OREANDA-NEWS. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange: RUALR/RUALRS), a leading, global aluminium producer, announces its results for the three months ended 31 March 2014.

Key highlights

In the first quarter of 2014 LME aluminium price continued its fall and reached the lowest record since the second quarter of 2009 of USD1,708 per tonne demonstrating a 3.4% decrease compared to USD1,769 per tonne in the last quarter of the prior year. This negative trend was compensated by historically maximum realized premiums over the LME aluminium price of USD336 per tonne in the first quarter of the current year, 21.3% higher than USD277 per tonne in the fourth quarter of 2013.

Aluminium segment cost per tonne in the first quarter of 2014 decreased by 6.6% to USD1,741 per tonne as compared to USD1,864 per tonne in the fourth quarter of 2013 and by 11.7% as compared to USD1,971 per tonne of the first quarter of 2013 following Russian Ruble depreciation against the US dollar and continuing cost cutting measures undertaken by management.

Primary aluminium production in the first quarter of 2014 decreased to 883 thousand tonnes by 2.3% (or by 21 thousand tonnes) as compared to 904 thousand tonnes in the last quarter of the preceding year and by 12.3% (or by 124 thousand tonnes) as compared to 1,007 thousand tonnes in the first quarter of 2013 reflecting the implementation of capacity curtailments program and was mostly attributable to the mothballed production at certain least efficient smelters located in European part of Russia and Urals.

Share of value-added products output increased to 44% of total aluminium production for the first quarter of 2014 in comparison with 43% for the last quarter or with 40% for the first quarter of the previous year.

Revenue in the first quarter of 2014 remained flat and comprised USD2,123 million as compared to USD2,125 million for the fourth quarter of 2013 as decrease in LME aluminium price was compensated by the growth in volumes sold and higher average realized premiums as well as improvement in product mix.

All these factors resulted in substantial improvement of the Company's Adjusted EBITDA position that comprised USD173 million for the first quarter of 2014 with a margin of 8.1% demonstrating an increase of 71.3% as compared to USD 101 million for the fourth quarter of 2013 with a margin of 4.8%. Aluminium segment EBITDA margin improved to 13.2% in the first quarter of 2014 as compared to 9.4% for the last quarter of 2013.

As a result the Company reduced its Recurring Loss to USD169 million for the first quarter of 2014 from USD310 million for the preceding quarter despite the decrease in the LME aluminium price by 3.4%, from USD1,769 to USD1,708 for the respective periods.

The Company obtained consent from a majority of its lenders required for, and satisfied other conditions precedent to, the effectiveness of the forbearance request letter, which became effective on 8 April 2014. Pursuant to the terms of the forbearance request letter, the forbearing lenders have agreed not to take any actions against any member of the Group resulting from certain potential defaults under the Original PXF Facility Agreements pending the effectiveness of the Amendment Agreement.

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

“The first quarter of 2014 saw a significant improvement in the Company's results compared to the previous quarter. The period benefited from the successful implementation of our cost cutting measures and ongoing inefficient capacity curtailment programme. Despite the LME aluminium price continued to be depressed, sliding to a five-year low during the period, UC RUSAL achieved a positive result from operating activities of USD30 million and saw adjusted EBITDA increase by 71.3% from the previous quarter to USD173 million.

UC RUSAL was able to achieve strong cash costs performance with Aluminium operating costs decreasing by 6.6% on the preceding quarter to USD1,741 per tonne, allowing the Company to further improve its position on the cash cost curve and improve EBITDA margin in the segment to 13.2%. In addition, the Company saw growth in the value-added products share which now accounts for 44% of total aluminium output. We will continue to improve profitability by expanding our product range, with projects to increase billet, slab, primary foundry alloys and wire rod capacity currently being realized at the Company's key smelters.

While it is too soon to say the aluminium market has fully turned the corner, we are seeing positive trends, such as robust consumption growth, which is being supplemented by the ongoing optimization of production capacity around the globe, which, in the long-term will ensure that the industry will not face another over production crisis.”