Alro SA announces its financial results

Alro SA,one of the largest aluminium producers in Central and Eastern Europe, announces today its financial results, in accordance with the International Financial Reporting Standards (IFRS), for the nine–month period ended 30 September 2014.The Company reports a negative adjusted net result* of RON 115 million for the nine–month period ended 30 September 2014 compared to a negative adjusted net result* of RON 21 million in the similar period of2013. The turnover for the first nine months of 2014 was of RON 1.44 billion compared to RON 1.50 billion in 9M2013.

“Alro increased its sales of processed aluminium, as part of its long-term strategy to focus on high value added products, but due to factors that we cannot control, such as the international aluminium market and the energy taxes, our Company continues to report losses”,said Marian Nastase, Chairman of the Board of Alro. “The third quarter of 2014 was a difficult one, with lower demand mainly in August and a strong competition in an oversupplied market. Under this adverse environment, the latest legislative changes regarding the energy support scheme come as a vital solution for our operations. Despite the high costs that were beyond our control, we decided to continue and even increase investments in energy efficiency projects, thus trying to partially offset the difficult market conditions.”

The sales quantity of aluminium products increased slightly by 1%, compared to the similar period of 2013, the sales of processed aluminium being higher by 7%, while the sales of primary aluminium lower by approximately 3%, with more slabs being internally used in order to support the increase of the value added production. However, the external factors continued to significantly impact the Company’s results: the low level of the aluminium price on the international market (i.e. the average aluminium price on the London Metal Exchange during January-September 2014 was 1,833 USD/tonne, while during the similar period of 2013 it was 1,871 USD/tonne) and the high eco-taxes. For example, only in 2014, the Company had to pay approx. RON 90 million for the green certificates quota for 2013, while during the same period of 2013 it paid approx. RON 34 million for the green certificates quota for 2012.

While trying to offset these difficult market conditions, Alro continued to focus on manufacturing high value added products and on increasing the efficiency of its operations. Several measures have been continuously taken by the management in order to secure the business sustainability, including among others diversifying the risk of energy supply and continuing to invest in developing its operating activity.

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

Given the significant impact generated by the mark to market of the derivative financial instruments that do not qualify for hedge accounting, Alro’s management considers the Adjusted Net Resultas a more relevant indicator for the financial performance of the Company.