Rusal Has First Profit in 3 Years on Ruble as Aluminum Gains
Net income was $293 million, compared with a $3.3 billion loss a year ago, Moscow-based Rusal said in statement today. Fourth-quarter profit advanced 28 percent to $282 million from $220 million in the previous three months, while adjusted earnings before interest, tax, depreciation and amortization rose 39 percent to $651 million.
Analysts typically compare Rusal’s quarterly results against the preceding three months.
Although the industry has managed to recover from a poor start to the year, when aluminum prices were at an almost five-year low, Rusal has “no plans to restart any mothballed capacity,” Chief Executive Officer Vladislav Soloviev said in the statement. Global aluminum demand will gain 6.5 percent this year, he said.
As markets outside China turned to a deficit, aluminum prices gained 2.9 percent in London last year, compared with a 13 percent decline a year earlier. European premiums that buyers pay for faster delivery rose about 40 percent in 2014.
The global slump in crude oil prices will boost economic growth in fuel-importing countries including China and consumption of industrial metals is likely to rise, Rusal said. As such, aluminum stocks in London are forecast to decline, returning to “normal historical levels in 2016,” it said.
Rusal, whose expenses are mostly in rubles while revenue is in dollars and euros, benefited from the 46 percent plunge last year in the Russian currency’s value against the dollar. The company was the best performer on the Moscow stock exchange last year, almost quadrupling in value. The stock, which is also listed in Hong Kong, rose 2.1 percent to HK$5.77 at 9:57 a.m. local time.
Rusal expects the benefit of a declining ruble to be limited this year because of high inflation, Soloviev said earlier this month. The company’s ruble-denominated expenses are rising, due to higher transportation and energy costs, and the company may need to consider adjusting salaries, he said.
Fourth-quarter sales gained 0.8 percent to $2.5 billion, from the previous quarter, while full-year revenue declined 4.1 percent to $9.36 billion from a year earlier. Net debt declined to $8.84 billion from $10.1 billion a year earlier.
The pressure on Rusal’s balance sheet should ease following about $600 million of interim dividend the company received from OAO GMK Norilsk Nickel, in which Rusal holds 28 percent, George Buzhenitsa, an analyst at Deutsche Bank AG in Moscow, said before the results were announced.
Having turned profitable, Rusal may be allowed to pay a dividend according to its debt covenants, Morgan Stanley said in a Feb. 10 report, citing estimates worked out after meeting with the company’s management.
In its statement, the company said that an early repayment of $300 million of debt last year should allow it to qualify for lower interest rates from March.
(An earlier version of this story corrected the fourth-quarter profit figure provided in the second paragraph.)