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24.03.2006 Business & Finance

Operation of VALCO has helped our business - Aluworks

By GNA

Accra, March 24, GNA - Aluworks, manufacturers of semi-finished aluminium products, said on Friday that the re-start in operations of the Volta Aluminium Company (VALCO) helped to make significant impact on the overall performance of the Company last year. Prior to the coming on stream of VALCO in September 2005, Aluworks had to import aluminium ingots from Switzerland.

Speaking at the "Facts behind the Figures Programme" on the Ghana Stock Exchange, Mr Kondagunta Venkataramana, Managing Director of Aluworks, said besides the increasing certainty of supply of aluminium, VALCO's reopening had positively reduced the cost of metal, energy costs as well as improved the cash flow of the Company. "We now do not need to pre-finance the imports nor keep large inventory as has been the case before the restart of operations of VALCO. In addition, VALCO supplies metal molten and sows, which require little energy for heating up," he told journalists and brokers on the Exchange.

Mr Venkataramana said despite the major challenge of soaring prices of aluminium, ranging between averages of 1,834 dollars per tonne in January 2005 to 2,250 dollars per tonne in December 2005 on the London Metal Exchange, the Company's performance remained resolute compared to 2004. Aluworks made a turnover of 478 billion cedis in 2005 compared to 458 billion cedis in 2004, an increase of 4.4 per cent.

Exports registered a hugely positive performance, going up from 166 billion cedis to 205 billion cedis, accounting for about 46 per cent of volumes. The export sales are also the highest since the inception of the plant. Nigeria, Togo, Benin, Burkina Faso and Cote d'Ivoire are the main destination of the Company's exports. Sales Volume, however, decreased from 19,497 tonnes to 17,647 tonnes due to sluggish local sales. The Company's production output for the year was 18,022 tonnes.

Profit after tax increased by nine per cent from 20.5 billion cedis in 2004 to 22.4 billion cedis in 2005. Mr Venkataramana said he was confident that the positive trend would continue with the recommencement of VALCO and said with a guaranteed metal supply both in molten condition and in form of sows, cost of sales would reduce by way of reduction in inventory costs and energy savings.

"We see next year's operations registering better results with the restart of VALCO and the benefits of strategies such as cost cutting exercises and global sourcing of spares and consumables already put in place will reduce operating cost and enable the Company mitigate the effects of the rising aluminium prices on the world market." There are plans for Colour Coating Line and the building of another cold rolling Mill to enhance the Company's capacity. The Company expects a production level of between 22 tonnes and 23 tonnes to meet both domestic and export orders.

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