UC Rusal Announces 2012 First Half Results
OREANDA-NEWS. August 30, 2012. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange: RUALR/RUALRS), the world’s largest aluminium producer, announces its results for the six months ended 30 June 2012.
Key highlights
• Results for the first half of 2012 were significantly impacted by a decrease in aluminium prices during that
period, a challenging macroeconomic environment and an overall increase in the purchase price of certain
raw materials and transportation tariffs. As a result, revenue, Adjusted EBITDA and Recurring Net Profit1 decreased by 9.7%, 60.4% and 74.4%, respectively for the first half of 2012 compared to that of the same period in 2011.
• In the second quarter of 2012, decreases in operating expenses and cost of sales, the continuing depreciation
of the Rouble against the US dollar and a record high level of average realised premiums above LME
aluminium prices (USD191 per tonne in the second quarter of 2012 compared to USD165 per tonne in the first quarter of 2012), positively affected the results of the reported period as compared to that of the previous quarter. As a result, Adjusted EBITDA and Recurring Net Profit increased by 38.0% and 27.7%, respectively for the second quarter 2012 compared to the previous quarter.
• The sharp decrease in reportable net profit to USD37 million for the first half of 2012 and reportable net loss of USD37 million for the second quarter of 2012 resulted primarily from the decrease in revenue described above and a one-off non-cash item relating to the impairment of an alumina and bauxite plant in Guinea (which accounted for USD167 million). Recurring net profit for the second quarter of 2012 increased to USD143 million from USD112 million for the first quarter of 2012.
• As at 30 June 2012, Net Debt amounted to USD10,855 million. In the first half of 2012, the Company made an early repayment of approximately USD635 million under its existing credit facilities, including USD135 million out of its operating cash flows and USD500 million of refinancing. As a result, the Company has no further short-term debt obligations until the end of 2012. The nominal interest expenses decreased by 19.3% in the first half of 2012 compared to the corresponding period of 2011.
• On 30 March 2012, the Company exercised the option, according to which, certain financial covenants under the existing facilities with international and Russian lenders (where applicable) shall not be tested during the 12 month period that commenced from the first quarter of 2012.
• On 24 August 2012, the Board approved a long-term programme of the gradual reduction of primary aluminium production at four less efficient aluminium smelters in Russia. The programme will affect 275,000 tonnes of primary aluminium capacity and will be implemented in stages from 2012 to 2018.
Commenting on the interim results, Oleg Deripaska, CEO of RUSAL said:
“During the first half of 2012, continuing financial problems in the Eurozone and a slower-than-expected growth in emerging economies resulted in a further weakening of global economic recovery. These challenging market conditions put a significant pressure on the aluminium industry, especially in the second quarter of 2012, leading to a sharp downturn in the price of aluminium on the LME.
Thanks to our product mix and a growing share of value-added products in our portfolio, RUSAL was able reach a total revenue of USD5,712 million for the first half of 2012, in spite of an 18.4% drop in the average LME aluminium price as compared to that for the first half of 2011.
The Company’s commitment to lowering costs resulted in our cost of sales falling by 6% in the second quarter of 2012 as compared to that of the previous quarter of the year. Together with our diversified product mix, this enabled the Company to grow its Adjusted EBITDA in the second quarter of 2012 by 38.0% quarter-on-quarter, with the adjusted EBITDA margin increasing to 11.6%.
In response to the weak macroeconomic environment and with a clear focus on increasing efficiency, RUSAL’s Board recently approved the curtailment of smelting capacity at four smelters with a highest cost of production. The total capacity curtailments until 2018 will reach 275,000 tonnes. The curtailed capacities will be replaced by advanced high-efficient smelters in Siberia, in particular, by the Company’s Boguchansky aluminium smelter, which is currently under construction.
Although global economic sentiment is predicted to remain weak in the mid-term, I am confident that the prospects for the industry remain attractive, with structural increases in demand expected from emerging markets as well as global economic recovery that will support the outlook for commodities.”
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