Alro S.a. · BVB:ALR
Alro — Romania Investor Days 2020
28 slides from Alro's conference presentation, Feb 26, 2020
Slide 1: ALRO Group Presentation
Romania Investor Days 26-27 February 2020 ALRO Group Presentation
Slide 2: Disclaimer
Disclaimer These materials are being supplied to you solely for your information and may not be reproduced in any form, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, by any medium or for any purpose. Failure to comply with this restriction
Slide 3: Contents
Contents Section 1: ALRO Group overview 4 Section 2: Financials 17 Appendix: Supporting materials 24 3
Slide 4: ALRO Group overview
Section 2 ALRO Group overview
Slide 5: 2019 – At a glance (1/2)
2019 – At a glance (1/2) International environment Local environment LME prices showed a decreasing trend trend in 2019 - average price In 2019, the energy supply in Romania remained highly volatile and led for 2019 of 1,791 USD/tonne (2018: LME average price 2,110 to very high levels of spot pr
Slide 6: 2019 – At a glance (2/2)
2019 – At a glance (2/2) On-going projects Achievements ALRO further increases its energy efficiency ALRO continues to implement best corporate governance practices In 2019, one of the most notable results of ALRO Group’s strategy regarding energy efficiency and environment protection was, start
Slide 7: One of the largest vertically integrated aluminium producers in Europe
One of the largest vertically integrated aluminium producers in Europe by production capacity Overview Key figures Vertically integrated primary and processed aluminium (Flat Rolled Product "FRP" and Preliminary consolidated results 2019 Sales/ EBITDA: RON 2,778m (USD extrusion) producer 655m) / R
Slide 8: Simplified business overview
Simplified business overview Fully integrated business producing high value added product mix End products End markets Sierra Leone Tulcea, Romania Slatina, Romania Slatina, Romania Primary Wire rod, Billets, Energy & Bauxite Alumina Power Transport Aluminum Slabs cables Manufacturing Construction
Slide 9: Fully integrated business with global distribution
Fully integrated business with global distribution 1 Bauxite is mined in Sierra Leone mine 3 Primary Aluminium (wire rods, slabs, billets, ingots) is produced and sold internationally¹: – Majority is sold to Alum – Alumina producer – and – Romania 43% – Western Europe 12% satisfies 100% of group n
Slide 10: Bauxite – SMHL asset overview
Bauxite – SMHL asset overview Overview Asset location Sierra Mineral Holdings 1 Limited (“SMHL”) operates a bauxite mine in Sierra Leone – acquired by ALRO Group in May 2011 SMHL consists of several deposits in the Gondama and Mokanji area, total concession Sierra Leone area of 322 km2 Mine li
Slide 11: Alumina – asset overview
Alumina – asset overview Overview Alumina production (kt) Wholly-owned alumina refinery located in Tulcea on Danube river 700 Current capacity of c.600kt alumina per annum 600 572 Alum needs approx. 2.9 tonne of the bauxite currently processed to produce 1 tonne of alumina 500 467 473 461 405
Slide 12: Primary Aluminium: vertically integrated producer
Primary Aluminium: One of the largest vertically integrated aluminium producers in Europe by production capacity Overview Simplified flow Total capacity of 265kt of electrolytic aluminium and 325kt of primary cast aluminium Secure supply source Coke; Pitch; Other raw materials State-of-the-art S
Slide 13: Processed Aluminium: Flat Rolled Products
Processed Aluminium: Flat Rolled Products Overview Processing facilities Flat rolled products plant located beside smelter in Slatina Facilities comprise of rolling mill shops in the processed division and an extrusion company in separate areas within the processing division Slabs produced by
Slide 14: Processed Aluminium: Vimetco Extrusion
Processed Aluminium: Vimetco Extrusion Overview Facilities overview Extrusion operation located in FRP plant in Slatina Extrusion press Billet diameter Maximum Width (mm) Yearly capacity Established in 2003 P 2 1650 force tonne ᶲ 7 inch (178mm) 180 7,000 tonnes Operates 2 extrusion presses wit
Slide 15: Environmental strategy
Environmental strategy Full commitment to a green future on several assets through the value creation chain CO2 Reduction of industrial water Progressive reduction of Energy efficiency Increase recycling rates for Air emissions reduction consumption CO2 emissions increase waste/scrap Installation
Slide 16: Strategic focus to increase higher margin downstream exposure
Strategic focus to increase higher margin downstream exposure whilst keeping costs down Focus on HVAP Diversifying Permanent focus Factory of the future product mix on cost Circular economy: waste Increase FRP production Adapt output production Improve capacity and reduction through to 120kt
Slide 17: Financials
Section 3 Financials aloo =
Slide 18: Steady quantities of primary and processed aluminium in an adverse market
Steady quantities of primary and processed aluminium in an adverse market Revenue evolution (RONm) Total revenue Δ +14.9% -5.0% +18.4% +9.4% -6.8% 2015-2019 (YoY growth) 2,423 2,303 2,726 2,982 2,778 +355m 6 34 17 109 273 141 17 7 52 57 74 77 10 … 32 1,390 1,373 1,351 1,273 1,178 +78m 1,065 1,016 1,
Slide 19: Decreasing margins due to adverse environment, but still robust
Decreasing margins due to adverse environment, but still robust Gross Profit and EBITDA margins (%) 25.2% 22.5% Δ 20.8% 2015-2019 16.8% 16.3% 16.0% -860bps 12.6% 12.7% 8.2% -360bps 9% 2015 2016 2017 2018 2019 Gross Profit Margin % EBITDA margin % 5y avg EBITDA margin Gross Profit and EBITDA evolutio
Slide 20: Revenues protected through natural and financial hedges
Revenues protected through natural and financial hedges Bottom line shielded by tax asset Hedging strategy for aluminium Sales financially Natural hedging hedged 1 0% 24% 23% 45% Aluminium scrap bought in the market at a price linked to LME 23 Financial hedging 16 26 Preferred instruments: Colla
Slide 21: Debt and cash levels in line with the overall unfavourable market
Debt and cash levels in line with the overall unfavourable market Debt and cash evolution (RONm) Δ 2015-2019 1,135 767 733 711 +320 562 1,254 934 1,055 919 950 -21m 167 322 357 240 119 +368m 2015 2016 2017 2018 2019 1 Total loans Cash and cash equivalents Net debt Capitalisation ratios (%) 5.00 80%
Slide 22: Airbus case study: Building a direct, accretive and long term relationship
Airbus case study: Building a direct, accretive and long term relationship with high profile end customers Long term contract signed… …with a reliable partner Strategic initiatives with Airbus Contract signed in 2016, for Airbus is one of the most Increase the number of alloys delivery from 20
Slide 23: ALRO Group's advantages in key product markets
ALRO Group's advantages in key product markets Located in Europe, a market that is net short aluminium products Experienced management Significant growth driven by team with exceptional record focus on HVAPs of delivery High margin business and Advanced asset base limited capex requirements supports
Slide 24: Supporting materials
Appendix Supporting materials
Slide 25: ALRO Group - Financial summary (1/2)
ALRO Group - Financial summary (1/2) Income Statement (RONm) Cashflow Statement (RONm) Dec-2019 Dec-2019 Dec-15 Dec-16 Dec-17 Dec-2018 (Preliminary Dec-15 Dec-16 Dec-17 Dec-2018 (Preliminary Results) Results) Profit / (loss) before income taxes 11 81 412 316 -33 Revenues 2,423 2,303 2,726 2,983 2,77
Slide 26: ALRO Group - Financial summary (2/2)
ALRO Group - Financial summary (2/2) Assets (RONm) Liabilities and shareholders’ equity (RONm) Dec-2019 Dec-2019 % of total % of total Dec-15 Dec-16 Dec-17 Dec-2018 (Preliminary Dec-15 Dec-16 Dec-17 Dec-2018 (Preliminary assets liabilities Results) Results) Current assets Current liabilities Cash an
Slide 27: Pricing of products
Pricing of products Pricing is based on London Metal Exchange (LME) prices plus a premium, with inter-company Bauxite and Alumina pricing based on market prices Primary products pricing Processed products pricing Base-case for several products – Similarly to primary products, pricing is based on LME
Slide 28: Ownership
Current operational and shareholding structure Paval Holding1 Vimetco1 Fondul Proprietatea1 Freefloat1 Ownership 12.39% 23.21% 54.19% 10.21% ALRO GROUP Sierra Leone Romania Divisions Primary Processed Bauxite mining Alumina Aluminium Aluminium 1) At the end of 2018, ALRO has successfully closed the