High Power Prices Tank First Half Financial Results For Alro Slatina

High Power Prices Tank First Half Financial Results For Alro Slatina

Despite increased sales over the period, Romanian aluminium company Alro SA (Alro Slatina) posted steep drop in profits for the first quarter of 2021 as reflected in the financial results released earlier this week.

The aluminium smelter showed consolidated sales for the first half of US$365.6 million, an increase of 13 percent on the year. Alro’s sales of primary aluminium and value-added aluminium increased as well, along with the price per unit the aluminium smelter sold.

Alro was unable to capitalize on these advantages in the first half though, which the firm chalks up to a rise in power prices. Its consolidated operating profit (EBITDA) came in at US$34.4 million, which was about one third of the number from last year. The firm chalks up the loss to extraordinary revenues last year in the form of a US$108.2 million state subsidy it received to make up for high power prices. Alro notes that it would qualify for a similar payment again this year if legal provisions had been made for it.

Alro elaborated in a press release issued along with financial results.

“In the analyzed period, the electricity market was dominated by a surge in electricity prices delivered in the local market that also embed a surge in the prices of the emission certificates. As a direct consequence, several of the Group’s electricity suppliers claimed amendments regarding the prices contracted in advance by the Group, reducing quantities and terms of payment, while others have cancelled the previous signed contracts.”

Alro also suffered losses due to derivative financial instruments and foreign exchange, dropping the firm’s net profit last year of US$60.5 million to a net loss of US$11.4 million.

Alro was founded in 1963 and is based in Slatina, Romania. The firm, a subsidiary of Vimetco N.V., is managed by Russian investor Vitaliy Machitski and has an installed capacity of 265,000 metric tons per year, making it one of the largest producers in Central and Eastern Europe outside of Russia and Scandinavia. It also produces 35 thousand metric tons per annum of recycled aluminium and churns out 335 thousand metric tons per annum of cast aluminium.