UC Rusal Announces Full Year Results for 2012
OREANDA-NEWS. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange:
RUALR/RUALRS), the world’s largest aluminium producer, announces its results for the year ended 31 December 2012. Key highlights
o The operating profitability and underlying results of aluminium industry for the year 2012 were seriously affected by low LME aluminium price as a result of investor sentiment. Average LME aluminium price decreased by 15.7% from USD2,395 per tonne for the year ended 31 December 2011 to USD2,018 per tonne for the same period of 2012. However, thanks to savings in procurement, cost reduction and working capital optimization initiatives undertaken by the management supported by product mix improvement, weakened local currency and growing premiums, UC RUSAL demonstrated Aluminium segment EBITDA margin of 12.1%, maintaining the premier position in industry.
o Primary aluminium production was almost flat at 4,173 thousand tonnes for the year ended 31 December 2012 compared to 4,123 thousand tonnes for the preceding year. Total aluminium output in the fourth quarter of 2012 decreased by 2.1% to 1,038 thousand tonnes compared to 1,060 thousand tonnes in the fourth quarter of 2011.
o Share of value-added products output increased to 39% of total aluminium production in comparison with 36% for the previous year.
o Revenue in the fourth quarter of 2012 increased to USD2,624 million (by 2.4%) as compared to USD2,563 million for the third quarter of 2012 in line with a slight rebound in metal prices and historically high premiums of USD249 per tonne.
o Aluminium segment cost per tonne reduced to USD1,946 per tonne (by 1.9%) in 2012 as compared to USD1,984 in 2011 supported by a decrease in power tariffs by 9% to USc.3.17/KWh in 2012 as compared to USc.3.48/KWh in 2011.
o Adjusted EBITDA comprised USD915 million for the year ended 31 December 2012 with a margin of 8.4%. In the fourth quarter of 2012 adjusted EBITDA improved to USD221 million compared to USD130 million in the previous quarter of the year backed by stronger revenue and lower costs.
o The Company maintained a robust cash position with USD999 million of free cash flow1 generated for the year ended 31 December 2012 and a reduction in working capital by 20% primarily due to stock optimization.
o Cost control and working capital reduction efforts allowed the Company to decrease the net debt position by USD220 million as at 31 December 2012 as compared to the beginning of the year.
o In the fourth quarter of the year ended 31 December 2012 the Company signed the agreement with major Norilsk Nickel shareholders improving corporate governance and providing increased guaranteed dividend flow.
Commenting on the results, Oleg Deripaska, CEO of RUSAL said:
“2012 remained particularly challenging for the aluminium industry. Despite global aluminium consumption rising by 6% in 2012 to 47.4 million tonnes negative investor sentiment lead to LME prices for aluminium decreasing by 15.7% year-on-year, taking a large share of the global production capacity to or below break-even level. Whilst UC RUSAL’s long-term focus on operational efficiency and cost control has allowed the Company to address these challenges, the unfavourable market conditions and lower LME price has inevitably impacted the operating results of the Company.
In an environment of depressed prices the Company focused its efforts to efficiently manage costs which succeeded in reducing aluminium segment cost per tonne in 2012 by 1.9% to USD1,946. As a result, UC RUSAL’s EBITDA margin was 8.4% which is in line with the global peers, while EBITDA margin in aluminium segment was 12.1% allowing the Company to maintain a premier position in the industry.
In 2012, UC RUSAL enhanced its financial flexibility and made debt repayment exceeding USD1 billion with USD441 million being paid out of the Company’s cash flows. Importantly the Company maintained its robust cash position with USD999 million of free cash flows being generated in 2012.
An undoubted milestone of 2012 was the signing of an agreement between UC RUSAL, Interros, and Millhouse aimed at settling the shareholders’ conflict in MMC Norilsk Nickel. All parties’ efforts will be integrated to deliver improved corporate governance and to increase the value of Norilsk Nickel in the interest of all its shareholders.
Through its lower cost smelters and capacity to optimize production, the Company has demonstrated its ability to respond to the challenging market conditions of the past 12 months. Continued focus on cost control, together with our longer term growth projects and robust financial position means we remain confident in our ability to deliver value and growth for all stakeholders.”
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