Alro S.a. · BVB:ALR
Alro — Frontier Investor Days 2021
36 slides from Alro's conference presentation, Sep 3, 2021
Slide 1: ALRO Group Presentation – Frontier Investor Days
Frontier Investor Days 3 September 2021 ALRO Group Presentation (BSE: ALR)
Slide 2: Disclaimer
Disclaimer This material is 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 may cons
Slide 3: Contents
Contents Section 1: ALRO Group overview 4 Section 2: Financials 20 Appendix: Supporting materials 32 3
Slide 4: ALRO Group overview
Section 2 ALRO Group overview
Slide 5: Sustainability – a key priority (1/2)
Sustainability – a key priority (1/2) Committed to a sustainable future and complying with the MATERIAL TOPICS applicable international sustainability targets, ALRO has been Our contribution to the economic development in the production areas publishing since 2017 an annual Consolidated Sustainabl
Slide 6: Sustainability – a key priority (2/2)
Sustainability – a key priority (2/2) In 2021, we decided to enhance our business strategy by using materiality assessment input to develop ALRO Group Sustainability Strategy 2021- 2025. This strategy aims to strengthen the foundation of our business by embedding sustainability across all department
Slide 7: ALRO Group at a glance
ALRO Group at a glance ALRO and VE adhered in 2020 to Top 3-5 in Europe ASI 1.368 tCO2e/tAl (cast) in aluminium industry (Aluminium from a direct specific emission in Stewardship emissions 2020 at ALRO Primary Initiative) perspective Aluminium CO₂ 79% Water recirculation degree within ALRO 2nd place
Slide 8: COVID-19 Pandemic – an unprecedented crisis
COVID-19 Pandemic – an unprecedented crisis overcome through specific measures Despite the unpredictable environment, the aluminium manufacturing facilities, alumina refinery, and bauxite mine were fully operational throughout the year amid the COVID-19 pandemic. Since the early stage of the pande
Slide 9: 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 extrusion) producer 1H 2021 Sales/ EBITDA: RON 1,538 m (USD 378 m) / RON 144 m (USD 35 m) Advanc
Slide 10: 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 & Transport Bauxite Alumina Slabs Power Aluminum cables Manufacturing Construction
Slide 11: 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 49% – Non-EU countries 10% satisfies 100% of group
Slide 12: ALRO has consistently improved costs, product mix and proved flexible
ALRO has consistently improved costs, product mix and proved flexible towards the new European Commission goals Significant investment in technology, state-of-the art equipment and strategic acquisitions to streamline operations are now reflected in the Company's performance Continuous investment in
Slide 13: 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 area of 322 km2.Mine life of over 20 y
Slide 14: Alumina – asset overview
Alumina – asset overview Overview Alumina production (kt) Wholly-owned alumina refinery located in Tulcea on Danube river 600 572 Current capacity of c.600 kt alumina per annum ALUM needs approx. 2.9 tonne of the bauxite currently processed to 500 467 473 461 produce one tonne of alumina 427 4
Slide 15: Primary Aluminium overview
Primary Aluminium: One of the largest vertically integrated aluminium producers in Europe by production capacity Overview Simplified flow Total capacity of 265 kt of electrolytic aluminium and 335 kt of cast aluminium Secure supply source Coke; Pitch; Other raw materials State-of-the-art product
Slide 16: 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 17: 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 Operates 2 extrusion presses with total production capacity of 25 ktpa with planned P1
Slide 18: Environmental strategy
Environmental strategy Reduction of industrial water consumption Energy efficiency increase • Installation and commissioning of forced • Reduction of specific power consumption cooling tower and water treatment • Audit performed by best in class technology equipment provider and benchmarking • Activ
Slide 19: 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: Increase FRP Adapt output Improve capacity and waste reduction production to 120kt p.a production bas
Slide 20: Financials
Section 3 Financials aloo =
Slide 21: Good results in an unpredictable context
Good results in an unpredictable context Revenue evolution per segments* (RON m) Total revenue Δ (YoY growth) -5% +18% +9% -7% -10% +13% 1H 2020-1H 2021 2,303 2,726 34 2,983 +177m 6 273 17 2,778 2,423 109 141 10 7 52 77 97 69 74 51 32 1,390 1,373 1,351 1,247 1,361 1,538 4 1,178 7 76 56 6 676 46 752
Slide 22: Lower margins, in line with the market evolution
Lower margins, in line with the market evolution Gross Profit and EBITDA margins (%) 35.0% 31.6% Δ 30.0% 25.2% 1H 2020 – 1H 2021 22.4% 25.0% 22.5% 16.3% 20.0% 16.0% 20.8% 16.2% +128 bps 15.0% 8.9% 12.5% 9.4% 10.0% 12.7% 8.2% 5.0% -222 bps 0.0% -0.3% -0.3% -5.0% 2016 2017 2018 2019 2020 1H 2020 1H 20
Slide 23: Revenues protected through natural and financial hedges
Revenues protected through natural and financial hedges Hedging strategy Sales financially hedged 1 100% 26% 27% 45% -100% 0% Aluminium Natural hedging Aluminium scrap bought in the market at a price linked to LME. 23 Financial hedging 16 26 20 Preferred instruments: Collars (buy put & sell call
Slide 24: Significant expansion CAPEX has already been spent
Significant expansion CAPEX has already been spent CAPEX evolution (RON m) CAGR 2015-2020 Total Capex (YoY growth) +4% +16% +85% +40% -55% -38% +41% -3.35% increase of HVAP’s share in 10.3% portfolio, product quality, 300 energy efficiency 10.0% 8.0% 250 8.0% 200 5.0% 6.0% 5.1% 150 306 4.2% 3.4% 3.6
Slide 25: Increased pressure on the cash due to unfavourable market conditions
Increased pressure on the cash due to unfavourable market conditions Debt and cash evolution* (RON m) Δ 1,135 1H 2020 – 1H 2021 1,055 872 834 733 710 -240m 562 1,254 1,279 1,055 976 1,039 -57m 919 357 950 322 240 119 142 224 167 -183m 2016 2017 2018 2019 2020 1H 2020 1H 2021 Total loans (RONm) Cash
Slide 26: Financial Summary
Financial Summary Solid revenue driven by successful strategy to focus on high and very-high value processed products despite the COVID-19 pandemic: ‒ 2018 Revenues: USD 757 m (RON 2,983m)1 ‒ 2019 Revenues: USD 655 m (RON 2,778m)1 ‒ 2020 Revenues: USD 593 m (RON 2,515m)1 ‒ 1H 2020 Revenues: USD 31
Slide 27: Flexibility and constant adaptation to market conditions
Flexibility and constant adaptation to market conditions proven even if acting in an adverse context ALRO’s Adjusted(1) Net Result and EBITDA long term evolution (RONm) 2016 2017 2018 2019 2020 1H 2020 1H 2021 500 2,246 2,110 400 1,969 1,791 1,704 1,595 300 1,605 451 200 402 355 361 346 246 227 237
Slide 28: Airbus case study
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 29: 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 team Significant growth driven by with exceptional record of focus on HVAPs delivery High margin business and Advanced asset base supports limited capex requirements
Slide 30: IR Information
IR INFORMATION 2021 Financial Calendar 26 February Publication of 2020 Preliminary Annual Financial Results 29 March Conference Call for 2020 Annual Results proposed for shareholders approval 29 April Annual General Shareholders Meeting for the approval of 2020 results 29 April Publication of the An
Slide 31: ALRO - Investor Relations Contact
ALRO - Investor Relations Contact Ana-Maria IMBREA, CIR, MIRSoc, FCCA Investor and Corporate Relations Rivergate Center 64 Splaiul Unirii St. District 4, 040036 Bucharest, Romania Phone: +40 374 570 717 Mobile: +40 752 105 339 Fax: +40 21 408 35 89 E-mail: amimbrea@alro.ro investor.relations@alro.ro
Slide 32: Supporting materials
Appendix Supporting materials
Slide 33: ALRO Group - Financial summary (1/2)
ALRO Group - Financial summary (1/2) Income Statement (RON m) Cashflow Statement (RON m) Dec-18 Dec-19 Dec-20 Jun-20 Jun-21 Result before incom e taxes 315 -33 366 287 -25 Dec-18 Dec-19 Dec-20 Jun-20 Jun-21 Adjustments for: Depreciation and amortisation 125 153 167 87 81 Re ve nue s 2,983 2,778 2 ,
Slide 34: ALRO Group - Financial summary (2/2)
ALRO Group - Financial summary (2/2) Assets (RONm) Liabilities and shareholders’ equity (RONm) % of total % of total Dec-18 Dec-19 Dec-20 Jun-20 Jun-21 Dec-18 Dec-19 Dec-20 Jun-20 Jun-21 assets liabilities Curre nt a sse ts Curre nt lia bilitie s Cash and cash equivalents 204 83 106 158 114 Bank and
Slide 35: 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 36: Ownership
Current operational and shareholding structure Paval Holding Vimetco Fondul Proprietatea Freefloat Ownership 12.39% 23.21% 54.19% 10.21% ALRO GROUP Sierra Leone Romania Divisions Primary Processed Bauxite mining Alumina Aluminium Aluminium 36