Aughinish Alumina on course to return to profit in 2025 after $113.6m loss for 2023
The On Alumina Estuary Foynes, The Shannon Co Near Refinery Limerick Aughinish
Pre-tax losses at the Russian-owned company that operates the largest alumina refinery in Europe located on the Shannon estuary last year totalled $113.64m (€108m).
New accounts filed by Limerick Alumina Refining Ltd (LARL) show that the company recorded the losses after revenues slumped by 32% from $853.48m to $583m for 2023.
The directors state that the company recorded the pre-tax loss as production costs were higher than the market price for alumina in 2023.
The directors point to continuing high natural gas prices and bauxite raw material supply difficulties as the main factors behind the high production costs.
The directors also state that the output of the refinery in 2023 was below capacity due to the loss of key customers in the European market and the disruption to the supply of bauxite.
The company last year recorded a gross loss of $89.66m after its cost of sales of $672.77m exceeded its revenues of $583m.
The directors state that a going concern assessment of the business, which takes into account the ongoing impact of the war in Ukraine on the company, forecasts that the company is due to return to profitability in late 2024 and to remain profitable in 2025.
In the accounts signed off on December 10, the directors point out that its owner, UC Rusal, has not been sanctioned in the range of sanctions imposed on Russian entities by the US, the EU and the UK as a result of the outbreak of war in Ukraine.
However, they state that the business of UC Rusal and LARL “is negatively impacted by sanctions on other entities/sectors and/or decisions by entities/sectors not to deal with Russian and Russian owned businesses".
The directors state in spite of not being designated a sanctioned entity the company is being continuously impacted by the effects of self-sanctioning by commercial counter-parties and intermediaries.
They state that it remains a principal concern that the company or its parent may be designated under a future sanctions package from the US, EU or UK.
Against the background of the continuing threat of sanctions, the directors reveal that in 2024, the company has returned to a funding model whereby the company holds a minimal cash balance in its Irish bank account with funds being provided by the group to meet payment obligations as and when they fall due.
The business remains a significant employer in the Midwest despite its losses of 2023 and 2022 and numbers employed remained at 459 in 2023.
The pre-tax loss of $113.64m takes account of exceptional costs of $19.59m that mainly relate to non-cash impairment loss of tangible assets of $16.7m.
Staff costs remained at $52.4m in 2023. Aggregate pay to directors declined from $1.03m to $706,000.
Auditors EY state that events and conditions indicate a material uncertainty exists that may cast significant doubt about the company’s ability to continue as a going concern.
EY point to a letter of support from parent company, UC Rusal IPJSC.
EY state: “However, the continued war in Ukraine and possible future escalation of sanctions may impact the ability of the parent company to continue to finance the ongoing activities of the company.” In their 'going concern' assessment, the company directors state the accounts should be prepared on a going concern basis given the improving sales price of alumina, forecast profitability and the execution of subordination agreements post year end.
At the end of December last, accumulated losses at the company totalled $359.65m.
Cash funds reduced slightly from $86.3m to $85.13m.
At the end of December, RARL estimated that future decommissioning and site restoration costs at $26.6m.