UC Rusal Announces Full Year Results for 2011

OREANDA-NEWS. March 20, 2012. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, MICEX-RTS: RUALR), the world's largest aluminium producer, announces its full year results for 2011.

Key highlights:

Revenue increased by 12.0% to USD12,291 million for the year ended 31 December 2011, as compared to USD10,979 million for the year ended 31 December 2010, outperforming LME aluminium price growth, mainly due to an increase in average realised aluminium prices, including a record level of realised premiums of USD160 per tonne over the LME aluminium price with an increase of 48.1% over the preceding year and an increase in the share of value-added products in total sales.

Increase in the share of value-added products output to 36% of total aluminium production in comparison to 32% for the previous year.

Sustainable level of costs in the fourth quarter of 2011 in comparison with the previous quarter of the year. Continuing decrease of the average-weighted energy tariff throughout the year (a drop of 12.2% in the fourth quarter of 2011, as compared to that of the first quarter of 2011).

Adjusted EBITDA for the year ended 31 December 2011 of USD2,512 million is generally in line with USD2,597 million for the year ended 31 December 2010, with the immaterial decrease resulting from the revenue growth being offset by cost increases in energy and raw materials. Adjusted EBITDA margin was 20.4% and 23.7% for the respective periods, maintaining the premier position of RUSAL in the industry.

Adjusted Net Profit, being the major indicator of the Company's core business results, increased for the year ended 31 December 2011 by 24.6% to USD987 million as compared to USD792 million for the previous year, primarily due to the decrease in interest expenses following the Company's successful debt refinancing in 2011 and overall decrease in the outstanding debt of the Company.

Recurring results of the Company, being Adjusted Net Profit plus effective share of Norilsk Nickel results for the year ended 31 December 2011 increased to USD1,981 million from USD 1,683 million for the previous year.

The reduction in the carrying value of the Company's investment in Norilsk Nickel, which is attributable to the sales and purchases by Norilsk Nickel of its own shares (buy-back) during the year, was a primary reason for the decrease in the net profit to USD237 million for the year ended 31 December 2011 compared to that of USD2,867 million for the year ended 31 December 2010.

Completed refinancing of the Company's debt portfolio with an extended maturity profile and reduced interest margins, which allowed for improved operational and financial flexibility, including agreement on a covenant holiday. Nominal interest expense reduced by 23.5% in 2011 as compared to 2010.

Total capital expenditure amounted to USD622 million for the year ended 31 December 2011.

Commenting on the full year results, Oleg Deripaska, CEO of RUSAL said:

"In spite of the deterioration of the global economy during the second half of 2011, on-going cost pressures across the whole commodities sector and a particularly challenging fourth quarter in 2011, UC RUSAL delivered a solid financial performance during the year, with revenue and adjusted net profit increasing by 12.0% and 24.6%, respectively. The ability of the Company to maintain its EBITDA margin above 20% throughout the year was a testament to its focus on and commitment to operational efficiency and cost control across UC RUSAL.

"Given the challenges the aluminium industry has faced over the past year and the uncertain near-term outlook, the successful debt refinancing and overall strengthening of the Company's financial position has had a positive impact on our financial results in 2011. Importantly, the refinanced debt portfolio with an extended maturity profile and reduced interest margins, including an option to introduce a covenant holiday, allows for more operational and financial flexibility in the future. On the production side, in 2011, the Company has continued to modernise its casting facilities in order to increase its share of value-added products, enabling us to meet growing demand from end users, while also ensuring cost efficient production across our smelters.

"While the current global economic volatility, in conjunction with excessive stock levels, will continue to put pressure on aluminium prices in the near term, global aluminium demand remains well above 2009 recession levels and we anticipate that the rising influence of developing countries will ensure demand remains robust throughout 2012. The Company is committed to its long term strategic growth paths and we view the current volatility as an opportunity to focus on the development of the most efficient and environmentally-friendly capacities, underpinning UC RUSAL's position as the world's aluminium leader."

Financial and Operating Highlights