The company said exchange rate differences related to the reevaluation of its foreign currency denominated loans had a significant impact on its net earnings.
“The financial results for the first quarter demonstrate once again that the aluminum market is volatile and only strong investment programs such as the ones we implement can help us maintain our position at local and global level,” said Marian Nastase, president of Alro’s board of directors.
He added the beginning of this year saw significant decrease on international markets, as well as of selling margins, which affected the company’s turnover. Alro reported a turnover of RON564 million in the first quarter, compared with RON598 million in the first quarter of 2015.
The company said the decline in international prices was partially compensated by sales of high added value products, which were bigger in volume, as well as by the depreciation of the Romanian leu to the US dollar in 1Q 2016 compared with 1Q 2015. “Thus, despite the difficult market conditions, Alro registers operational profit and generates positive cash flow from operational activity,” it said.
The company’s primary aluminum sales grew 23% in the first quarter and processed aluminum sales grew 4%. In spite of the higher shipments, the company registered a lower EBIT that stood at RON23 million in the first quarter, from RON96 million in the same period last year, as a result of lower spot aluminum quotations on the London Metal Exchange, from an average of $1,800/ton in 1Q 2015 to an average of $1,500/ton during the first quarter of this year.
Despite market volatility, Alro continues its long-term strategy, focusing on raising capacity and output of higher added value products, as well as lowering its energy dependency by cutting down in consumption and upgrading its recycling of aluminum.
Alro plans to invest $53 million this year and has already ensured most of its financing, the company said.
Alro is a unit of Dutch Vimetco, which has operations in Romania, China and Sierra Leone. The company owns nearly 84.2% of Alro’s capital, while investment fund Fondul Proprietatea owns 10.21%.