ALRO Group reports higher sales in 1-3Q 2021

ALRO S.A, one of the largest vertically integrated aluminium producers in Europe, measured by production capacity, announces today its consolidated financial results for the nine months ended 30 September 2021. The Group’s turnover increased by 27% (1-3Q 2021: RON 2.5 billion vs. Q1-Q3 2020: RON 2 billion), as management took advantage of the opportunities created by the global economic context. ALRO Group net result for the period was a loss of RON 25 million (1-3Q 2020: a net profit of RON 273 million), while the operating result (EBIT) was RON 164 million in 1-3Q 2021 (1-3Q 2020: RON 355 million).

“We have managed to overcome a 2020 tough year marked by severe uncertainty due to COVID-19 pandemic and the 1-3Q 2021 marked by recovery, but also by new challenges in terms of energy, raw material prices and legislative changes at local and European level. This new reality pushed us again to act cautiously and stay on alert to succeed in maintaining all our production units 100% functional, without disturbances in the distribution chain and layoffs”, said Marian NĂSTASE, Chairman of the Board of Directors, ALRO. “The effects of the general improvement of the aluminium market helped us to report better results, but these have been partially offset by the abnormal evolution of the energy market, characterized by an unprecedented increase in prices also due to the high pressure for energy decarbonisation in Europe and Romania. Under these circumstances, we implemented several measures to mitigate this unusual situation and continued our investments plan in energy efficiency projects while keeping our focus to gain autonomy from an energy perspective, too”, added Marian NĂSTASE.

The worldwide economic recovery in 2021 and the increase in demand in the automotive, construction, and general engineering industries resulted in higher sales for the Group’s products in 1-3Q 2021, especially for billets and flat-rolled products. The aerospace industry, where the Group sells very high value-added flat-rolled products, continued to record low levels but began to show signs of recovery at a relatively slow pace in Q3 2021.

The price of aluminium continued its upward trend and reached an average of 2,384 USD/tonne in 1-3Q 2021, up by 751 USD/tonne compared to the similar period of 2020. This upward trend continued in 3Q 2021 when the LME average was 2,648 USD/tonne, higher with 944 USD/ tonne as compared to the average reported in 3Q 2020 (e.g., 1,704 USD/tonne), reaching a maximum level in 1-3Q 2021 of 2,950 USD/tonne on 13 September 2021. Thus, the stable production performance, increased volumes sold, and the attractive aluminium prices in the analysed period led to sales value of primary aluminium products up by 26% and by 25% for the processed products in 1-3Q 2021 compared to the similar period of 2020. The Primary Aluminium Division reported increased production quantities by 9% in 1-3Q 2021 vs. 1-3Q 2020 and 14% higher in 3Q 2021 vs. 3Q 2020. The same upward trend was recorded by the Processed Aluminium Division, by 13% higher in 1-3Q 2021 vs. 1-3Q 2020 and by 31% higher in 3Q 2021 vs. 3Q 2020.

However, during the analysed period, the good performance of the aluminium industry has been partially offset by the soaring prices for raw materials and utilities. The electricity market has been dominated by an unprecedented increase in energy supply prices, mainly related to the rise of the emission certificates prices and the increased gas price. Therefore, the cost of goods sold increased at Group’s level by 8% in 1-3Q 2021 vs. 1-3Q 2020 and by 29% in 3Q 2021 vs. 3Q 2020 mainly due to the upward trend of the electricity and natural gas prices. Under these circumstances, the Group kept the focus on optimizing the electricity consumption rates. It thus continued the smelter pots relining using AP12LE technology, putting into operation 75 pots (1-3Q 2020: 31 pots upgraded with the AP12LE technology), the project being in progress.

The operating result (EBIT) in 1-3Q 2021 amounts to RON 164 million compared to RON 355 million reported in 1-3Q 2020. Although the Group achieved much better operating results, in 2021 it could not book an income from the energy compensation scheme for indirect CO₂ emissions embedded in the energy prices as it did in 2020, as the legislation has not been implemented at the local level. In 3Q 2021, the recorded EBIT was by RON 89 million higher as compared 3Q 2020, thanks to the attractive aluminium prices and the high level of demand for the Group products, materialized in higher volumes sold.

Nevertheless, the Group’s net result is a loss of RON 25 million compared to a profit of RON 273 million in 1-3Q 2021 compared to the similar period of last year. Even if it incurred good operating results in 1-3Q 2021, these could not cover the FX loss incurred, and a one-off tax expense adjustment. However, in 3Q 2021, the Group’s net result was a net profit of RON 23 million, by 16% higher than the net profit of RON 20 million reported in 3Q 2020, amid a significant increase in turnover by 60% in 3Q 2021.