To: Financial Supervisory Authority
Bucharest Stock Exchange
Current report in compliance with the stipulations of the Law no. 24/2017 (republished) and of the FSA Regulation no.5/2018 (including the subsequent amendments) regarding the issuers of financial instruments and market operations
Date of report: 16.05.2022
Name of issuer: ALRO S.A.
Headquarters: Slatina, 116 Pitesti Street, Olt County
Telephone/ fax number: +40 249 431 901 / +40 249 437 500
Sole registration number at the Trade Register Office: RO 1515374
Trade Register Number: J28/8/1991
The European Unique Identifier (EUID): ROONRCJ28/8/1991
Legal Entity Identifier (LEI): 5493008G6W6SORM2JG98
Subscribed and paid-in share capital: 356,889,567.5 RON
Regulated market on which the issued shares are traded: Bucharest Stock Exchange – Premium Tier Category (market symbol: ALR)
We hereby inform all persons who may be interested about the following important event to be reported:
ALRO registered a consolidated turnover
of RON 1.1 billion in 1Q 2022
Slatina, 16 May 2022 – ALRO S.A. (BSE: ALR, “the Company” or “ALRO”), one of the largest vertically integrated aluminium producers in Europe, measured by production capacity, announces today its Interim Condensed Consolidated Financial Statements for the first quarter of 2022. ALRO Group registered in 1Q 2022 a turnover of RON 1.1 billion, 48% higher compared to 1Q 2021 when it stood at RON 744 million. The increase in turnover is the result of higher aluminium quotations on the London Metal Exchange (LME), combined with the growing demand for the high and very high value-added products of the Group, especially for the aerospace sector and an increase in the exchange rate. However, the favourable market conditions were offset by the rise in utilities and raw materials prices on the international market. The high pressure for energy decarbonisation in Romania and Europe led to anomalies in the energy market, starting in the second half of 2021, which led to an increase in the electricity supply prices, a trend that continued in 1Q 2022. All these external factors led to a net loss of RON 18 million in 1Q 2022, lower than RON 62 million, the net loss incurred in 1Q 2021.
“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, the EU 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”, said Marian NASTASE, Chairman of ALRO’s Board of Directors. “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”, added Marian NASTASE, Chairman of ALRO’s Board of Directors.
Market & Operational Update
In 1Q 2022, the aluminium price on the London Metal Exchange (LME) registered a record average of 3,280 USD/tonne, meaning a 56% increase compared to 1Q 2021, when the average was 2,096 USD/tonne. The reporting period’s maximum stood at 3,985 USD/tonne compared to a maximum of 2,261 USD/tonne in Q1 2021.
To take advantage of the favourable market conditions and the growing demand, ALRO Group focused on increasing the output and sales of processed aluminium products. As such, the plates production, for the aerospace industry, the highest profitability products of the Group were up 5,000 tonnes compared to 1Q 2021. The sales increased by almost 23% in volume terms during the reported period.
The Group continued to supply its products to its traditional markets in the EU. ALRO Group has no exposure to key-related parties and/or customers or key suppliers in Russia or Ukraine and there are no other sanctions affecting the Group's business.
However, the increase in revenue was offset by the unprecedented increase in energy costs, that led to a 48% higher cost of goods sold, in 1Q 2022, compared to 1Q of 2021, and, ultimately, to a net loss of RON 18 million in the first quarter of this year. The Group managed to limit the overall loss by temporarily suspend the activity of three out of its five potrooms, and buying and processing cold primary metal from the market, thus reducing the overall electricity consumption. Moreover, ALRO Group continued its investments in expanding the Eco-Recycling Facility capacity to supply the necessary metal for the flat-rolled production with only 5% energy consumption compared to the electrolytic aluminium.
While facing a volatile international environment, ALRO Group continued its commitment to the community. Thus, the Group supported UNICEF in Romania with donations of RON 300,000 to help the affected by the war in Ukraine. Also it joined the Romanian Government's campaign "Ukraine - Together we help more" by donating medicines, medical supplies, personal items and fuel for refugees of RON 300,000 and by providing accommodation to refugees.
Moreover, since the beginning of the COVID-19 pandemic, ALRO has donated around RON 2.5 million to institutions involved in preventing and combating the effects of the pandemic and became a partner for the authorities in their effort to accelerate the vaccination campaign by opening two vaccination centres for the Group's employees and their families in Slatina and Tulcea.
These financial results as included in the Consolidated Quarterly Report for 1Q 2022 and the Interim Condensed Consolidated Financial Statements for the first quarter of 2022 (unaudited) are available in a separate document on the Company's website, Investor Relations category, Reports section: http://www.alro.ro/en/reports and at the below link:
Marian-Daniel NASTASE Gheorghe DOBRA
Chairman of the Board of Directors Chief Executive Officer
For further information, please contact:
Phone: +40 744 644 004
Notes to the Editor:
The companies part of ALRO Group are: ALRO S.A. – manufacturer of aluminium, Alum S.A. – producer of alumina, Sierra Mineral Holdings I, Ltd. – bauxite mining, Vimetco Extrusion S.R.L. – extrusion business line, Conef S.A. – holding and management company, Global Aluminium Ltd. – holding company and Bauxite Marketing Ltd – marketing, Vimetco Trading – aluminium sales. Having this structure, the Group created an integrated production chain assuring the raw materials for ALRO.
ALRO is subsidiary of Vimetco PLC (Republic of Cyprus), a global, vertically-integrated primary and processed aluminium producer. The structure of ALRO’s shareholders is: Vimetco PLC (54.19%), Paval Holding (23.21%), Fondul Proprietatea (10.21%) and others (12.38%).
ALRO is one of the largest vertically integrated aluminium producers, by capacity, in Europe, having an installed production capacity of 265,000 tonnes per annum of electrolytic aluminium, 35,000 tonnes per annum of recycled aluminium and the Cast-House has a total cast aluminium capacity of 335,000 tonnes per annum and processing facilities of 130,000 tpa of hot and cold rolling facilities and extrusion shop.
The main market for ALRO products is represented by the European Union; the Company exports its products to the USA and Asia, as well. ALRO is ISO 9001 certified for quality management and has NADCAP and EN 9100 certificates for aerospace production organizations, ALRO’s products adhere to the quality standards for primary aluminium on the LME, as well as international standards for flat rolled products.
Starting from 18 March 2019, the Index Committee of the Bucharest Stock Exchange approved the inclusion of ALRO (code ALR) in BET, the main index of the market, and in BET-TR, the total return version of BET. ALRO’s shares have been listed on the Bucharest Stock Exchange since October 1997 and ALRO represents the first company in the aluminium industry present in these two indices.
Since 2020, ALRO and Vimetco Extrusion are members of ASI (Aluminium Stewardship Initiative), an international association that contributes to enhancing sustainability in the global aluminium sector.