Its operating profit (EBIT) grew to RON355 million in the first nine months of 2020, from RON126 million in the year-earlier period, as a result of Romanian authorities implementing the EU-ETS compensation scheme based on a EU decision and receiving subsidies under the form of a compensation for emission costs indirectly covered by the Group in 2019.
The decrease in sales was due to unfavorable market conditions and the crisis caused by the COVID-19 pandemic which affected the aluminium industry. Alro sales reached RON1.7 billion, lower than RON1.9 billion in Q1-Q3/2019.
The net profit was attributed mostly to the subsidies received to partly offset indirect electricity costs included in electricity prices, in accordance with the EU legislation, as well as due to cost-cutting measures in the third quarter of 2020.
Sales of primary aluminium products increased by 2% in Q1-Q3 2020 as compared to the same period of the previous year, mainly due to the sales of aluminium wire rod. Demand in the cable industry was stable in Q1-Q3 2020, which allowed the Group to sell approximately 3,000 tons more aluminium wire rod in Q1-Q3 2020 than in Q1-Q3 2019. The Group expects the coronavirus pandemic not to have a major impact on the cable sector, as cable manufacturers are considered essential in the public utilities sector, which is a strategic area.
Another range of primary products, for which the Group recorded a sales growth, especially in Q3 2020, is billets. In this field, the Group managed to sell over 670 tonnes of billets more in Q3 2020 as compared to Q3 2019, due to the demand increase extruded division starting with September 2020.
The sales of processed aluminium products decreased slightly by 3% in Q1-Q3 2020 as compared to the same period of 2019. Out of these, flat rolled products decreased by 9%, mainly due to low demand for coils in line with the reduced activity of our customers in the aeronautics and automotive sectors. However, signs of revival have been noticed for plate sales since Q2 2020, which increased by over 790 tons in Q3 2020 as compared to Q3 2019, the plates being the Group’s highest value added processed product.
Despite the negative factors surrounding the aluminium producers, the quantitative sales of extruded products were higher by over 3,500 tons during the 9 months ended 30 September 2020 compared to the same period of previous year and by over 1,400 tons in Q3 2020 compared to Q3 2019, and these consisted mainly of deliveries of standard profiles and customized profiles for solar power plants.
“The contribution of the sales to third parties in the Primary Aluminium segment was RON851,452 thousand in Q1-Q3 2020 and represented 44% of the Group’s total revenues (Q1-Q3 2019: RON 914,867 thousand; 42%). Third party sales of Processed Aluminium segment represented 49% of the Group’s total revenues during the period ended 30 September 2020 being in amount of RON 958,453 thousand (during 9 months ended 30 September 2019: RON 1,072,210 thousand, i.e. 50%),” per the company’s financial report.
The 9-month period ended 30 September 2020 was dominated by the global economic and health crisis generated by the coronavirus pandemic. However, the Group has slipped through this difficult period, keeping all its production units fully operational and without locking down its activity, and has continuously produced bauxite, alumina and aluminium products. Amid this economic situation, Alro Group has efficiently managed the negative consequences of the pandemic, by implementing in its locations, protocols and operational, administrative and health procedures for prevention of the Covid-19 spreading, designed to protect the health of its employees and ensure a chain of continuous supply for its customers.
Alro Slatina is majority owned by Russian group Vimetco (54.2%), while Paval Holding owns 23.2% and Fondul Proprietatea owns 10.2%.