Romanian aluminium firm ALRO SA reported consolidated turnover of RON 3.5 billion in 2021

On 25^th March 2022, the Romanian integrated aluminium company, ALRO S.A. publicised its consolidated and separate financial statements for the year ended 31^st December 2021.

ALRO Group, one of the largest aluminium producers of Europe registered a turnover of RON 3.5 billion up from RON 2.5 billion in 2020. Alro booked a net profit of RON 26 million in 2021, compared to a net profit of RON 335 million in 2020. The increased turnover for both the Group and ALRO was the result of a favourable trend of the aluminium quotations on the London Metal Exchange (LME) as well as of the constantly higher demand for the high and very high value-added products of the Group, with a focus on aluminium for aerospace industries, general engineering, and consumer products.

Marian NĂSTASE, the Chairperson of ALRO's Board of Directors said, "2021 brought even more challenges than 2020, with a sanitary crisis followed by an unprecedented energy crisis for the entire European and aluminium industries. We witnessed several EU competitors either significantly reducing their activities or completely closing.”

"We managed to keep our activity thanks to our long-term business model focused on vertical integration while developing the production of high and very high value-added products. However, the prohibitive energy prices made us decide to reduce the electrolytic aluminium production, halting the production of three out of the five potrooms, a measure implemented in 2022.”

“At the same time, we considered the specific technological measures that allow a quick and efficient restart when energy market conditions return to normal. This decision helps us preserve liquidity and fulfilling all the Company's financial obligations, including timely payment of salaries, taxes and fees, and debt service under the loans", added Marian NĂSTASE.

The two vital factors that influenced the entire European aluminium industry in 2021 is the demand that increased constantly and the energy prices that spiked to unprecedented levels, driven by the CO2 emission rights quotations and gas prices and scarcity. While the first driver led to record high aluminium prices on the London Metal Exchange (LME), the second one offset most of this increase and led to a significant cut-down in production at the EU level. Thus, in 2021, the LME reached an annual average of $2,480 per tonne, higher by 46% than in 2020, when the average was $1,704 per tonne.

In 2021, the highest LME value was $3,180 per tonne, which was recorded in October (in 2020 the maximum level of $2,051 per tonne was reached in December). However, the CO2 certificate quotations surged in 2021, reflecting in record-high energy costs, European aluminium producers facing a 300% increase in electricity bills in the second part of 2021, compared to the same period or 2020. In Romania, the electricity price increase doubled by a shortage in supply, electricity supply contracts were unilaterally denounced or renegotiated at inflated costs.

However, corresponding with these market outlooks, ALRO Group registered a turnover growth of 39% compared to 2020. In 2021, the Group gripped the advantage of the increased demand for its high value-added products, especially from the aerospace industries, general engineering, and consumer products sectors.

Additionally, the alumina segment contributed to the Group turnover in 2021 to a greater extent than in 2020, recording a 61% increase in revenues from sales to third parties. The revenues from processed products sales increased by 36% in 2021 compared to 2020, while primary aluminium showed an increase of 32% for the same period.

The robust performance of the automotive and construction sectors, the anti-dumping tariffs imposed by the European Union on extruded products from China, very tight supply, lack of containers, and logistic pressure sustained the demand for billets, especially in H1 2021, and the need for the Group's primary products. Moreover, in June 2021, ALRO extended the multi-year agreement with Airbus based on the successful partnership, which validates ALRO's long-term investments and efforts to become a reputable supplier for the aerospace industry.