RUSAL’s net profit jumps 111% in 2016; revenue drops due to lower LME prices

UC RUSAL the leading global aluminium producer from Russia, announces its results for the full year ended 31 December 2016.

RUSAL’s revenue for the year ended 31 December 2016 decreased by 8.0% to USD 7,983 million as compared to USD8,680 million for 2015 attributed to the decrease in the average LME aluminium price from USD1,663 per tonne in 2015 to USD1,604 per tonne in 2016 and a 43.4% drop in premiums.  However, the LME aluminium price increased by 14.4% YOY to USD1,710 in the fourth quarter of 2016 and this together with the 5.3% growth in aluminium sales volumes resulted in the increase in revenue by 9.2% to USD2,027 million in the last quarter of 2016.

Aluminium segment cost per tonne decreased by 4.7% YOY to USD1,344 in the fourth quarter of 2016 due to cost control measures and the decrease in raw material prices. This, along with improved sales price and sales volume helped the company to increase an adjusted EBITDA to USD412 million. Aluminium segment cost per tonne decreased by 8.4% to USD1,333 in 2016 in comparison with USD1,455 in 2015.

The Company achieved Adjusted Net Profit and Recurring Net Profit of USD590 million and USD1,257 million for 2016. In November 2016, the company was benefitted from the cash payment of USD299 million received from the sale Alumina Partners of Jamaica (“Alpart”) to the Chinese state industrial group, JIUQUAN IRON & STEEL (GROUP) Co. Ltd.

Adjusted EBITDA for 2016 decreased to USD1,489 million as compared to USD2,015 million for the previous year. The factors that contributed to the decrease in Adjusted EBITDA margin were the same that influenced the operating results of the Company.

The Company recorded a net profit of USD1,179 million in 2016, as compared to USD558 million in 2015.

Commenting on the full year 2016 results, Vladislav Soloviev, CEO of RUSAL, said:

“Despite a challenging start of the year, with aluminium prices reaching multi-year lows, RUSAL achieved a solid financial performance in 2016. On the one hand, we saw improved market conditions in the second half of the year, supporting our key performance metrics and on the other, our solid results were down to our dedication to cost management, production discipline, and a stronger focus on innovation and value added products (VAP) development.”

He highlighted the company’s investment in new casthouse projects at Krasnoyarsk and Khakas smelters in order to expand VAP proposition, with new alloys expected to be shipped in 2017.

He also highlighted the launch of the superpower RA-550 cell running at over 550 kA at our Sayanogorsk smelter in order to counter a major drawback of superpower cells which, in most cases, lose efficiency or increase energy consumption as amperage increases. He reiterated RUSAL’s commitment to improve its energy efficiency across its production chain.

In 2016 the volume of aluminium semis imports by Rusal significantly decreased while exports increased. As a result, the volume of exports of aluminium products exceeded imports for the first time. That has allowed domestic enterprises to retain production volume in terms of reducing domestic demand.

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As for segment revenues for 2016 are concerned, primary aluminium and alloys sales revenue decreased by 9.1%, to USD6,614 million in 2016 as compared to 2015.

Revenue from sales of alumina increased by USD27 million or by 4.5% to USD622 million for the year attributed to growth in alumina sales volume.

Revenue from sales of foil decreased by 11.1% to USD240 million in 2016, attributed to a decrease in the weighted average sales price and sales volumes.

Revenue from other sales, including sales of other products, bauxite and energy services decreased by 5.4% to USD507 million.

Rusal expects the aluminium market to remain in a good shape with demand increasing by 5% and global market deficit widening to 1.1 mn tonnes in 2017.