UC Rusal Announces 2016 Interim Results
· Throughout the first half of the year, the aluminium industry remained under strong pressure as the weak commodity environment continued. Despite the ongoing pricing pressure there was a slight recovery in the Average London Metal Exchange (“LME”) aluminium price by 3.7% to USD1,571 for the second quarter of 2016 as compared to USD1,515 for the first quarter of 2016 resulting in the growth of average sales price by 2.8% to USD1,712 in the second quarter of 2016 as compared to USD1,666 in the preceding quarter, while the average realized product premium for the same period decreased by 5.8%.
· Revenue in the first half of 2016 decreased by 18.0% to USD3,896 million from USD4,750 million in the first half of 2015 due to 13.6% decline in LME aluminium price together with 54.5% decrease in average realised premiums over LME aluminium price to USD167 per tonne for the first six months of 2016 as compared to USD367 per tonne for the same period of the prior year. This negative trend was slightly compensated with the 5.0% growth in the physical sales volumes between the periods.
· Revenue in the second quarter of 2016 increased by 3.6% to USD1,982 million, as compared to USD1,914 million for the first quarter of 2016, following the slight improvement in the LME aluminium price and increase in the share of value added products (“VAP”) in total aluminium sales to 47% in the second quarter of 2016 in comparison with 41% in the previous quarter.
· As a result, the Adjusted EBITDA was increased to USD344 million in the second quarter of 2016 as compared to USD312 million in the first quarter of the year.
· RUSAL achieved Adjusted Net Profit and Recurring Net Profit of USD40 million and USD276 million, respectively, for the second quarter of 2016, as compared to USD27 million and USD149 million for the previous quarter.
· On 12 July 2016 the Group made a principal repayment in total amounts of USD139 million and EUR8 million (USD9 million) under the Combined PXF Facility of amounts due in the first quarter of 2017.
· On 19 July 2016 the Company entered into an agreement to sell 100% stake in the Alumina Partners of Jamaica (“Alpart”) to the Chinese state industrial group, JIUQUAN IRON & STEEL (GROUP) Co. Ltd. (“JISCO”) for a consideration of USD299 million.
Commenting on the 2016 second quarter and interim results, Vladislav Soloviev, CEO of RUSAL, said:
“Throughout the first half of the year, the aluminium industry remained under strong pressure as the weak commodity environment continued. Despite the ongoing pricing pressure, there was a slight recovery in the LME price in Q2 vs Q1, which occurred thanks to strong demand and a tightening of ex-China supply. Both of these positively impacted RUSAL’s financial results in Q2, which also benefitted from strong VAP sales. During Q2, RUSAL reached a 47% share of VAP sales, achieved thanks to seasonal demand growth, which in turn, increased the Company’s strong position in the niche products market. RUSAL is on target to further increase its VAP capacity in order to meet growing customer demand.
“In addition to already producing a wide range of primary aluminium and alloys, RUSAL is constantly seeking new markets to penetrate and new technologies to innovatively develop. In particular, we announced a project to develop 3D printing technology for the industrial use of aluminium and aluminium alloys. The technology will be used to print aluminium parts for use by our customers in the machinery-producing, aerospace and automotive sectors.
“During the reporting period, RUSAL’s management team has focused on keeping costs under control which has helped to provide an effective counterbalance to weaker LME aluminium prices and premiums. We delivered USD1,330 per tonne cash cost in the aluminium segment in 1H 2016, which is a 10% decrease compared to USD1,484 per tonne in 1H 2015.
“Looking forward to the second half of the year, we believe that the aluminium industry will remain under pressure. However, our focus on product quality and strong cost controls mean that RUSAL remains excellently positioned to navigate any challenges ahead.”