UC Rusal Announces 2014 First Half Results
OREANDA-NEWS. UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange: RUALR/RUALRS), a leading global aluminium producer, announces its results for the six months ended 30 June 2014.
Key highlights
Total aluminium output amounted to 1,783 thousand tonnes in the first half of 2014, representing a decrease of 10.8%, as compared to 1,999 thousand tonnes in the first half of 2013 following the successful completion of capacity curtailments program at the least efficient smelters.
Production of value-added products continued to grow and reached a record 46.9% of total aluminium production in the second quarter of 2014.
Alumina output remained almost flat and comprised 3,618 thousand tonnes in the first half of 2014, representing a decrease of 0.5%, as compared to 3,638 thousand tonnes for the same period of 2013.
Bauxite production totalled 5,885 thousand tonnes in the first half of 2014, representing a decrease of 0.5%, as compared to 5,912 thousand tonnes in the first half of 2013.
Revenue in the first half of 2014 decreased by 15.7% to USD4,384 million as compared to USD5,203 million in the first half of 2013 due to a 12.6% decrease in physical aluminium sales and continued pressure of the LME price down to an average of USD1,753 per tonne, a 8.7% decrease compared to the same period of 2013, partially offset by historically high premiums over LME aluminium price of USD347 per tonne for the first half of 2014.
Revenue in the second quarter of 2014 increased by 6.5% to USD2,261 million as compared to USD2,123 million for the first quarter of 2014, following a 4.6% increase in aluminium sales volumes, a 5.3% increase in the average LME aluminium price and a 5.4% growth in the average realized premiums over the LME price.
Aluminium segment cost per tonne decreased by 9.8% to USD1,752 per tonne in the first half of 2014, in comparison with USD1,942 per tonne in the first half of 2013 following the successful completion of capacity curtailments program at the least efficient smelters. External factors such as the depreciation of the Russian Ruble to the US dollar by 12.8% to RUB34.98 in the first half of 2014 from RUB31.02 in the respective period of 2013, has also had a significant positive effect on the overall level of costs.
Although Adjusted EBITDA comprised USD393 million for the first half of 2014 representing a decrease of 6.4% as compared to USD420 million for the same period of 2013, Adjusted EBITDA margin improved to 9.0% for the first six months of 2014, as compared to 8.1% for the same period of 2013. Aluminium segment EBITDA margin increased to 15.0% in the first half of 2014, as compared to 12.7% for the same period of the preceding year.
The Company recognised Profit and Recurring Net Profit of USD116 million and USD129 million, respectively, for the second quarter of 2014, demonstrating positive result first time since the first quarter of 2013.
The second half of 2014 management outlook: aluminium production is expected at around 1.8 million tonnes in the second half of the year. RUSAL continues maintaining cost discipline and keeping low cash cost base. RUSAL's management expects positive aluminium price dynamics in the second half of 2014 with physical premiums continuing to rise through to the end of the year. Management views further improvement of margins and profits in the second half of 2014 at current aluminium price levels. 2014 capex is expected to be approximately USD500-600 million. RUSAL's EBITDA in the second half of the year is expected in excess of USD600 million at current aluminium price levels.
Commenting on the first half results, Oleg Deripaska, CEO of RUSAL said:
"During the first half of 2014, there was a major improvement in RUSAL's financial results in the second quarter compared to the first quarter, which was a result of a recovery in the aluminium price, a rise in average realized premiums, and tight cost controls.
Revenue in the second quarter of 2014 increased by 6.5% to USD2,261 million from the first quarter of 2014. The continuing enhancement of the high value-added product portfolio is an additional strong driver for RUSAL's revenue line. In the first half of 2014, RUSAL produced 809,000 tonnes of primary foundry alloys, billets, slabs and wire rod, which represented 45.4% of total aluminium output in the period - an all-time record for the Company.
Adjusted EBITDA in the second quarter of 2014 substantially improved, increasing by 27.2% to USD220 million, with EBITDA margin improving by 9.7%. The aluminium segment's EBITDA margin increased to 15.0% in the first half of 2014 compared to 12.7% for the same period last year. In the second quarter of 2014, the Company reported Profit and Recurring Net Profit of USD116 million and USD129 million, respectively, entering positive territory at the bottom line for the first time since the first quarter of 2013.
Post half year end, RUSAL fully executed its refinancing process and in doing so increased the average debt maturity from 2 to 4.4 years which subsequently extended the grace period until 2016. The refinancing was a transformational move for RUSAL's debt profile. Further deleveraging remains a priority for RUSAL in order to support our financial position.
In the second half of the year, we expect the LME spot aluminium price to remain around current levels and we see a potential upside for physical premiums. The positive dynamics in the aluminium sector is supported by the mounting ex-China deficit, solid demand fundamentals driven by the ongoing shift from steel to aluminium in the automotive sector and a lack of new primary aluminium projects putting pressure on the supply side of the equation."
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