Alro, the largest aluminum producer in Continental Europe (excluding Russia and the Scandinavian Peninsula), posted a net adjusted profit of 93 million lei in the first quarter of 2017 compared to 41 million lei in the similar period of 2016, a 227% surge. The company’s turnover was 634 million lei, rising from 564 million lei in the same period in 2016, while the net profit was 78 million lei, compared to 27 million lei, in the same period last year (plus of 288%).
„In the first quarter of 2017, Alro achieved a significant operational and financial performance, following the Company’s long-term strategy of increasing production and sales of value-added products, as well as valuing more favorable market conditions than in the same period of the previous year”, said Marian Nastase, president of the Board of Alro. „Profitability margins have increased visibly, as well as the Company’s ability to generate liquidity. We have already achieved a significant part of the net profit budgeted for the current year, and the current market conditions make us confident about the rest of the year.”
2017 started with a continuation of the upward trend in aluminum quotations at the London Metal Exchange (LME), started in the second half of 2016, backed by events that indicate a slowdown in global aluminum supply growth in many parts of the world (such as the US or Australia) but especially China. Thus, the average LME in January-March 2017 was USD 1,851 / ton, with more than USD 300 / ton higher than the average of the same period in 2016, of USD 1,516 / ton.
In Q1 2017, revenue from primary aluminium sales increased by 9% compared with the same period of 2016, while processed aluminium sales recorded an even higher 16% growth, in line with Company’s medium and long-term strategy. This positive evolution was supported by the increase in aluminium prices on the international market (+22% compared to Q1 2016), the appreciation of US dollar against the Romanian currency (with 4.2% compared to average of Q1 2016), as well as improving the sales structure, factors that have offset the drop in premiums for aluminium products.
Under this condition and due to the efficient management of raw materials costs, the gross margin improved significantly from 9% in Q1 2016 to 22% in Q1 2017, which resulted in a net profit of RON 78 million, almost three times higher than the net profit of RON 27 million reported in the same period last year.
The Company achieved a significant improvement in cash flows generated from operating activities, reaching RON 96 million (compared to RON 14 million in Q1 2016). These results reflect the significant improvement in profitability, as well as the Company’s efforts to manage cash flows as efficiently as possible.
In terms of investments, in Q1 2017 Alro spent RON 31 million, compared to about RON 18 million in Q1 2016, which had as main destinations investments co-financed from the European Regional Development Fund, the reconditioning of the electrolysis tanks and other mainenance and improvement of existing equipments.
Alro will accelerate this year’s investment for technological upgrading and operational efficiency improvement, according to the approved budget in amount of USD 41 million for 2017. Continuing its long-term strategy, the Company will invest in lowering energy dependency and increasing the share of high value-added products within its mix of products. The latter mainly targets the processed aluminium section, with the aim of gradually increasing production capacity for hot-rolled products (heat treated plates and cladded products).
