Aluworks re-energised to return to profit path

Aluworks, the indigenous aluminium products manufacturer, is banking on the Ghana International Trade Commission’s (GITC) order for the imposition of an additional duty of 36 percent on aluminium products that are dumped onto the domestic market to improve its fortunes.

In its 2019 annual report, the company said the GITC’s action, in addition to resuscitation assurances from the government owing to Aluworks’ strategic importance to the extended Bauxite-Aluminium Scheme, was a silver lining amid the torrid times.

“This is a significant ruling. It is geared towards limiting the inflow of cheap competitive material from China on the basis of unfair export rebates that China had been giving to its traders to enable them to sell cheaply here.

This will level the playing field in terms of price and allow quality to prevail. We do have very high-quality products,” acting board chairman Prof. Lade Wosornu said in the report issued to the Ghana Stock Exchange yesterday.

“Going forward, we expect an influx of orders for our products; however, we still have the major problem of securing the financing to enable us meet the expected increase in demand arising from our importing customers converting into local purchasing customers,” he added.

Acting on a petition brought before it by Aluworks in 2019, the GITC initiated investigations whose findings indicated that there has been dumping of aluminium products by China onto the Ghanaian market utilising an unfair export rebate.

The commission’s ruling was a directive to the Ghana Revenue Authority to implement certain recommendations, especially the additional 35.77 percent duty, in line with World Trade Organisation (WTO) rules.

Dumping occurs when a producer exports a product to a foreign market at a price lower than the normal value which the producer or exporter normally charges in its own domestic market.

It is usually established by comparing the “normal value” and the “export price”, where the normal value is the price at which the like product is sold for consumption in the originating market.

In such instances, the importing country can take anti-dumping measures to offset the impact on the competitiveness of domestic industries.

Aluworks’ turnover in 2019, according to the report, increased by 23 percent over that of 2018, rising from GH¢62.5m to GH¢77m.

It however suffered a net loss after tax of GH¢24.5m, after charging finance costs of GH¢22.8m. In 2018 the company made a loss of GH¢33.2m, after charging GH¢16.6m in finance costs.

With the company’s retained earnings account sitting in deficit, its board failed to recommend a dividend payment for the year.

According to the board chairman, without the much-needed investment in working capital, Aluworks risks a fall in turnover and a rise in losses, despite the ray of hope that has been offered by the GITC.

“We will continue working with professionalism in order to enhance the recovery as well as the sustainable and inclusive growth of the business operations of the company and its customers, both national and regional,” Prof. Lade said.