Rusal Posts Best Results in Almost 3 Years as Prices Gain
United Co. Rusal reported its best results since the fourth quarter of 2011 as prices and premiums for the world’s largest aluminum producer increased.
Adjusted earnings before interest, tax, depreciation and amortization in the third quarter rose to $470 million from $220 million in the prior three months, Moscow-based Rusal said today in a statement. Net income was $220 million, up from $116 million, and sales rose 9.6 percent to $2.48 billion. Analysts typically compare Rusal’s results against the previous quarter.
“Healthy consumption growth coupled with production curtailments, have led to a deficit in the global market” excluding China, Chief Executive Officer Oleg Deripaska said in the statement. That, together with falling inventories in London, “means the deficit is continuing to widen,” he said.
Average aluminum prices for three-month delivery gained 9 percent in London in the quarter as markets outside China turned to a deficit. European premiums that buyers pay for faster delivery rose more than 15 percent. Rusal also benefited from a ruble that’s down 30 percent this year against the dollar.
“Rusal, whose spending’s mostly denominated in rubles and revenue comes from exports, to a large extent was helped by the national currency weakening,” George Buzhenitsa, a Deutsche Bank AG analyst, said before the results.
Every ruble that the dollar appreciates secures about $120 million for annualized Ebitda, Rusal said in a presentation.
Global aluminum consumption will reach 66 million tons in 2018 from 52 million tons last year, and the market will remain in deficit “for the foreseeable future,” Deripaska said.
“We have a significant deficit in all three main consuming regions outside China,” Steve Hodgson, director of sales and marketing, told reporters on a call. Premiums will “remain well supported at or above the $500 per ton level,” he said. Rusal also expects the LME aluminum price to stay above $2,000.
Fourth-quarter Ebitda is expected to be more than $400 million “at current margin conditions,” Chief Financial Officer Alexandra Bouriko said. The company sees aluminum output of 900,000 tons this quarter, after a 5.2 percent year-on-year decline to 903,000 tons in the previous three months.
Net debt totaled $9.92 billion as of Sept. 30, down from $10.6 billion on June 30, according to the statement.
Alcoa Inc., the largest U.S. aluminum producer, reported its highest earnings in three years on Oct. 9 as prices rebounded and demand rose from car, truck and plane makers.
Rusal closed up 0.9 percent at HK$4.35 in Hong Kong today.