Aluminium producer Alro ups profit in Romania despite higher electricity costs towards end-2011

Romanian aluminum producer Alro made a EUR 52.9 million profit in 2011, up from EUR 37.9 million the year before, due to favorable market conditions in the first nine months of the year, and despite a drop in revenues caused by lower aluminum prices and higher electricity costs in the last three months of the year. The producer added EUR 100 million to its turnover last year, reaching EUR 528 million. The producer’s tax contribution to the state was of almost EUR 12 million, up from EUR 7.8 million the previous year.

“The structure of our costs, as well as significant investments allowed us to improve results when the international aluminum market went up, but also stay profitable when unpredictable external factors impacted our activity,” said Marian Nastase, vice-president of the board with Alro Slatina (in picture).

The producer’s financial results in the fourth quarter of the year, down 70 percent year-on-year, were impacted by a drop in the price of metal on the London Metal Exchange and by the increase in the cost of utilities, mainly triggered by buying electricity from the spot markets. The increase in electricity prices was caused by the impact of he drought in Romania’s hydroelectric power. Alro received only half of the required electricity from Hidroelectrica, which had to call Force Majeure in the fourth quarter of the year. This increased the company’s utilities costs by around EUR 11.5 million in the fourth quarter of the year alone. Its full utilities costs were EUR 45.4 million higher than the year before.

Vimetco, the majority shareholder in Alro is planning to become energy self-sustainable by building its own power plant in Tulcea, on the Romanian seaside. Vimetco plans a EUR 276 million gas-fired plant, with financial support from the European Bank for Reconstruction and Development (EBRD).