MOSCOW, Aug 31, 2010 - (ACN Newswire) - UC RUSAL Plc (SEHK: 0486, EuroNext: RUSAL/RUAL), the world's largest aluminium producer, announces its results for the first six months of 2010 ended 30 June 2010.
Key highlights:
-- Net profit of USD1,268 million for the first half of 2010,
as compared to net loss of USD868 million for the first half of 2009.
-- Revenue increased 41.6% to USD5,321 million in the first half of 2010,
compared to the first half of 2009, due to higher aluminium prices.
-- Profit from operating activities of USD1,034 million in the first half
of 2010 generating an operating margin of 19%, as compared to a loss
from operating activities of USD487 million in the first half of 2009.
-- Adjusted EBITDA(1) increased to USD1,325 million for the first half
of 2010, as compared to negative USD144 million for the first half of
2009. Adjusted EBITDA margin has returned to historically comfortable
level of 24.9%.
-- Total aluminium output grew to 1,996 thousand tonnes in the first half
of 2010, an increase of 1%, as compared to the first half of 2009. In
the second quarter of 2010, aluminium production increased by 5%, as
compared to the first quarter of 2010.
-- Alumina output totaled 3,712 thousand tonnes in the first half of 2010,
a decrease of 1%, as compared to the first half of 2009. In the second
quarter of 2010 alumina production increased by 3.7%, as compared to
the first quarter of 2010.
-- Aluminium foil and packaging production volumes increased by 32% to
39.7 thousand tonnes in the first half of 2010, as compared to 30.1
thousand tonnes in the first half of 2009.
-- Aluminium Cash Operating Costs decreased by 2.3% from an average of
USD1,706 per tonne of aluminium for the first quarter of 2010 to an
average of USD1,666 per tonne for the second quarter of 2010.
-- Completed commissioning of potline 5 at Irkutsk aluminium smelter
(Russia), restarted production at the Novokuznetsk aluminium smelter
(Russia), Ewarton plant (Jamaica) and restored operations at Aughinish
alumina refinery (Ireland).
-- Investments(2)in development of existing facilities and construction
of new assets amounted to USD457 million, including refinancing of the
BEMO Loan in the amount of USD208 million and repayment of the BEMO
Loan in the amount of USD52 million out of IPO proceeds in accordance
with the terms of the International Override Agreement.
-- The market value of UC RUSAL's stake in Norilsk Nickel was USD7,168
million at 30 June 2010, compared to USD6,707 million as at 31
December 2009 due to a positive share price performance in the first
half of 2010.
-- VEB USD4.5 billion loan refinancing approved by Sberbank, maturing
in December 2013.
-- Long-term project finance in the amount of RUR50 billion
(approximately USD1.7 billion(3)) for BEMO HPP and the first phase
of the Boguchansky aluminium smelter approved by VEB.
-- The Board of Directors of the company approved that the board lot
size of the shares for trading on the Stock Exchange of Hong Kong
Limited will be changed from 24,000 shares to 6,000 shares with
effect from 9:30 a.m. (Hong Kong time) on 4 October 2010.
Commenting on the first half of 2010 results, Oleg Deripaska, CEO of UC RUSAL said: "UC RUSAL significantly improved its strong financial performance in the first half of 2010. We have increased revenue by 41.6%, returned to a historically comfortable adjusted EBITDA margin of 24.9% and consolidated the positive rate of return. These results reflect the significant improvements in our operational efficiency including the impact of various cost-saving initiatives and productivity enhancement programs. As the industry outlook began to improve, we started to restore production at our facilities, and also increased our capacity through the launch of a technologically and environmentally advanced fifth potline at the Irkutsk aluminium smelter. This will strengthen our position as the world's largest aluminium producer.
"Recessions are followed by active growth and dynamic development, which we need to be prepared for. Continued recovery in global markets should generate good opportunities for growth in demand for aluminium, as it is a base metal required to support key industries and growing economies. As financing has been finalised for the completion of the BEMO Project and further negotiated for the Taishet Aluminium Smelter, more than 1 million tonnes per annum of new, more efficient aluminium and electricity production capacity will be ensured. Asia is a key region for the aluminium industry and consumption, driven by China, is forecast to continue to grow. UC RUSAL's developing presence in the region will allow the Company to capitalise on its competitive advantages, thereby achieving even stronger financial performance and value growth."The information contained in this press release is for media advice only. The contents are true and accurate at the time of publishing, however, may change over time.
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Key selected data 6 mo ended Yr ended Ch. 6 mo/
30 June 31 Dec 6 mo
2010 2009 2009 (%)
========================================================================
Aluminium and alumina price information (USD/t)
------------------------------------------------------------------------
Aluminium price per tonne
quoted on the LME(4) 2,130 1,422 1,668 50%
Alumina price per tonne(5) 331 196 244 69%
========================================================================
Key operating data (kt unless otherwise indicated)
------------------------------------------------------------------------
Primary Aluminium 1,996 1,980 3,946 1%
Alumina 3,712 3,738 7,278 (1%)
Bauxite (mt, wet) 5.5 6.0 11.3 (8%)
Aluminium foil and
packaging products 39.7 30.1 69.8 32%
Coal (50%) (Kt) 9,816 7,088 17,344 38%
Transport (100%)
(Kt of transportation) 9,498 7,504 14,686 27%
========================================================================
Selected data from consolidated interim condensed statement of income
(USD million) unless otherwise indicated
------------------------------------------------------------------------
Revenue 5,321 3,757 8,165 41.6%
Cost of sales (3,495) (3,449) (6,710) 1%
of which energy costs (937) (901) (1,880) 4%
Gross profit 1,826 308 1,455 493%
Distribution expenses (299) (284) (566) 5.3%
Administrative expenses (394) (311) (713) 26.7%
Impairment of non-current assets (45) (37) (68) 21.6%
Profit from operating activities 1,034 (487) (63) na
(excluding the impact of
impairment charges) 1,079 (450) 5 na
margin (% of revenue) 19% nm nm na
Adjusted EBITDA 1,325 (144) 596 na
margin (% of revenue) 24.9% (3.8%) 7.3% na
Finance income 645 23 1,321 2,608%
Finance expenses (656) (680) (1,987) (3.5%)
Share of profits / (losses)
and impairment of associates 458 348 1,417 31.6%
Income tax expense (186) (64) (18) 191%
Net income / (loss)
for the period 1,268 (868) 821 (nm)
========================================================================
Selected data from consolidated interim condensed
statement of financial position (USD million)
------------------------------------------------------------------------
Total assets 24,405 22,219 23,886 10%
Total working capital 2,311 2,123 1,477 9%
Net Debt 12,152 13,426 13,633 (9%)
========================================================================
Selected data from consolidated interim condensed
statement of cash flows (USD million)
------------------------------------------------------------------------
Net cash flows generated from/
used in operating activities 173 (142) 321 (nm)
Net cash flows used in
investing activities (407) (61) (301) 567%
of which capex (137) (74) (244) 85%
of which contributed to BEMO (320) (55) (176) 482%
========================================================================
Selected ratios
------------------------------------------------------------------------
Net Debt to
Adjusted EBITDA ratio 4.6:1 (nm) 22.9:1 na
Total Net Debt to
Covenant EBITDA ratio 5.0:1 na na na
========================================================================
Market review
Worldwide production of primary aluminium in the first half of 2010 increased by 5.6% in comparison with the second half of 2009 and was 16.5% higher than in the first half of 2009. Aluminium consumption increased by 7.1% in comparison with the second half of 2009.
As in 2009, the key industries driving the increase in demand are the automotive and construction sectors. The key region for aluminium demand growth is Asia, in particular China, which re-started 1.7 million tonnes of previously curtailed aluminium capacity during the first half of 2010.
Company outlook
Based on current and forecast industry operating costs, as well as the strong demand for aluminium from China and the recovery of physical demand in the USA, Europe and Japan, UC RUSAL expects aluminium prices to remain at current levels for the remainder of 2010. Since the beginning of 2010, the premium for aluminium spot contracts with deliveries to Europe has increased by 90% up to USD180 per tonne, on a delivered, duty paid Rotterdam basis. UC RUSAL expects premiums to remain strong throughout 2011 and 2012.
Aluminium production in China in 2010 is forecast to grow by 30% and reach 16.9 million tonnes, with consumption growing by 20% to 16.7 million tonnes. Furthermore, UC RUSAL forecasts that China will increase its imports of primary aluminium in 2011 and 2012. It is estimated that more than 25% of China's domestic producers are unprofitable at the current aluminium price due to the increase in domestic electricity tariffs, higher raw material costs and wage inflation. Curtailment expectations have been further fuelled by Chinese government restrictions on outdated facilities and a strengthening currency, leading to an anticipated reduction in production of 1-1.5 million tonnes on an annualised basis.
Aluminium stocks
Aluminium stocks are forecast to drop by up to 5% by the end of 2010 and continue to decline throughout 2011 and 2012 as demand recovers to pre-crisis levels. The ongoing profitability of financing transactions may be challenged by rising interest rates and holding costs, however, it is expected that improvement in physical demand will absorb any releases from warehouse stocks.
Russian aluminium consumption
We expect Russian aluminium consumption to increase by approximately 50% in 2010 to 800 thousand tonnes, as compared to 531 thousand tonnes in 2009.
The government stimulus measures to support producers have proven to be effective and have generated strong performances of the machinery, infrastructure and packaging sectors which, in turn, have increased demand for aluminium. We expect Russian aluminium consumption to grow by another 30% to over 1 million tonnes in 2011, mainly driven by the machinery, construction and packaging industries . We expect Russia's cumulative annual compound growth rate for aluminium consumption to be 9% between 2012 and 2015 .
Alumina market
We expect global alumina production to be stable at 83 million tonnes in 2010 and to increase to 89 million tonnes in 2011. As the leading global company producing and selling alumina, UC RUSAL believes that alumina contract prices and the LME aluminium price should be de-linked and that de-linking the alumina price from the aluminium price will promote fair pricing for this raw material and create new investment opportunities.
We anticipate that the market will introduce an alumina index, which will track spot price sales, and we expect this could happen next year. Currently, other global aluminium and alumina producers support a new pricing index for alumina.
New aluminium ETF
Since 2000, aluminium price growth has outperformed the growth of the S&P500 index by 57% and has become a viable investment opportunity when taking into consideration global economic recovery and the positive forward price outlook. UC RUSAL, along with other aluminium market players and financial institutions, recognises the potential demand created by the establishment of a physically-backed aluminium ETF to enable investors to take advantage of future growth in aluminium prices. Such funds may have the effect of eliminating aluminium surpluses and supporting prices. The use of ETFs is driven by macro trends and volatility. Today's aluminium positive forward curve contango makes aluminium particularly attractive when compared to other metals and traded instruments, and an ETF would facilitate this for investors.
BUSINESS REVIEW
Aluminium production results
UC RUSAL's total attributable aluminium output amounted to 1,996 thousand tonnes in the six months ended 30 June 2010, as compared to 1,980 thousand tonnes for the six months ended 30 June 2009. Output in the second quarter of 2010 increased by 5% to 1,023 thousand tonnes, as compared to 973 thousand tonnes in the first quarter of 2010, and by 6% as compared to 963 thousand tonnes in the second quarter of 2009, showing an overall upward trend in production during those periods. These production results are in line with the forecasts made in the Annual Report. The table below shows the contribution from each facility.
The increases in volumes in each of the periods was mostly due to the completion in April 2010 of the commissioning of potline 5 at the Irkutsk aluminium smelter and also the restart of many of the Group's operations which had been previously idled due to low demand in late 2009.
Alumina production results
UC RUSAL's total attributable alumina output amounted to 3,712 thousand tonnes in the six months ended 30 June 2010, as compared to 3,738 thousand tonnes for the six months ended 30 June 2009. Output in the second quarter of 2010 increased by 3.7% to 1,889 thousand tonnes, as compared to 1,822 thousand tonnes in the first quarter of 2010, and by 16.7% as compared to 1,619 thousand tonnes in the second quarter of 2009, showing an overall upward trend in production during these periods. The table below shows the contribution from each facility.
The slight decrease in the volume of alumina production for the first six months of 2010 as compared to the six months ended 30 June 2009 was due to the temporary mothballing of the Windalco, Alpart, Eurallumina and Zaporozhye alumina refineries. The mothballing of these refineries was almost entirely off-set by the restart in 2010 of many of the Group's operations which had been previously idled due to low demand in late 2009 (including in particular, a substantial restoration of operations at Aughinish alumina refinery in Ireland from September 2009 to March 2010). These production results are in line with the forecasts made in the Annual Report.
Bauxite production results
UC RUSAL's total attributable bauxite output was 5.5 million tonnes for the six months ended 30 June 2010, as compared to 6.0 million tonnes for the six months ended 30 June 2009. Output in the second quarter of 2010 of 2.9 million tonnes roughly approximated output in the same period in 2009, but increased by 12% as compared to 2.6 million tonnes in the first quarter of 2010, showing an overall upward trend in production during the first half of 2010. The table below shows the contribution from each facility.
The decrease in volume of bauxite production for the first six months of 2010 as compared to the six months ended 30 June 2009, was mostly due to the idling of capacity due to low demand following the mothballing of several alumina refineries in 2009. There has been a general increase in output during the first six months of 2010 in line with the restart of alumina operations.
Foil and packaging production results
The aggregate aluminium foil and packaging material production from the Group's plants was 39.7 thousand tonnes for the six months ended 30 June 2010, as compared to 30.1 thousand tonnes for the six months ended 30 June 2009. Output in the second quarter of 2010 increased by 6.8% to 20.5 thousand tonnes, as compared to 19.2 thousand tonnes in the first quarter of 2010, and by 15.2% as compared to 17.8 thousand tonnes in the second quarter of 2009, showing an overall upward trend in production during those periods. The table below shows the contribution from each facility.
The increase in volumes in each of the periods was mostly due to an increase in preliminary production orders which, in the first half of 2010, increased substantially in comparison with the first half of 2009 due to demand restoration.
FINANCIAL OVERVIEW
Revenue increased by USD1,564 million, or 41.6%, to USD5,321 million in the first six months of 2010, as compared to USD3,757 million in the same period in 2009. The increase in revenue was primarily due to increased sales of primary aluminium and alloys, which accounted for 85% and 84.1% of UC RUSAL's revenue for the first six months of 2010 and 2009, respectively.
Revenue from sales of primary aluminium and alloys increased by USD1,364 million, or by 43.2%, to USD4,524 million in the first six months of 2010, as compared to USD3,160 million in the same period in 2009. The increase in revenue over the period resulted primarily from the rise in weighted-average realised aluminium prices, by approximately 49% in the first six months of 2010, as compared to the same period in 2009, due to the increase in the LME aluminium price and premiums over LME price in the different geographical segments.
Revenue from sales of alumina increased by USD100 million, or 59.2%, to USD269 million in the first six months of 2010 as compared to USD169 million in the same period in 2009. The increase in revenue in the first six months of 2010 was primarily the result of an increase in alumina weighted-average sales prices by 41.9%, in line with the rise in worldwide aluminium prices, as well as an increase in the volume of sales of alumina by 12.1%.
Revenue from sales of foil increased to USD135 million in the first six months of 2010, or by 29.8%, as compared to USD104 million in the same period in 2009, due to an increase in the volume of sales of foil and an increase in the volume of sales and an increase in average realised price during the first six months of 2010 when compared to the corresponding period for 2009.
Revenue from other sales, including chemicals and energy, increased to USD393 million in the first six months of 2010, or by 21.3%, from USD324 million in the same period in 2009. The increase in 2010 was primarily due to an increase in volumes and the corresponding tariffs earned from the Group's transportation business in Kazakhstan due to an increase in coal consumption. Other factors contributing to the increase in other sales were increases in prices and volumes of various by-products and secondary materials, including silicon, hydrate, soda, aluminium powders and electricity following the overall recovery in the global economy and the resulting increase in capacity of a number of the Group's production entities.
Cost of Sales
The following table shows the breakdown of UC RUSAL's cost of sales for the six months ended 30 June 2010 and 30 June 2009.
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Cost of Sales 6 mo ended Change Share of
30 June 6 mo/ costs
(USD Mil) 2010 2009 6 mo (%)
========================================================================
Cost of alumina 497 510 (2.5%) 14.2%
Cost of bauxite 230 201 14.4% 6.6%
Cost of other raw materials
and other costs 1,206 1,212 (0.5%) 34.5%
Energy costs 937 901 4.0% 26.8%
Depreciation and amortisation 234 282 (17.0%) 6.7%
Personnel expenses 350 399 (12.3%) 10.0%
Repairs and maintenance 45 54 (16.7%) 1.3%
Change in asset retirement
obligations 3 23 (87.0%) 0.1%
Net change in provisions for
inventories (7) (133) (94.7%) (0.2%)
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Total cost of sales 3,495 3,449 1.3% 100.0%
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Cost of sales increased by USD46 million, or 1.3%, to USD3,495 million in the six months ended 30 June 2010, as compared to USD3,449 million in the same period in 2009, which was primarily due to an increase in energy costs and a decrease in the net change in provision for inventories. As a percentage of revenue, however, cost of sales decreased from 92% in the first six months of 2009 to 66% in the same period in 2010.
Energy costs also increased by USD36 million, or 4%, to USD937 million in the six months ended 30 June 2010, as compared to USD901 million in the same period in 2009. The increase in energy costs over the period resulted primarily from the liberalisation of the electricity market in the Russian Federation. As a percentage of revenue, energy costs decreased from 24% in the first six months of 2009 to 18.0% in the same period in 2010.
Gross profit
As a result of the foregoing factors, UC RUSAL reported a gross profit of USD1,826 million for the six months ended 30 June 2010 compared with USD308 million for the six months ended 30 June 2009, representing gross margins of 34% and 8% respectively.
Results from operations
UC RUSAL reported a profit from operating activities of USD1,034 million in the first six months of 2010, as compared to a loss from operating activities of USD487 million in the same period in 2009, representing positive and negative operating margins of 19% and (13%), respectively.
Adjusted EBITDA
Adjusted EBITDA, being results from operating activities adjusted for amortisation and depreciation, impairment charges and loss on disposal of property, plant and equipment, increased to USD1,325 million in the first six months of 2010, as compared to negative USD144 million in the same period in 2009. Positive operating results were the key factors influencing this increase.
Adjusted EBITDA
Adjusted EBITDA, being results from operating activities adjusted for amortisation and depreciation, impairment charges and loss on disposal of property, plant and equipment, increased to USD1,325 million in the first six months of 2010, as compared to negative USD144 million in the same period in 2009. Positive operating results were the key factors influencing this increase.
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6 mo ended Yr ended Ch.6 mo/
30 June 31 Dec 6 mo
(USD Mil) 2010 2009 2009 (%)
========================================================================
Reconciliation of Adjusted EBITDA
Results from operating activities 1,034 (487) (63) --
Add:
Amortisation and depreciation 246 299 586 (17.7%)
Impairment of non-current assets 45 37 68 21.6%
Loss on disposal of property,
plant and equipment -- 7 5 --
Adjusted EBITDA 1,325 (144) 596 --
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Finance income
Finance income increased by USD622 million to USD645 million in the first six months of 2010 as compared to USD23 million in the same period in 2009. Finance income in the first six months of 2010 was primarily represented by changes in the fair value of derivative financial instruments and net foreign exchange gain.
In November 2009, the Company entered into long-term electricity contracts with related parties through 2019-2021. The contract pricing contains a fixed or a cost based component and an LME-linked price adjustment. Management has analysed the contracts and concluded that the price adjustments represent embedded derivatives which were valued at USD570 million as at the end of 2009. Estimates of the fair value of the embedded derivatives are particularly sensitive to changes in the LME aluminium price. A change in the LME aluminium price between 31 December 2009 and 30 June 2010 resulted in a net asset position of derivative financial instruments. Gain from revaluation of embedded derivatives amounted to USD569 million for the six months ended 30 June 2010.
UC RUSAL recorded a net foreign exchange gain of USD63 million in the first six months of 2010, as compared to a net foreign exchange loss of USD79 million in the same period in 2009. This was primarily as a result of the continuing depreciation of the Ruble against the US dollar over that period.
Finance expenses
Finance expenses decreased by 3.5% to USD656 million in the first six months of 2010 as compared to USD680 million in the same period in 2009. The decrease in finance expenses in the six months ended 2010 was primarily due to net foreign exchange loss recognised in the six months ended 30 June 2009 as partially offset by increases in interest expenses.
Interest expenses on bank loans increased by USD105 million, or 21.1%, to USD602 million in the first six months of 2010, compared to USD497 million in the same period in 2009. This increase was due to amortisation of the gain that was recognised on the completion of the debt restructuring.
Share of profits / (losses) and reversal of impairment of associates and jointly controlled entities
Share of profits of associates was USD458 million in the first six months of 2010 and USD348 million in the same period in 2009 (including partial reversal of impairment). Share of profits of associates in both periods resulted primarily from the Company's investment in Norilsk Nickel.
Share of losses of jointly controlled entities was USD27 million in the first six months of 2010 and USD8 million in the same period in 2009. This represents the Company's share of results in the Company's joint ventures - BEMO and LLP Bogatyr Komir.
Profit / (loss) before income tax
UC RUSAL reported a profit before income tax of USD1,454 million for the six months ended 30 June 2010, as compared to a loss before income tax of USD804 million for the six months ended 30 June 2009. This was mainly due to results from operating activities (which increased by USD1,521 million), the finance income (which increased by USD622 million) and the share of profits of associates (which increased by USD110 million).
Income tax expense
Income tax expenses increased by USD122 million, or 191%, to USD186 million in the first six months of 2010, as compared to USD64 million in the same period in 2009.
Current tax expenses increased by USD47 million, or 147%, to USD79 million as at 30 June 2010, as compared to USD32 million as at 30 June 2009. The increase in current tax expenses was primarily due to positive operating results for some entities of the Group in the first six months of 2010.
Net profit / (loss) for the period
As a result of the above, UC RUSAL recorded a net profit of USD1,268 million for the six months ended 30 June 2010, as compared to a net loss of USD868 million for the six months ended 30 June 2009.
Cash Operating Costs
Aluminium Cash Operating Costs increased by 14.5% or USD213 per tonne (inclusive of exchange rate effects) from an average of USD1,471 per tonne in 2009 to an average of USD1,684 per tonne for the six months ended 30 June 2010. However, aluminium Cash Operating Costs have been reduced by 2.3% or USD40 per tonne (inclusive of exchange rate effects) from an average of USD1,706 per tonne in the first quarter of 2010 to an average of USD1,666 per tonne for the second quarter of 2010. Key factors contributing to the reduction in aluminium Cash Operating Costs in the second quarter of 2010 were decreases of USD10 per tonne in exchange rate effects due to the appreciation of the Ruble, USD3 per tonne in alumina and USD81 per tonne in the cost of power, which were partially off-set by increases of USD34 per tonne in raw materials and USD19 per tonne in other expenses.
The largest components of the UC RUSAL aluminium cash operating structure were alumina and power at 39% and 25% respectively, as compared to the industry average of 37% and 36% respectively, which underscores UC RUSAL's competitive advantages in having access to cheap surplus electricity in Siberia. Other cost items (raw materials at 16%, payroll at 7% and other costs at 13%) are roughly in line with the industry averages.
The Group's alumina Cash Operating Costs also increased by 6% or USD15 per tonne from an average of USD257 per tonne in 2009 to an average of USD272 for the six months ended 30 June 2010. However, alumina Cash Operating Costs have been reduced by 2% or USD5 per tonne from an average of USD274 per tonne in the first quarter of 2010 to an average of USD269 per tonne for the second quarter of 2010. The principal factor in the overall increase in the Group's alumina Cash Operating Costs from 2009 to the first half of 2010 was the increase in the market price of utilities (including fuel-oil and gas) as a result of a corresponding increase in market oil prices.
Norilsk Nickel investment
The market value of UC RUSAL's stake in Norilsk Nickel was USD7,168 million at 30 June 2010, compared to USD4,527 million at 30 June 2009 and USD6,707 million as at 31 December 2009 due to a positive share price performance in the first half of 2010.
Assets and liabilities
UC RUSAL's total assets increased by USD519 million, or 2.2%, to USD24,405 million as at 30 June 2010 as compared to USD23,886 million as at 31 December 2009. The increase in total assets mainly resulted from the increase in interests in associates and jointly controlled entities, inventories and other current assets, as partly offset by a decrease in property, plant and equipment.
Total liabilities decreased by USD2,606 million, or 14.8%, to USD14,948 million as at 30 June 2010 as compared to USD17,554 million as at 31 December 2009. The decrease was mainly due to the partial repayment of USD2,143 million of the outstanding debt of the Group out of the IPO proceeds (together with certain restructuring fees). Total Debt has been reduced to USD12.5 billion in the first six months of 2010. The Company is now significantly ahead of its debt reduction targets and, as a result, started to pay a lower margin (5.5% vs. 7%) from June 2010 as the Total Net Debt to Convenant EBITDA ratio dropped.
Capital expenditure
UC RUSAL recorded total investment in the development of existing facilities and the construction of new assets of USD137 million in the six months ended 30 June 2010. UC RUSAL's capital expenditure in 2010 was aimed at maintaining existing production facilities, with the exception of the BEMO Project.
The table below shows the breakdown of UC RUSAL's capital expenditure by business segments (excluding acquisitions) in the six months ended 30 June 2009 and 2010 and the year ended 31 December 2009.
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Capital expenditure 6 mo ended Yr ended Ch.6 mo/
30 June 31 Dec 6 mo
(USD Mil) 2010 2009 2009 (%)
========================================================================
Aluminium 95 49 164 93.9%
Alumina 35 18 62 94.4%
Mining and metals -- -- -- --
Energy 1 4 8 (75%)
Other operations 6 3 10 100%
Total capital expenditures 137 74 244 85.1%
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At present, UC RUSAL's capital expenditure for 2010 is subject to covenants included in the International Override Agreement and is restricted to maintenance investments and investments in the BEMO HPP. According to the limits specified in the International Override Agreement, UC RUSAL's total capital expenditure for 2010 is limited to USD481 million, including a ceiling of USD256 million for the BEMO HPP and ceiling of USD225 million for maintenance. UC RUSAL's expenditure on the BEMO Project during the first half of 2010 was USD60 million net of refinancing of the BEMO Loan, which was in an amount of approximately USD208 million, and repayment of the BEMO Loan in an amount of approximately USD52 million, which was derived from proceeds from the Global Offering and in accordance with the terms of the International Override Agreement.
The expected source of funding for the Group's capital expenditure within the International Override Agreement framework is operating cashflow from UC RUSAL's operations. Although the debt restructuring agreements generally prohibit UC RUSAL from incurring capital expenditures in relation to any projects until the end of the Override Period, in relation to the BEMO Project and the Taishet aluminium smelter, the International Override Agreement permits UC RUSAL to fund the projects on a project finance basis or through certain equity investments.
UC RUSAL announced at the end of July 2010 that the Supervisory Board of VEB has approved a financing package amounting to RUR50 billion (approximately USD1.7 billion) for completion of the BEMO Project. Under the financing package, VEB will provide a loan to the BEMO HPP of RUR28.1 billion with a tenor of 16 years for the completion of the construction of the BEMO HPP. The bank will lend an additional RUR21.91 billion to Boguchansky aluminium smelter for 14 years to complete the construction of the first phase of the smelter and infrastructure facilities. The approved credit facilities will cover the full expenses for the construction of the BEMO HPP and the first phase of the smelter.
The first phase of the smelter, which will have a capacity of 147,000 tonnes per annum, is currently close to 30% complete and construction will be resumed in the fourth quarter of 2010. It is planned that the first phase of the smelter will be completed in 2013.
The approved credit facilities will be provided according to the principles of project financing without recourse to the Group's balance sheet. The financing will be available upon signing of the loan documentation, receipt of the necessary corporate approvals, approval of the Group's creditors and fulfillment of other conditions precedent.
Loans and borrowings
The nominal value of the Group's loans and borrowings, including amounts of unsecured company loans to Onexim, was USD13,100 million as at 30 June 2010, compared to USD14,543 million as at 31 December 2009.
On 1 February 2010, UC RUSAL repaid principal debt and fees owed to its international lenders (excluding VEB) as well as principal debt and accrued interest to the Onexim Group in the amount of USD2.143 billion. These debt repayments were made from the approximately USD2.2 billion proceeds of the IPO.
These debt repayments exceed the Company's debt repayment target through the end of 2010, with USD3.3 billion remaining to be repaid by the end of 2013.
CONSOLIDATED INTERIM CONDENSED STATEMENT OF INCOME
------------------------------------------------------------------------
Three months Six months
ended 30 June ended 30 June
2010 2009 2010 2009
(USD Mil) (unaudited) (unaudited) (unaudited)
------------------------------------------------------------------------
Revenue 2,990 1,980 5,321 3,757
Cost of sales (1,929) (1,840) (3,495) (3,449)
Gross profit 1,061 140 1,826 308
Distribution expenses (165) (118) (299) (284)
Administrative expenses (154) (156) (394) (311)
Loss on disposal of prop.,
plant and equipment - (5) - (7)
Impairment of non-current
assets (40) (12) (45) (37)
Other operating expenses (34) (89) (54) (156)
Results from operating
activities 668 (240) 1,034 (487)
Finance income 716 24 645 23
Finance expenses (360) (331) (656) (680)
Share of profits and reversal
of impairment of associates 195 328 458 348
Share of losses of jointly
controlled entities (34) (18) (27) (8)
Profit/(loss) before tax 1,185 (237) 1,454 (804)
Income tax (164) 7 (186) (64)
Net profit/(loss)
for the period 1,021 (230) 1,268 (868)
Attributable to:
Shareholders of Company 1,021 (230) 1,268 (868)
Earnings/(loss) per share
Basic and diluted earnings/
(loss) per share (USD) 0.07 (0.02) 0.08 (0.07)
========================================================================
CONSOLIDATED INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME
------------------------------------------------------------------------
Three months Six months
ended 30 June ended 30 June
2010 2009 2010 2009
(USD Mil) (unaudited) (unaudited) (unaudited)
------------------------------------------------------------------------
Net profit/(loss)
for the period 1,021 (230) 1,268 (868)
Other comprehensive
income/(loss):
- Actuarial (losses) /
gains on post retirement
benefit plans (60) 8 (32) 21
- Share of other compre-
hensive (loss)/ income
of associate (43) 77 29 71
- Foreign currency translation
differences for foreign
operations (841) 859 (433) (645)
------------------------------------------------------------------------
(944) 944 (436) (553)
------------------------------------------------------------------------
Total comprehensive income
/(loss) for the period 77 714 832 (1,421)
Attributable to:
Shareholders of the Company 77 714 832 (1,421)
========================================================================
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
------------------------------------------------------------------------
Three months Year ended
ended 30 June 2010 31 Dec 2009
(USD Mil) (unaudited)
------------------------------------------------------------------------
ASSETS
------------------------------------------------------------------------
Non-current assets:
Property, plant and equipment 5,910 6,088
Intangible assets 4,032 4,112
Interests in associates 9,186 8,968
Interests in jointly controlled entities 998 778
Financial investments 43 54
Deferred tax assets 64 144
Derivative financial asset 60 -
Other non-current assets 211 118
------------------------------------------------------------------------
Total non-current assets 20,504 20,262
------------------------------------------------------------------------
Current assets:
Inventories 2,324 2,150
Trade and other receivables 1,269 1,238
Cash and cash equivalents 308 236
------------------------------------------------------------------------
Total current assets 3,901 3,624
------------------------------------------------------------------------
Total assets 24,405 23,886
------------------------------------------------------------------------
EQUITY AND LIABILITIES
------------------------------------------------------------------------
Equity:
Share capital 152 -
Share premium 15,782 13,641
Other reserves 3,078 3,081
Currency translation (3,960) (3,527)
Reserve (5,595) (6,863)
Total equity 9,457 6,332
------------------------------------------------------------------------
Non-current liabilities:
Loans and borrowings 12,042 11,117
Provisions 419 385
Deferred tax liabilities 544 512
Derivative financial liabilities - 510
Other non-current liabilities 63 62
Total non-current liabilities 13,068 12,586
------------------------------------------------------------------------
Current liabilities:
Loans and borrowings 418 2,752
Current taxation 35 44
Trade and other payables 1,282 1,911
Derivative financial liabilities - 60
Provisions 145 201
------------------------------------------------------------------------
Total current liabilities 1,880 4,968
Total liabilities 14,948 17,554
Total equity and liabilities 24,405 23,886
Net current assets/(liabilities) 2,021 (1,344)
Total assets less current liabilities 22,525 18,918
========================================================================
CONSOLIDATED INTERIM CONDENSED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------
2010 2009
(USD Mil) (unaudited)
------------------------------------------------------------------------
OPERATING ACTIVITIES
Net profit/(loss) for the period 1,268 (868)
------------------------------------------------------------------------
Adjustments for:
Depreciation 237 291
Amortisation 9 8
Impairment of non-current assets 45 37
Changes/fair value of financial
instruments (573) (4)
Revaluation of financial instruments 11 -
Reversal of impairment of trade and
other receivables (2) 54
Reversal of impairment of inventories (7) (133)
Provision for legal claims 8 30
Reversal of tax provision (5) -
Foreign exchange (gain)/ losses (78) 56
Loss on disposal of property, plant and
equipment - 7
Loss on disposal of intangible assets - 10
Interest expense 645 601
Interest income (9) (19)
Income tax expense 186 64
Share of profits and reversal of
impairment of associates (458) (348)
Share of losses of jointly controlled
entities 27 8
------------------------------------------------------------------------
1,304 (206)
------------------------------------------------------------------------
(Increase)/decrease in inventories (151) 864
Increase in trade and other receivables (182) (49)
Increase in prepaid expenses and other assets - (20)
Decrease in trade and other payables (341) (304)
Decrease in provisions (48) (13)
Cash generated from operations 582 272
------------------------------------------------------------------------
Income taxes paid (77) (6)
Interest paid (332) (408)
Net cash generated from /
(used in) operating activities 173 (142)
------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from disposal of property,
plant and equipment 5 43
Interest received 3 2
Acquisition of property, plant and equipment (136) (69)
Acquisition of intangible assets (1) (5)
Cash inflow on disposal of subsidiaries - 25
Dividends from jointly controlled entities 25 -
Contributions to jointly controlled entities (320) (55)
Changes in restricted cash 17 (2)
Net cash used in investing activities (407) (61)
------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from borrowings 208 909
Repayment of borrowings (1,818) (1,060)
Restructuring fees (63) (82)
Listing related expenses (82) -
Repayment of Fee Warrants (153) -
Proceeds from Global Offering 2,236 -
------------------------------------------------------------------------
Net cash generated from /
(used in) financing activities 328 (233)
Net increase/(decrease) in
cash and cash equivalents 94 (436)
Cash and cash equivalents at 1 January 215 685
Effect of exchange rate fluctuations on
cash and cash equivalents (5) (10)
Cash and cash equivalents at the
end of the period 304 239
========================================================================
DISCLAIMER
The information contained in this press release is for media advice only. The contents are true and accurate at the time of publishing, however, may change over time.
This and all announcements and press releases published by United Company RUSAL Plc are available on its website under the links http://www.rusal.ru/en/stock_fillings.aspx and http://www.rusal.ru/en/presscenter.aspx, respectively
Contact:
RUSAL
Vera Kurochkina
Tel: 7 495 720 5170
Vera.Kurochkina@rusal.com
For Investor Enquiries:
RUSAL
Catherine Shiang
Tel: 852 6391 6819
Catherine.Shiang@rusal.com
Topic: Earnings
Source: RUSAL
Sectors: Metals & Mining, Daily Finance
https://www.acnnewswire.com
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