Stronger dollar steers Romanian aluminum producer Alro back to profit

Romanian aluminum producer Alro Slatina, part of international group Vimetco, posted an adjusted net profit of some EUR 5.17 million in the first quarter of 2015, compared to an adjusted loss of EUR 10 million in the same period of last year.

The company’s turnover went up by 20.5%, in local currency, to the equivalent of EUR 134 million. The sales increase was mainly supported by the stronger dollar, as the average USD/RON exchange rate was about 20% higher in Q1 2015 compared to Q1 2014. Alro also increased its production of primary aluminum and processed aluminum, and the average aluminum price on the London Metal Exchange went up by 5% compared to Q1 2014, to an average of USD 1,800 per ton.

The stronger dollar also had a less favorable effect on the company’s results mainly due to the revaluation of the USD denominated debt, which generated a financial loss of some EUR 13.7 million for Q1 2015.

“Once again our results prove that we have a sound and strong business, that we took the correct measures to reduce costs and to adapt to the international context, and that we focused on the correct product mix,” said Marian Nastase, President of Alro’s Board of Directors.

“However during the first quarter our cash flow was severely hit by the payment we had to make for the 2014 full quota of green certificates, our Company being forced to contract additional financing to support it,” he added. Alro had to pay EUR 29 million for green certificates and co-generation taxes in 2014, as it is the largest single electricity consumer in Romania.

The Government decided to cap the green certificate quota for large industrial producers, but the measure hasn’t yet been implemented, although the European Commission approved it in October 2014.

“Considering the finalization of the legislation regarding the exemption of the big energy industrial consumers from acquisition of green certificates, we are confident that the payment we made during Q1 2015 for the full quota is the last one,” said Marian Nastase.

Alro will continue its investment program focused on reducing the energy dependence by increasing the energy efficiency and the capacity of the Eco scrap facility targeting in a first stage 50,000 tons per year. Moreover the Company budgeted for 2015 CAPEX investments of approximately USD 59 million and planned the extension of the client portfolio by increasing the production capacities for high value added products.