Last year, the company posted a year-end 2011 profit of US$65 million.
The company attributes the loss, or ‘main negative influence’ on ‘the derivative embedded in the company’s main energy supply contract with a specific IFRS treatment, adding that it didn’t affect Alro’s cash flow.
Marian Nastase, Alro’s president of the board, said that the company capitalised on its major investments made in Romania and was able to achieve its operational targets despite the challenging market conditions.
“We also improved our products portfolio and services, and were able to meet the demand of a wider range of customers,” he said, adding that ‘unforeseeable external factors’ such as energy supply issues and taxes, had an influence on costs and led to the negative year-end result.
Electricity costs in Romania increased by US$50 million and a severe drought at the beginning of the year forced Alro to purchase a significant amount of energy from the Day Ahead Market and from the Balancing Market at higher costs.
The Day Ahead Market is a financial market where participants buy and sell energy at financially binding day ahead prices the following day. The Balancing Market allows electricity companies and traders to submit offers to sell and bids to buy energy from the system by altering generation or consumption.
Alro has also had to contend with its power supplier, Hidroelectrica, declaring insolvency and green energy schemes and carbon taxes, which have increased costs.
Primary aluminium output for 2012 was 249kt, down from 2011’s 261kt. Processed aluminium production reached 64kt, up 9.4kt on 2011’s figure of 54.6kt and this helped offset the effect of depressed global aluminium prices.
Alro has invested heavily in reducing energy consumption and will continue to do so, said Nastase.
Alro is the largest aluminium producer in Central and Eastern Europe measured by volume with an installed production capacity of 265,000 tonnes per year.
Russia: UC Rusal cuts capacity by 300kt