Alro sees profit drop despite favourable context

Alro Slatina (ALR) aluminium producer, one of the biggest domestic companies, controlled by Vimetco group owned by Russian investors, saw its net income fall by 18% in the first half, to 28.9m RON (8.9m euros), though it paradoxically benefited from much more favourable factors than in the first six months of 2009.

Thus, aluminium prices reached an average of 2,160 dollars/tonne in London in the first half of 2010, up 48% from the average level of the first half of 2009. Physical sales also rose, as Alro produced 13.8% more primary aluminium in the same period, and production of processed aluminium (with a high added value) doubled.

The average dollar exchange rate kept close to 3.16 RON/dollar in the first half. During January-June 2009 period, the average dollar exchange rate stood at 3.17 RON.

“The explanation could be a profit transfer inside the group, a customary practice among giants of this type where the interest of minority shareholders is very low because of the very small free-float. The operating figure reported in the second quarter should also have been better,” commented a market analyst.