|
| Monday, 14 November 2011, 09:00 HKT/SGT | |
| |  | |
Source: RUSAL | |
|
|
|
HONG KONG, Nov 14, 2011 - (ACN Newswire) - UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, MICEX: RUALR, RTS: RUAL), the world's largest aluminium producer, announces its results for the third quarter ended 30 September 2011.
-- Revenue increased by 16.8% to USD3,162 million for the three months
ended 30 September 2011, as compared to USD2,708 million for the
same period of 2010, mainly due to an increase in sales prices and
a record level of realised premiums of USD164 per tonne over the
LME aluminium price.
-- Adjusted EBITDA increased by 25.0% to USD705 million for the
three months ended 30 September 2011 as compared to USD564 million
for the three months ended 30 September 2010. Adjusted EBITDA margin
was 22.3% and 20.8% for the three months ended 30 September 2011
2010, respectively, maintaining its premier position in the industry.
-- Adjusted Net Profit for the three months ended 30 September 2011
increased more than twice to USD290 million as compared to USD143
million for the three months ended 30 September 2010 following the
strong operating results.
-- Net profit was USD432 million for the three months ended 30
September 2011 as compared to USD29 million for the three months
ended 30 September 2010.
-- Continuing decrease of the average-weighted energy tariff (a drop by
6% in the third quarter of 2011 as compared to that of the second
of 2011).
-- Completed refinancing of the debt portfolio with maturity extension
and interest margin reduction which allowed for operational and
financial flexibility, dividend payments and the lifting of capex
restrictions.
-- BEMO project well on track with all nine turbines delivered on site
and five of them installed.
-- RUB40 billion 15-year non-recourse project financing for Taishet
aluminium smelter arranged and capital spending restarted in the
third quarter of 2011.
Commenting on the third quarter results, Oleg Deripaska, CEO of RUSAL said:
"Market uncertainty and anticipation of another global economic downturn have put significant pressure on the aluminium industry in the third quarter of 2011. Despite the volatile metal prices, UC RUSAL has nevertheless achieved impressive results during the period. Solid production results, enhanced cost efficiency and client-oriented marketing efforts, coupled with a focus on value-added products, have enabled us to end the period with adjusted EBITDA increasing by 25.0% and adjusted net profit more than doubling period-on-period. UC RUSAL has maintained its leading position in industry with an adjusted EBITDA margin of 22.3%.
"The third quarter has seen UC RUSAL reinforce its financial position after a successful refinancing of its debt, a move supported by major international and Russian blue chip lenders. This step gives the Company more flexibility in terms of capital expenditure and development of a new long-term growth strategy with completion of the Boguchansky and Taishet smelters at its forefront.
"Current volatility and falling LME prices have led to a tangible imbalance between the physical and equity market. Major indicators show that the physical market remains tight with premiums staying at their five-year high levels. This supports our view that prices for aluminium, unlike prices for other commodities amid the current economic conditions, have reached the break-even point. In the mid to long term, demand for our metal is to remain strong, and despite the current challenging economic conditions, UC RUSAL believes the progress it has made together with the continuing focus on cost efficiency will enable the Company to continue delivering value for all its stakeholders."
Overview of trends in the aluminium industry and business environment
Aluminium industry during the nine months period ended 30 September 2011
Demand for aluminium continued to improve throughout the nine months ended 30 September 2011, reaching 33.7 million tonnes and representing a 10% increase from that for the same period in 2010. Worldwide production of aluminium was in balance with the aluminium consumption levels for the nine months ended 30 September 2011, but was 7% higher than the recorded for the same period in 2010, which represents a trend towards higher growth rates for consumption than for production.
Demand for aluminium in the Western markets has remained firm, with strong performance in the North American and European automotive and commercial transportation sectors partially offset by the weakness in the construction sector, leading to a 5% growth in North America and a 4.5% growth in Europe, year to date. A residual impact of the Japanese tsunami remains looming, with the consumption in Japan recorded at -3%. Overall, and in keeping with recent trends, demand for aluminium was largely driven by non-OECD countries, with China showing an 18% consumption growth, with India 13% and Brazil 8%, according to Brook Hunt.
Japan's demand for aluminium is returning to the pre-earthquake levels led by the automotive and construction sectors, according to UC RUSAL. Imports of aluminium exceeded the level a year ago for the first time since March 2011. Forecasts of auto production for the fourth quarter are up by 20% in Japan compared to that of the fourth quarter of 2010. Demand for aluminium building materials in Japan are up by 6.6% for the first half of 2011 as compared to that of the same period last year.
China's demand for aluminium rose to 14.5 million tonnes during the period. The reported growth of 18% in aluminium consumption in China significantly outperformed aluminium production growth of 14% for the nine months ended 30 September 2011 due to power supply restrictions that resulted in smelter closures and delays in starting of new smelting capacity. China sustained a net import aluminium position of 0.43 million tonnes for the first nine months of 2011. Imports are mainly semi-fabricated products such as slabs, billets and aerospace. The LME - SHFE price arbitrage turned positive due to a drop in the LME price towards the end of the third quarter of 2011.
Aluminium cost inflation as well as a positive aluminium metal forward curve, and low interest rates level supported the aluminium price. As a result, during the first nine months of 2011, the LME aluminium price increased to an average of USD2,498 per tonne, which was up by 18% compared to that of the same period last year. Aluminium continued moving into off-warrant warehouses as part of financial deals, supporting aluminium production and supply as well as the underlying price. Nevertheless, at the price levels realised throughout the latter part of the third quarter of 2011, it is estimated that up to 25% of the global aluminium operations were unprofitable, resulting in the postponement of capacity restarts and leading to the potential for capacity closures in the fourth quarter of the year.
Aluminium industry 2011 outlook
In the major aluminium consuming markets, the impact of the current economic downturn is mixed. Globally, automotive remains a key driver of aluminium demand growth. Full year production of cars in North America is expected to grow by 5% year-on-year, with a forecasted growth of 1.6% in Europe. The construction sector remains weak in the major economies outside China, and the European rolled products sector is slowing. Despite this, demand from other consuming segments, including aviation and packaging, remains firm, and overall, UC RUSAL predicts a year-on-year global demand growth of 13% for aluminium in 2011, to 46 million tonnes.
Total underlying demand for aluminium in China is forecast at 19 million tonnes in 2011, a 15% increase compared to that of 2010. In addition to the automotive and construction segments, on-going infrastructure development and new investments in aerospace and defence are supporting demand increases, although there are indications of stock building in the automotive industry.
China's aluminium output is expected to grow by 14% in 2011 to 18 million tonnes, but this is down from an annualised aluminium production rate of 19 million tonnes in July 2011 as power supply has temporarily been suspended in the third quarter due to the drought in South West China and that there was a drop in the export of semis due to lower primary aluminium demand.
On a global basis, the growth in aluminium production is forecasted to increase by 9% in 2011 to 46 million tonnes despite the uncertain economic outlook, according to UC RUSAL's estimate. Regional aluminium markets remain largely balanced as indicated in reported premiums. This supports our view that aluminium has been affected less than other materials such as copper by the current economic conditions and any excess supply is effectively locked in warehouses and/or finance transactions.
Business review
- Aluminium production -
Total aluminium output amounted to 1,041 thousand tonnes for the third quarter of 2011, as compared to 1,038 thousand tonnes for that of the same period in 2010. Output for the nine months ended 30 September 2011 increased by 1.0% to 3,064 thousand tonnes as compared to 3,034 thousand tonnes for the respective period of 2010. The increase was mostly due to increased production at certain Siberian (Russia) smelters of UC RUSAL as well as Kubal of Sweden.
- Alumina production -
Total alumina output amounted to 2,049 thousand tonnes for the third quarter of 2011 and 6,074 thousand tonnes for the nine months ended 30 September 2011, and demonstrates a 0.1% and a 5.5% growth as compared to the same periods in 2010, respectively. The increase in the volume was due to increased production at Nikolaev alumina refinery in Ukraine, Windalco Ewarton plant in Jamaica and Aughinish alumina refinery in Ireland.
- Bauxite production -
Aggregate bauxite production was 3,560 thousand tonnes and 10,177 thousand tonnes, respectively for the three- and nine-month periods ended 30 September 2011, as compared to 3,306 thousand tonnes and 8,697 thousand tonnes for the three- and nine-month periods ended 30 September 2010 and demonstrates a 7.7% and a 17.0% growth in the respective periods. The main factor of growth over the respective periods was increased production at Bauxite Co. De Guyana (BCGI) in Guyana, Windalco Ewarton plant in Jamaica and North Urals in Russia.
Financial Overview
- Revenue -
Revenue increased by USD454 million or 16.8% to USD3,162 million in the third quarter of 2011, as compared to USD2,708 million for the corresponding period in 2010. For the nine months ended 30 September 2011, revenue increased by 18.1% to USD9,485 million, as compared to USD8,029 million for the nine months ended 30 September 2010. The increase in revenue was primarily due to increased revenue from sales of primary aluminium and alloys, which accounted for 85.4% and 84.2% of UC RUSAL's revenue for the third quarter of 2011 and 2010, respectively and 84.7% and 84.4% for the nine months ended 30 September 2011 and 2010, respectively.
Revenue from sales of primary aluminium and alloys increased by USD420 million or 18.4% to USD2,700 million in the third quarter of 2011, as compared to USD2,280 million for the corresponding period in 2010. The increase in revenue over the period resulted primarily from the rise in weighted-average realised aluminium prices, by approximately 23.9% in the third quarter of 2011 as compared to that for the corresponding period in 2010, driven by an increase in the LME aluminium price (to an average of USD2,399 per tonne from USD2,089 per tonne for the three months ended 30 September 2011 and 2010, respectively) and a record level of premiums over the LME price in the different geographical segments. Weighted-average realised premiums above the LME aluminium prices have increased by 43.9% from USD114 per tonne in the third quarter of 2010 to USD164 per tonne in the third quarter of 2011.
Revenue from sales of primary aluminium and alloys increased by 18.6% to USD8,038 million for the nine months ended 30 September 2011, as compared to USD6,778 million for the same period of 2010. The same trends as for the third quarter drive the increase in revenue in the nine-month period.
- Cost of sales -
Cost of sales increased by USD321 million, or 16.4%, to USD2,282 million for the three months ended 30 September 2011, as compared to USD1,961 million for the corresponding period in 2010. The principal drivers of the increase were higher costs of energy due to an increase in tariffs for electricity and capacity, personnel expenses as a result of the implementation of a new incentive program for main production personnel, and raw materials due to growth in the purchase price of materials. Appreciation of Ruble/US dollar average exchange rate in the third quarter of 2011 compared to the third quarter of 2010 negatively affected Ruble denominated expenses in the third quarter of 2011.
- Results from operating activities and Adjusted EBTIDA -
Results from operating activities increased in the third quarter of 2011 by 27.5% to USD552 million, as compared to USD433 million for the corresponding period in 2010, representing positive operating margins of 17.5% and 16.0%, respectively. The increase in margins mainly reflects the positive effect of an increase in the LME aluminium price and premiums over the LME as well as the reduction in distribution, general and other operating expenses.
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 USD705 million in the third quarter of 2011, as compared to USD564 million for the corresponding period in 2010. Positive operating results were the key factor influencing this increase.
- Finance income and expenses -
Finance income increased by USD100 million to USD104 million in the third quarter of 2011 as compared to USD4 million for the corresponding period in 2010 primarily due to the foreign exchange gain that was recognised in the third quarter of 2011.
Finance expenses decreased by 54.4% to USD319 million in the third quarter of 2011 as compared to USD699 million for the corresponding period in 2010 primarily as the result of a change in the valuation of embedded derivatives (starting from the beginning of 2011, valuation is based on the contractually-committed volumes of electricity and capacity in line with the term of notice submitted to the administrator of trading system on a monthly basis whereas prior to that the embedded-derivative features were revalued for the entire duration of the contracts). The LME-linked price-adjusting premiums to counterparties contained in long-term electricity and other supply contracts and realised during the period amounted to USD79 million and USD23 million for the third quarters of 2011 and 2010, respectively, and were included in the change in fair value of derivative financial instruments. In third quarter 2010 the change in fair value of derivative financial instruments also included revaluation of the embedded derivatives for the future periods amounting to USD400 million. At the same time revaluation of a financial instrument linked to the share price of OJSC MMC Norilsk Nickel amounted to USD61 million in the third quarter of 2011 compared to USD7 million in the third quarter of 2010.
Interest expenses on bank loans (including bank charges) and loans from related parties decreased by USD101 million, or 34.2%, to USD194 million in the third quarter of 2011, as compared to USD295 million in the same period in 2010 primarily due to reduction in principal amounts payable to international and Russian lenders and interest margin reduction for all international banks and Onexim over comparable periods.
- Net profit for the period -
As a result of the above, UC RUSAL recorded a net profit of USD432 million for the three months ended 30 September 2011, as compared to a net profit of USD29 million for the three months ended 30 September 2010.
- Adjusted Net Profit -
Adjusted Net Profit for any period is defined as the net profit adjusted for the net effect from the share in the results of Norilsk Nickel, the net effect of embedded derivative financial instruments, excess of effective interest rate charge over nominal interest rate charge on restructured debt and the net effect of non-current assets impairment. Adjusted net profit increased to USD290 million for the three months ended 30 September 2011, as compared to USD143 million for the same period in 2010. Positive operating results were the key factors influencing this increase.
- Segment reporting -
The Group has four reportable segments, as described in the Annual Report, which are the Group's strategic business units. The core segments are Aluminium and Alumina.
For the three months ended 30 September 2011 and 2010, segment result margins (calculated as the percentage of segment profit to total segment revenue) from continuing operations were 25.7% and 19.4% for the aluminium segment, and 0.2% and 12.3% for the alumina segment. Key drivers for the increase in margin in the aluminium segment are disclosed in "Revenue", "Cost of sales" and "Results from operating activities and Adjusted EBITDA" sections above. Growth in purchase prices of materials over the comparable periods (mainly fuel oil, bauxite, caustic soda and so on) ahead of the alumina sales price, which is linked to the LME aluminium price, was the key driver for the significant decrease in margin in the alumina segment.
Please see the full earnings report at www.hkexnews.hk/listedco/listconews/sehk/20111114/LTN20111114045.pdf
Forward-looking statements:
This press-release contains statements about future events, projections, forecasts and expectations that are forward-looking statements. Any statement in this announcement that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risk and uncertainties include those discussed or identified in the prospectus for UC RUSAL.
Contact:
Vera Kurochkina
+7-495-720-51-70
vera.kurochkina@rusal.com
Topic: Earnings
Source: RUSAL
Sectors: Metals & Mining
https://www.acnnewswire.com
From the Asia Corporate News Network
Copyright © 2024 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.
|
|
|
|
|
|
|
|
