ALRO’s consolidated turnover augments by 48% Y-o-Y in 1Q2022 driven by higher LME prices

On May 16, Romanian integrated aluminium company ALRO S.A. released its Interim Condensed Consolidated Financial Statements for the first quarter of 2022 (1Q2022).  ALRO, one of the largest aluminium producers in Europe, registered a turnover of RON 1.1 billion in the first quarter of 2022, up 48 per cent from the first quarter of 2021 when it was RON 744 million.

The group's turnover has risen due to a surge in aluminium prices on the London Metal Exchange (LME), coupled with an increase in demand for high value-added products, especially in the aerospace sector, combined with an increase in the exchange rate.

Having said this, ALRO suffered a net loss of RON 18 million in the 1Q2022, down from RON 62 million in the previous quarter, due to rising utility and raw material prices on the international market. The heavy demand for energy decarbonisation in Romania and Europe caused anomalies in the energy market, which led to an increase in power supply costs in the second half of 2021, a trend that persisted in the first quarter of 2022.

The average aluminium price on the London Metal Exchange (LME) reached a new high of US$3,280 per tonne in the first quarter of 2022, up from US$2,096 per tonne in the first quarter of 2021. The maximum price for the reporting period was US$3,985 per tonne, up from US$2,261 per tonne in Q1 2021.

"Our focus is more than ever on high and very high value-added aluminium products and extruded custom-made profiles while we direct most of our resources to increase the Eco-Recycling Facility capacity. Meanwhile, we supplemented our aluminium needs by buying cold primary metal from the market and processing it. All these decisions and efforts helped us limit the huge impact of the electricity prices on our final result", said Marian NĂSTASE, Chairman of ALRO's Board of Directors.

ALRO Group focuses on boosting output and sales of processed aluminium products in order to take advantage of favourable market circumstances and growing demand. As a result, plate production, is one of the highest-profitable products, increased by 5,000 tonnes in the first quarter of 2021. During the time period under review, sales climbed by about 23 periods in volume.The group kept supplying its products to its usual European markets. The ALRO group has no key-related parties, clients, or key suppliers in Russia or Ukraine, and no other sanctions harm the Group's operations.

"The challenges we faced in 2021 are also a harsh reality in 2022, with an even higher impact on the entire European aluminium industry. Considering the actual context, theEU expects to lose in 2021-2022 approximately 50% of its primary aluminium capacity. For ALRO Group, flexibility, adaptation and a new mindset define our business model to continue our activity, a strategic one at a national and European level. We continue to prove that the measures we have implemented to reduce costs, optimize our processes, continue the strategic investments and on the top of everything to assume producing less electrolytic aluminium and gradually suspend the activity of three out of five electrolysis potrooms in 1Q 2022 helped us limit the overall loss while preserving our liquidity and fulfilling all our financial obligations, including payments of salaries, taxes, or loans," added Marian NĂSTASE. 

However, the rise in revenue was countered by a 48 per cent increase in the cost of goods sold in 1Q 2022 compared to 1Q 2021, resulting in a net loss of RON 18 million in the first quarter of this year. The Group was able to reduce the total loss by temporarily suspending three of its five potrooms' operations and purchasing and processing cold primary metal from the market, therefore lowering overall power use. In addition, ALRO Group continues to invest in developing the Eco-Recycling Facility's capability to provide the necessary metal for flat-rolled manufacturing while using just 5% of the energy of electrolytic aluminium.

ALRO Group maintained its commitment to the community despite a tumultuous worldwide climate. As a result, the Group donated RON 300,000 to UNICEF Romania to assist those impacted by the Ukraine conflict. It also contributed RON 300,000 to the Romanian government's "Ukraine - Together We Help More" initiative by delivering medications, medical supplies, personal goods, and gasoline to refugees, as well as providing refugee housing.

The Romanian aluminium producer also donated around RON 2.5 million to institutions involved in preventing and combating the effects of the COVID-19 pandemic since the outbreak began and has partnered with the authorities in their efforts to speed up the vaccination campaign by opening two vaccination centres for employees and their families of the group in Slatina and Tulcea.