The sales revenue declined to RON973 million, from RON1.02 billion in January-June 2013.
The weaker results are mainly due to high energy costs and lower prices on the international markets.
“Two major factors continued to impact Alro’s results during this half year as well: the international aluminum market, where the demand is still weak, while, locally we faced the high costs for energy”, said Marian Nastase, Chairman of the Board of Alro.
“However, based on the latest developments, we are hopeful that the improvement of the market will continue,” Nastase added, pointing to the latest legislative changes regarding energy taxes implemented by the European Union.
Alro reported an adjusted net loss of RON80 million, significantly larger than RON17 million in the year-ago period. The adjusted result is the net result minus non-current assets impairment, plus/ minus the loss/ profit from derivative financial instruments that do not qualify for hedge accounting, plus/ minus deferred tax.
“Given the significant impact generated by the mark to market of the derivative financial instruments that do not qualify for hedge accounting, the management of Alro considers the adjusted net result as a more relevant indicator for the financial performance of the company,” Alro said in a statement.
Alro, the largest aluminum smelter in Southeastern Europe, is the main company of the Alro Group, which also includes alumina producer Alum, bauxite producer Sierra Mineral Holdings I Ltd., and Vimetco Extrusion, an extruded profiles producer. Dutch-registered Vimetco is the owner of Alro.
The Alro Group reported a net adjusted loss of RON89 million, slightly changed from RON90 million in the first half of 2013.
The group’s primary aluminum production reached 127,605 tons in the first six months (versus 124,648 tons in 1H 2013), while the processed aluminum production increased 2% to 48,828 tons (from 48,518 tons in 1H 2013).
“While the production increased slightly in 1H 2014 compared to 1H 2013, the revenues decreased mainly due to the lower aluminum price on the London Metal Exchange (LME),” Alro said.
The average LME price was of 1,753 $/ton, compared to 1,918 $/ton, in the first half of 2013.
“Another factor that negatively affected the operational results was the high energy costs. However, positive signs were visible starting with the second quarter of this year, as the Romanian Government approved a decision to implement a support scheme to exempt large electricity consumers from the payment of up to 85% of the green certificates quota, decision that was submitted to the European Commission for approval.”
The main markets for the aluminum manufactured by Alro are within the European Union (i.e. Hungary, Poland, Greece, Germany and Romania), but the company also exports to the USA and Asia.
On the Bucharest stock exchange, Alro shares traded down 1% Thursday morning.