UC RUSAL announces 2015 interim results

UC RUSAL, a leading global aluminium producer, announced its results for the three and six months ended 30 June 2015.

Key highlights

• A record low London Metal Exchange (“LME”) aluminium price driven by growing exports from China and oversupply in different regions exerted further pressure on the aluminium industry throughout the first half of 2015. The average LME aluminium price decreased by 10.1% from USD1,968 per tonne for the last quarter of 2014 to USD1,769 per tonne for the three months ended 30 June 2015.

• A significant drop in premiums over the LME aluminium price in different geographical regions resulted in a decrease in average realised price by 7.8% to USD2,119 per tonne for the second quarter of 2015 from USD2,299 per tonne for the preceding quarter of the year.

• Revenue in the first half of 2015 increased by 8.3% to USD4,750 million from USD4,384 million in the first half of 2014 due to a 4.4% increase in physical aluminium sales.

• Revenue in the second quarter of 2015 decreased by 8.2% to USD2,273 million from USD2,477 million in the first quarter of the year following a 5.0% decrease in sales volumes.

• Aluminium segment cost per tonne decreased by 15.3% to USD1,484 in the first half of 2015 from USD1,752 per tonne in the first half of 2014 due to management efforts to strictly control costs and stabilise expenses despite a 50.8% increase in the average electricity tariff. External factors, such as the depreciation of the Russian Ruble against the US dollar also had a significant positive effect on the overall level of costs.

• Adjusted EBITDA in the second quarter of 2015 decreased by 21.2% from USD721 million to USD568 million as a result of a decrease in LME aluminium price and premiums in comparable periods as well as due to the strengthening of the Russian Ruble against the US Dollar. Adjusted net profit of the company in the second quarter of 2015 decreased to USD187 million from USD228 million in the first quarter of 2015.

• The company reduced its Net Debt by USD832 million in the first six months of 2015, which together with the robust financial results led to a further drop in the leverage ratio to below 3.0:1 as at 30 June 2015.

Commenting on the 2015 interim results, Vladislav Soloviev, CEO of RUSAL said:

‘The first half of RUSAL’s financial year coincided with another challenging period for the aluminium market, with the all-in aluminium price declining by 22%, Chinese semis exports increasing by 43% and the global aluminium market entering a surplus. As a result, the company reduced its 2015 demand estimate by 6%, down from an anticipated 6.5%, due to weaker demand from Russia, Brazil and Asia.

In spite of this challenging market context, RUSAL still managed to report a strong set of financial results thanks to its relentless focus on efficiency, CAPEX control, commitment to improving the quality of its products and extending its overall product mix.”

RUSAL forecasts:

RUSAL has reduced its overall 2015 demand growth forecast to 6% from a previously anticipated 6.5% due to weaker than expected demand in Russia, Brazil and Asia. Chinese apparent consumption growth is forecast to slow to 9.0% in 2015 from 9.5%.

RUSAL has reduced its initial global aluminium demand growth forecast from 6.5% to 6%, or 58 million tonnes for the whole of 2015, due to weaker demand in various emerging markets and declines in both Japan and South Korea.

RUSAL is skeptical that Chinese aluminium producers will be able to increase semis exports in 2H 2015, as these exports are already unprofitable. This may result in a potential slowdown in Chinese exports in the second half of the year.

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