Recovered Aluminium Prices, Internal Cost Measures Buoy Rusal’s Q1 Results

Recovered Aluminium Prices, Internal Cost Measures Buoy Rusal’s Q1 Results
Nikolaev Alumina Refinery. Source: Rusal

Russian Federation aluminium titan UC Rusal released first-quarter results on Friday. Though production numbers remained approximately level, the recovery in the aluminium market coupled with internal cost consciousness contributed to solid gains on the firm’s financial bottom line.

Rusal turned in US$2,297 million in revenue during the quarter, up 20% from US$1,194 million in the first quarter of last year, and up 13.3% quarter-on-quarter from Q4’s total of US$2,027 million. Adjusted EBITDA came in at US$475 million, a 52.2% increase year-on-year from last year’s first-quarter number of US$312 million, and up 15.3% quarter-on-quarter from Q4’s adjusted EBITDA of US$412 million.

Adjusted profit for the quarter totaled US$263 million, a staggering 874.1% explosion past last year’s Q1 total of US$27 million and a still-impressive quarter-on-quarter increase of 497.7% above Q4’s total of US$44 million.

Rusal chalks up the better financial numbers to a rise in LME prices and an increase in sales in the quarter. It also credits operational efficiency and cost discipline for internal upward pressure on bottom-line numbers in the quarter.
Production in the quarter ranged from roughly level to down slightly. Rusal turned out 910 thousand metric tons of primary aluminium in the first quarter, 0.7% off from last year’s first-quarter total of 916 thousand metric tons, and down 2.1% from Q4’s total aluminium output of 930 thousand metric tons. Alumina production totaled 1,889 thousand metric tons in Q1, up by a slight 0.9% from last year’s first-quarter production of 1,873 thousand metric tons, and down 2.6% from the prior quarter’s total of 1,939 thousand metric tons. Bauxite production for the quarter came in at 2,869 thousand metric tons, a drop of 4.7% from last year’s first-quarter harvest of 3,009 thousand metric tons, and up by 1.0% quarter-on-quarter above Q4’s total of 2,841 thousand metric tons.

“The first quarter of the year marked another strong period for RUSAL,” opined Rusal’s CEO Vladislav Soloviev. “Revenue increased by 13.3% quarter-on-quarter (“QoQ”) to USD2.3 bn, with VAP sales growing +7.8% QoQ supporting our topline. Adjusted EBITDA grew by 15.3% QoQ to USD475 mln, while Adjusted EBITDA margin remained healthy at 20.7% despite the negative impact of local currency appreciation on RUR-denominated costs. As a result the Company posted a strong Recurring Net Profit of USD434 mln, almost 3-fold increase year-on-year (“YoY”).”

“In the period, the Company significantly improved its debt profile through the successful placing of a debut Eurobond tranche and Panda bond tranche,” Soloviev went on. “Our first Panda bond placing meant that RUSAL became the first overseas company with global operations outside of China to enter the Chinese bond market. Post the period end, the Company also placed its second Eurobond issue. Our success in the debt markets demonstrates the confidence the financial community has in RUSAL and further reinforces the investment case and growth strategy underpinning the Company.”

“The aluminium market remained in robust health in the first quarter, with ex-China aluminium demand growing by 3.4% in 1Q 2017 YoY,” Soloviev remarked. “Demand in China grew by 7.5% in 1Q 2017 YoY. Aluminium demand is on track to grow by 5.0% to 62.7 mln tonnes in 2017, supported by positive economic developments globally, all of which leaves RUSAL well placed for the year ahead.”