UC RUSAL announces results for the 2nd Quarter and 1st Half ended 30 June 2016.

Russian Aluminium major UC RUSAL announces its results for the 2nd Quarter and 1st Half ended 30 June 2016. The aluminium industry remained under strong pressure throughout the 1st half of the year due to the volatility in the commodity market. There was a slight recovery of 3.7% in the LME prices to USD1,571 during the second quarter of 2016. The average sales price increased by 2.8% to USD1,712  but the average realized product premium for the same period decreased by 5.8%.

RUSAL reports a revenue drop of 18.0% to USD 3,896 million YOY in the first half of 2016 in comparison to USD4,750 million in H1 2015 mostly due to lower LME aluminium price and 54.5% decrease YOY in average realised premiums to USD167 per tonne in H12016. This was slightly offset by the 5.0% growth in the physical sales volumes.

Sequentially, revenue increased by 3.6% to USD1,982 million during Q2, as compared to USD1,914 million for Q1 2016. A 47% increase in aluminium sales volume in Q2 2016 in comparison with 41% in the previous quarter boosted up the revenue. Subsequently, the Adjusted EBITDA increased to USD344 million in Q2 2016 as compared to USD312 million in Q1.



RUSAL achieved Adjusted Net Profit of USD40 million for Q2 2016, as compared to USD27 million in Q1. In July 2016 the Company entered into an agreement to sell 100% stake in the Alumina Partners of Jamaica (“Alpart”) to JIUQUAN IRON & STEEL (GROUP) Co. Ltd. (“JISCO”) from China for a consideration of USD299 million.

Vladislav Soloviev, CEO of RUSAL talked about strong demand and tightening of China supply which helped recover the LME price and positively impacted Rusal’s second quarter results.

“Despite the ongoing pricing pressure, there was a slight recovery in the LME price in Q2 vs Q1, which occurred thanks to strong demand and a tightening of ex-China supply. Both of these positively impacted RUSAL’s financial results in Q2, which also benefitted from strong VAP sales… RUSAL is on target to further increase its VAP capacity in order to meet growing customer demand,” he said.

Like all other aluminium majors he also indicated Rusal’s plan to diversify into value added segment, which will leverage upon the growing demands from the aerospace and automotive sector.

“In addition to already producing a wide range of primary aluminium and alloys, RUSAL is constantly seeking new markets to penetrate and new technologies to innovatively develop. In particular, we announced a project to develop 3D printing technology for the industrial use of aluminium and aluminium alloys. The technology will be used to print aluminium parts for use by our customers in the machinery-producing, aerospace and automotive sectors,” he added.

He appreciated the effort of RUSAL’s management team for keeping costs on check and thereby counterbalancing the falling LME prices and premiums.  RUSAL delivered USD1,330 per tonne cash cost in the aluminium segment in H1 2016, which recorded a 10% decrease compared to USD1,484 per tonne in 1H 2015.

“Looking forward to the second half of the year, we believe that the aluminium industry will remain under pressure. However, our focus on product quality and strong cost controls mean that RUSAL remains excellently positioned to navigate any challenges ahead,” he concluded.

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