Vimetco reports full year financial results for the 12 months ended 31 December 2008

Financial highlights

• Sales increased 52% to USD 1,833 million (2007: USD 1,210 million)
• EBITDA was USD 259 million (2007: USD 295 million)
• Net profit before impairment charges for China was USD 71 million (2007: USD 194 million)
• Goodwill impairment was USD 215 million
• Net loss, as a result of impairment charges, for the year was USD 144 million
• Full consolidation of the China segment, including the Linfeng site from January 2008
• Acquisition of a bauxite mine for USD 30 million in Sierra Leone in July 2008
• Net cash at the end of the year USD 102 million (2007: USD 137 million)

Operational highlights

• Primary aluminium production in 2008 reached 691,000 tonnes (2007: 567,000 tonnes)
• With continued focus on higher added value products, processed aluminium production in 2008 was 91,000 tonnes (2007: 52,000 tonnes)
• Aluminium industry severely affected by the global financial crisis in the second half of year with aluminium price declining 56% between July 2008 and the end of the year – from USD 3,291/tonne to USD 1,454/tonne
• In the first half of year Vimetco continued to expand, meeting several important milestones including:
  • Greater vertical integration through acquisition of a bauxite mine in Sierra Leone and a stake in a Chinese coal mine; construction of a new 300 MW power plant in China scheduled for completion in 2009
  • Continuing expansion in China, primary aluminium producing and processing
    capacities grew by over 50%, introducing latest state-of-the-art 400 kA technology
  • Focus on higher added value products: upgrading and increasing the overall capacity
    of the cold rolling mill in Romania and quadrupling the capacity of continuously casted
    band in China
• In the second half year Vimetco responded rapidly and decisively to the fall in aluminium price:
  • Vimetco announced production cuts in China (October) and production cuts in Romania (November)
• Additional responses to further decline in aluminium price:
  • January 2009 suspension of one pot line in Romania
  • Group wide cost-cutting measures implemented in early 2009

Acting Chief Executive Officer, Frank Müller, said:

“Since 2007 Vimetco has been transformed from a regional company into a major, publicly listed, global supplier of a wide range of aluminium products, with operations on three continents. In the course of 2008 we were able to achieve a number of key milestones. The second half was dominated by the impact of the global financial crisis, which has significantly affected the aluminium price.

We took rapid and decisive action to adjust to the fall in aluminium demand with a rigorous plan which involved a series of cost-cutting measures and adjusting the timing and execution of our business strategy.

Despite a period of extraordinary market developments, Vimetco managed to meet many of its business objectives, including steps towards the goal of vertical integration, more focus on the higher added value products in China and Romania and continuing expansion in China, based on the introduction of the latest technologies.

Looking ahead, Vimetco is committed to meeting the challenges of the current market where sizeable inventory surpluses are expected to grow throughout 2009, with aluminium prices continuing to be depressed for much of the year.

Priorities are to adjust production levels and the product mix to meet demand levels in a timely manner; cost-cutting measures will be increased where required and the company will continue to source raw materials cost-effectively; and cash levels will be maintained to service debt repayments and interest.”

A conference call will be held today at 9.30am BST during which Frank Müller and Marian Nastase will present results. Dial in details: +44 (0)20 7162 0077.

If you have any questions about the call please contact Jennifer Kelly on jkelly@hogarthpr.co.uk or 020 7645 3951

Full-year results 2008 and Analyst Presentation are available here