💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

UPDATE 1-Rusal Q3 earnings drop, sees bigger aluminium surplus

Published 13/11/2015, 12:57 pm
© Reuters.  UPDATE 1-Rusal Q3 earnings drop, sees bigger aluminium surplus
GMKN
-

* Q3 core earnings fall to $420 mln

* Confirms potential closure of 200,000 tonnes capacity

* Sees aluminium premiums rebounding

* Expects China capacity closures to pick up in 2016 (Adds earnings, outlook details, CEO comment)

MELBOURNE, Nov 13 (Reuters) - Russian aluminium giant Rusal 0486.HK reported an 11 percent fall in third-quarter core earnings from a year earlier, in line with expectations, as aluminium prices dropped, and warned the market remained "highly challenging".

The world's top aluminium producer "confirmed the potential closure of up to 200,000 tonnes of production this year," which it flagged it was considering earlier this year, but did not specify when or where it might cut output.

"During the third quarter of 2015, the aluminium industry was under significant pressure from sliding prices and premiums due to a higher than expected market surplus," Chief Executive Vladislav Soloviev said in a statement.

Pointing to weaker demand in some emerging markets and supply growth in the Middle East, India and China, Rusal trimmed its forecast for global aluminium demand growth in 2015 to 5.6 percent and raised its forecast for a global aluminium surplus this year by a third to 373,000 tonnes.

It said aluminium capacity closures in China had been slow despite very low domestic aluminium prices as regional authorities subsidised loss-making production, but expected that to change next year.

"We expect rapid closures early in 2016 with the onset of a new five-year development plan," the company said.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $420 million in the September quarter from $470 million in the same period last year, slightly better than seven analysts' forecasts around $418 million.

It cut its cash costs by 17 percent to a multi-year low of $1,440 a tonne in the quarter, helped by a weaker rouble, while its average sales price fell 20 percent to $1,843 a tonne from a year earlier.

Selling prices were hit by a double whammy of falling prices on the London Metal Exchange as well as a 51 percent slump in the premiums paid over LME prices for immediate delivery. Rusal said premiums bottomed in the third quarter.

"As expected, premiums should rebound in line with continued tightness in key consumption markets," it said.

Recurring net profit, which is adjusted net profit plus Rusal's share of Norilsk Nickel's GMKN.MM earnings, rose 15 percent to $287 million.

Rusal last month declared its first dividend since going public in 2010, paying out a total of $250 million, or $0.016 a share, for the first half of this year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.