In 2019, Alro recorded a decrease in sales of 7%, a decrease in EBIT of 73% and a net loss of RON -68.3m.
Alro published their preliminary FY 2019 results according to which the company recorded a 7% decrease in revenue, amounting to RON 2.78bn.
The company notes that at a global scale, the aluminium market was affected in 2019 by a 15% YoY LME decrease, by international politics, such as the US tariffs on imports, the Chinese retaliation, the Brexit negotiations. All these event drove the clients on the aluminium market to have a cautious behavior, which had a significant impact on Alro’s results in 2019.
The tariffs imposed by the USA caused important aluminium metal quantities to be diverted between key market areas. At the same time, the lifting of US sanctions against Rusal in the beginning of 2019 brought back more aluminium into the market.
All these contributed to fluctuations in the aluminium markets worldwide and determined clients downstream to rather wait for better opportunities, which eventually caused the prices to decrease.
Alro also states that on the Romanian market they faced further adverse conditions, mainly derived from the prohibitive energy prices, which are above the prices in other European countries such as Germany, Austria, Poland, France, the Netherlands, and above the European Union average, and consequently pushing Alro’s gross margin as low as 8%, from last year’s 22%. This trend was also observable in Q4 2019 when the gross margin was 4% compared to the 19% recorded in Q4 2018.
When observing cost of goods sold, the Group reported an increase of 10%, amounting to RON 2.55bn. Such an increase came mainly on the back of the growth of the purchase prices of utilities (electricity and gas), in line with the prices from OPCOM’s platforms.
As a result of all of the above, gross profit stood at RON 226.4m, compared to RON 669.88m in 2018.
Going further down the P&L, SG&A were lower by 10%, while other operating income went up by RON 156.4m. This was achieved as the company reduced the amperage and energy consumption in the smelter and resold the spare electricity back to the market by limiting production of electrolytic and primary aluminium to only as much as necessary for assuring the sales target and the production of processed products; it reduced the level of inventories of raw materials and consumables and it effectively diminished its general and administrative expenses.
As a result, EBIT amounted to RON 99.22m, representing a decrease of 73%. Such a result puts the operating profit margin at 3.6%, showing a significant decrease of 8.6 p.p.
In 2019, Alro recorded a net loss of RON 68.34m, compared to a net profit of RON 235.3m in 2018.
