OREANDA-NEWS. May 15, 2012. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, MICEX-RTS: RUALR), the world's largest aluminium producer, announces its results for the first quarter ended 31 March 2012.

Key highlights:

•           Revenue increased by 2.7% to USD2,882 million in the first quarter of 2012 as compared to USD2,806 million in the fourth quarter of 2011.

•           Primary aluminium and alloys sales volumes increased by 8.8% due to the volumes shifted from the fourth quarter of 2011 while average realised premiums over LME aluminium price increased by 3.8% achieving record high level of USD165 per tonne.

•           Production of value-added products reached 37% of total output in the three months ended 31 March 2012.

•           Aluminium segment cost per tonne1 in the first quarter of 2012 remained almost flat to that in the last quarter of 2011 due to the strict cost control despite upwards pressure from strong oil price and appreciating currency.

•           Adjusted EBITDA decreased by 38.0% to USD237 million for the three months ended 31 March 2012 as compared to USD382 million for the last quarter of 2011, with a corresponding decrease in Adjusted EBITDA margin from 13.6% to 8.2% primarily due to weaker LME aluminium price performance in respective quotation periods.

•           Due to the successful debt restructuring in the fourth quarter of 2011, interest expenses decreased by 20.2% to USD146 million in the first quarter of 2012 as compared to USD183 million in the same period of 2011.

•           Recurring Net Profit of UC RUSAL decreased to USD112 million for the three months ended 31 March 2012 from USD366 million for the fourth quarter of 2011.

•           Net profit was USD74 million for the three months ended 31 March 2012 as compared to the net loss USD974 million for the last quarter of 2011.

•           The Board of Directors has appointed Mr. Barry Cheung as Chairman of the Board with effect from 16 March 2012. As the Chairman of the Board, Mr. Cheung, a non-executive director of the Board since 2010, will have an expanded role in providing leadership and guidance for UC RUSAL's growth strategy, especially in China and the rest of Asia, and for the Company's continued commitment to promoting excellence in corporate governance.

•           On 30 March 2012, the Company exercised the option to introduce a period of up to 12 months, during which financial covenants under the existing international and Russian facilities (where applicable) do not apply. The Company has also made an early repayment of approximately USD130 million under the existing credit facilities out of its own cash in the first quarter of 2012 and, as a result, has no further short-term debt obligations until the end of 2012.

Commenting on the first quarter results, Oleg Deripaska, CEO of RUSAL said:

"The first quarter of 2012 has proved to be a tough test for the aluminium industry with the global demand for the metal slowing down and the aluminium price weakening. Alongside the continued cost inflation, the challenging market environment weighed heavily on the profitability of aluminium producers. With the aluminium price nearing the cash-cost of production for many higher cost producers, the Company's continued focus on cost control and modernization programme has resulted in the aluminium segment cost per tonne

increasing by only 0.1% as compared to the first quarter of 2011 despite significant external pressures such as rising oil price and rouble appreciation.

Production volumes of aluminium also remained firm. However, growth in the physical sales of aluminium was offset by price decreases. Our interest expenses have also decreased significantly, and with the early debt repayment made, UC RUSAL does not have further short-term debt obligations until the end of 2012.

In response to continued uncertainty in the global economy, RUSAL is currently considering the curtailment of 300-600 thousand tonnes of high-cost smelting capacity starting from the second half of 2012, with corresponding alumina production to be possibly idled in order to achieve the production capacity balance.

Even though near-term market prospects are still rather clouded, there are positive signals, with aluminium consumption growth in the US, strengthening of auto sales in Germany, and a strong rise in aluminium consumption in Japan, as well as high level of premiums, that allow us to look optimistically into the future. Long-term fundamentals for aluminium remain strong, and UC RUSAL, being the world's leading aluminium producer, has taken the steps necessary to overcome challenges of today to be well-positioned for tomorrow."

Financial and Operating Highlights

 

 

 

Change

 

Change

 

Quarter ended

quarter on

Quarter ended

quarter on

 

31 March

quarter, %

31 December

quarter, %

 

 

 

(1Q to 1Q)

 

(1Q to 4Q)

 

2012

2011

 

2011

 

Key operating data

unaudited

unaudited

 

unaudited

 

('000 tonnes)

 

 

 

 

 

Aluminium

1,049

1,014

3.5%

1,060

(1.0%)

Alumina

2,034

1,996

1.9%

2,082

(2.3%)

Bauxite

3,622

3,139

15.4%

3,288

10.2%

Key pricing and performance data

 

 

 

 

 

('000 tonnes)

 

 

 

 

 

Sales of primary aluminium and

 

 

 

 

 

alloys

1,095

971

12.8%

1,006

8.8%

(USD per tonne)

 

 

 

 

 

Aluminium segment cost per tonne

1,963

1,962

0.1%

1,952

0.6%

Aluminium price per tonne quoted on

 

 

 

 

 

the LME

2,177

2,503

(13.0%)

2,090

4.2%

Average premiums over LME price

165

153

7.8%

159

3.8%

Alumina price per tonne

316

391

(19.2%)

329

(4.0%)

Key selected data from the consolidated interim condensed statement of income

 

(USD million)

 

 

 

 

 

Revenue

2,882

2,993

(3.7%)

2,806

2.7%

Adjusted EBITDA

237

682

(65.2%)

382

(38.0%)

margin (% of revenue)

8.2%

22.8%

NA

13.6%

NA

Net profit/(loss) for the period

74

451

(83.6%)

(974)

NA

margin (% of revenue)

2.6%

15.1%

NA

(34.7%)

NA

Adjusted Net (Loss)/Profit for the

 

 

 

 

 

period

(90)

288

NA

110

NA