Romanian aluminum producer Alro ends 2013 on a loss

Romania’s aluminum producer Alro Slatina reported for 2013 a preliminary adjusted net loss on RON 78 million (some EUR 17.6 million), compared to an adjusted net profit of RON 123 million (EUR 27.6 million) in 2012. It also reported sales of RON 2.02 billion (EUR 458 million) in 2013. The company recorded a negative Earnings before interest and taxes (EBIT) of RON 21 million (EUR 4.7 million), compared to a positive EBIT of RON 286 million (EUR 64.2 million) in 2012. In a recent release, Alro says that “the company reported for 2013 a preliminary net loss of RON 76 million, compared to a loss of RON 155 million (restated) reported in 2012. Due to the high volatility of the derivatives embedded in the energy supply contract, starting Q1 2013 the company’s management decided to consider the adjusted net result as a more relevant indicator for the financial performance of the Company”. The adjusted net profit/(loss) represents the net profit/(loss) of the company plus/(minus) fixed assets impairment, plus/ (minus) the loss/ (gain) from derivative financial instruments that do not qualify for hedge accounting, plus/ (minus) deferred tax. According to Marian Nastase, President of Alro’s Board of Directors, the company’s results for last year were impacted by several factors, such as “the burden of the energy costs (generated by the energy consumption taxes – green certificates, cogeneration tax etc.)”. He added that Alro’s efforts to remain competitive and the authorities’ efforts to keep under control the accelerated growth rate of the subsidy for the renewable sector were almost completely neutralized by the explosion of new projects in the photovoltaic sector. These increased from 48 MW at the end of 2012 to 1,150 MW at the end of 2013, according to the statistics published by the regulator. "Therefore the burden which was already unbearable in 2013 put us in a position to reevaluate all operations for the year 2014, process which is currently ongoing," Nastase also explained. The company’s 2013 financial results were impacted by two major factors, namely the high energy costs caused by the overcompensation schemes for renewable energy producers and the continuous descending trend of the aluminum prices on the international market. As a result, in 2013, the overall electricity cost amounted to RON 814 million (EUR 184 million), out of which RON 191 million (EUR 43.3 million) related to green certificates and cogeneration tax. “Last year, the final price per megawatt-hour that Alro had to pay was twice the EU average,” reads the company’s statement. Alro’s total primary aluminum production for 2013 stood at 250,000 tonnes, while the processed aluminum production reached 71,000 tonnes, up by 6,700 tonnes compared to 2012. Irina Popescu, irina.popescu@romania-insider.com