The Auworks Limited, an aluminium smelting company in the country is hoping to return to profit after recording its fourth straight loss in 2010. The company is recovering but rather on a steady pace. Maxwell Adombila Akalaare reports
ALUWORKS LIMITED has, for the fourth year running posted an end-of-year loss of GH¢7.350 million in its 2010 operations.
The 2010 loss is however a GH¢0.655 million better that the previous year’s loss of GH¢8.005 million, indicating a 8.9 per cent improvement in the company’s 2010 operations.
Following the loss, the company’s Board of Directors have consequently not fixed dividend for 2010, a decision the board said was “regrettable.”
Mr Kwadwo Kwarteng, the Board Chairman of Aluworks explained at Aluworks’s annual general meeting in Accra that the company’s 2010 loss was attributed to the low volumes of productions and sales recorded in the year.
He was meanwhile hopeful that the company would witness a significant break-through in its productions and revenue mobilisation in the 2011 operational year “following the return to supplies by the Volta Aluminium Company.”
The Board Chair noted disclosed that the company has at the moment done close to 80 per cent of its entire 2010 operations just within the first five months of this year, an improvement he said was mainly due to the revitalisation of the Volta Aluminium Company Limited (VALCO) after it was closed down around 2005.
VALCO’s closer had induced operational challenges for the Aluworks, key among which was Aluworks having to outsource its raw materials at a much higher cost than it use to get from VALCO.
The company’s weak financial stand mainly due to its five straight end-of-year operation losses equally didi not help matters, partly causing it to import just 5,748 tonnes of aluminium ingots which is far less than half of the company’s upgraded production capacity of 20,000 metric tonnes.
Due to Aluworks’s staggering financial stand, the company embarked on a Rights Issue in 2010 of which it hoped to raise sufficient funds to support its hiked cost of production.
The said Rights Issue was, however, not successful, after it managed to raise just 67 per cent of the targeted funds.
Aside the company producing below capacity resulting from its inability to import sufficient raw materials to sustain its operations, Aluworks is also battling with influx of relatively lower priced products from China into the country.
Mr Ernest Kwasi Okoh, CEO of the Aluworks said “the blockage caused by the influx of cheap Chinese products” partly caused the company to sell only 4,786 tonnes of products in 2010, indicating a 1,214 short-fall of the company’s estimated break-even point of 6,000 tonnes.
Looking ahead, the CEO said “2011 has started quite well and we believe it will be a break through for our operations.”
He said though the revitalisation of VALCO was likely to cut down the Aluworks’ operational cost by 36 per cent in 2011 and ensure it reliable supply of ingots for onward production, the company was now faced with problem of selling its finished products in the Ghanaian market due to the flooded Chinese products.
“If the Chinese problem is solved, 2011 would surely be a profitable year for us,” Mr Okoh.
While thanking the government for bringing back VALCO, the Aluworks CEO said government needed to apply the World Trade Organisations (TWO) counter-prevailing measures on the cheap Chinese products to enable a fair environment for both products in the market.
“The Chinese products have enjoyed illegal export-rebates for far too long,” Mr Okoh noted and thus called on government and other relevant authorities to act now to save the local aluminium industry from a depression induced by cheap Chinese products.
No comments:
Post a Comment