NASTASE.

Market Update

During the first quarter of 2019, the global market looked fragile and reported decreased aluminium prices quoted at the London Metal Exchange (LME), levels influenced also by several factors such as the risks of higher production output in China, the US Government policies regarding the imposed aluminium tariffs and potential new imposed barriers, Alunorte curtailment, macro uncertainty, estimated aluminium global deficit for 2019 etc.

Therefore, in Q1 2019, the LME continued its decreasing trend as showed at the end of 2018, leading to an average price for three-month period ended on 31 March 2019 of 1,859 USD/tonne compared to the LME average price recorded during the three-month period ended on 31 March 2018 of 2,159 USD/tonne. All these market circumstances impacted the results of all major companies in aluminium industry, which reported either significant reduction of profits, or losses in the first quarter of 2019.

However, the analysts estimate a potential recovery of the aluminium market, later this year, based on the metal balance deficit registered at this point.

Locally, the energy supply remains a challenge, as approximately 40% of the national electricity consumption is covered by supply from transactions on the day ahead market (PZU), leading to price distortions. Being a highly volatile market, the spot prices have reached very high levels, with negative impact on final consumers in general, and on energy-intensive users, in particular. This translates into higher production costs for ALRO.

Financial and Operational Review

During the beginning of 2019, ALRO Group continued to remain focused on increasing the production and sales of processed aluminium products, in order to better respond to market demand and reported higher deliveries of processed products, partially offset by the approximately 300 USD/tonne drop in the LME quotations, which limited the revenues in terms of value. Thus, the investments done in the last years are paying-off as the share of high value added products ('HVAPs) and very high value added products ('VHVAPs') dedicated to specialized industries, such as aerospace and automotive industry in its total deliveries have increased and reached 51% of the Q1 2019 Group's total revenues, compared to 49% in Q1 2018.

Despite the downturn of the international aluminium market, the investment strategy that ALRO Group implemented showed positive results, with an EBITDA margin over 12%, at a level of RON 95 million in Q1 2019, compared to RON 133 million earned in Q1 2018. The Group reported positive cash from operations in which generated RON 61 million in Q1 2019; cash provided in financing activities was RON 72 million and the cash used for investing activities was RON 44 million. The Group continued its investments in return-seeking capital projects to enhance the Group's competitive position, while ensuring a sustainable growth and the amount allocated in Q1 2019 was RON 26 million. Moreover, during the first quarter of 2019, several new and modern piece of equipment for extension of capacity, competitiveness increase and for reducing energy and raw materials consumption rates were commissioned within the Group production facilities: in ALRO for research infrastructure for high qualification industrial applicationsand in ALUM for research of aluminium hydroxide technology (dry and wet).

Significant Events

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. 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 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 these two indices.

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

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 for ALRO and ALRO Group included in this press release are reported based on the interim condensed consolidated financial statements of ALRO and its subsidiaries for the 3 months ended 31 March 2019, which are unaudited and have been prepared in accordance with IAS 34 Interim financial reporting as adopted by the European Union (EU). These 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).

For further information, please contact:

www.alro.ro

Florența Ghiță

Bucharest

Phone: +40 744 644 004

Email: [email protected]

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.

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. 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. 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.