Rusal’s quarterly loss shrinks as unprofitable plants closed

United Co. Rusal (486)’s quarterly loss narrowed from the previous three months after the world’s largest aluminum producer shut unprofitable plants and cut costs.

The net loss shrank to $172 million in the third quarter from $458 million in the second, Moscow-based Rusal said today in a statement. Adjusted earnings before interest, taxes, depreciation and amortization reached $130 million, in line with the $129.8 million average of six analyst estimates compiled by Bloomberg. The year-earlier loss was $118 million.

Slowing global economic growth has eroded demand for aluminum, dragging down prices for the metal used in cars, aircraft and drink cans. Supply of the metal is outpacing demand for a seventh consecutive year and will remain in surplus until at least 2018, Morgan Stanley estimated.

“Conditions within the aluminum market remain challenging, and there is still a long way to go before we see a marked improvement,” Chief Executive Officer Oleg Deripaska said in the statement.

Sales dropped 3.5 percent from the second quarter to $2.4 billion. Analysts compare quarter-on-quarter results rather than year-earlier figures to track performance amid market volatility.

Rusal shares, down 54 percent this year, fell 0.4 percent to HK$2.27 in Hong Kong trading as of 10:22 a.m.

Aluminum traded at an average $1,828 a metric ton in the quarter, after sinking to $1,765 a ton at the end of June, the lowest price in four years.

China Demand

The company raised its estimate for China’s aluminum consumption growth this year to 10 percent from 9.5 percent, according to the statement. Global consumption is expected to reach 51.2 million tons this year, while production is estimated to be 50.9 million tons, Rusal said.

Rusal intends to reduce production by 247,009 tons in 2013 from 2012, and by 516,062 tons in 2014, the company said last month. Output fell 5.8 percent to 2.95 million tons in the first nine months of the year, according to today’s filing.

Given current aluminum prices, fourth-quarter Ebitda may be about $100 million at best, translating to a full-year figure of $640 million, Irina Lapshina, an analyst at Sberbank CIB in Moscow, said in a Nov. 7 note.