United Company RUSAL — Q3 2011 Earnings Presentation
26 slides from United Company RUSAL's earnings presentation, Nov 14, 2011
Slide 1: 3Q 2011 Results Presentation
3Q 2011 Results Presentation 14 November 2011
Slide 2: Disclaimer
Disclaimer These materials and the subsequent discussion are not an offer for sale of any securities of United Company RUSAL Plc (the “Company”). The distribution of these materials in certain jurisdictions may be restricted by law and therefore persons into whose possession these materials come sho
Slide 3: Financial and operational results; Market update; Growth projects; Summary results
Financial and operational results Market update Growth projects Summary results 3
Slide 4: 3Q 2011 vs 2Q 2011 highlights
3Q 2011 vs 2Q 2011 highlights Increased production and maintained margins despite decrease in LME aluminium price Aluminium production increased by 3%, alumina production by 1% Maintained Adjusted EBITDA margin at 22% Adjusted Net profit increased by 19% reaching US$290m Continuous focus on co
Slide 5: Maintained margins despite drop in aluminium price
Maintained margins despite drop in aluminium price LME aluminium price (1) Revenue US$/t US$m 2Q 2011 av. 3Q 2011 av. 3,330 (5%) US$2,600 (8%) US$2,399 3,162 Adjusted EBITDA Adjusted Net profit US$m US$m (5%) 19% 22% 22% 9% 7% Agusted EBITDA margin Adjusted Net profit Agusted Net profit margin Stron
Slide 6: Achieved record level of premium, maintained strong share of VAP production
Achieved record level of premium, maintained strong share of VAP(1) production Realized premiums above LME Al price (2) Aluminium sales by regions US$/t US$/t 6.8% 5.5% Source: UC RUSAL IFRS financial statements for 3Q 2011 Production of value-added products Sales breakdown by product Kt VAP sales c
Slide 7: Further steps to increase VAP production
Further steps to increase VAP production Creating VAP production hub Modernisation of 5 aluminium smelters located in European part of Russia and Urals Targeted share of VAP: 100% of total production at all 5 smelters VAP: wire rod (KAZ), slabs (VgAZ), foundry aluminium alloys (NAZ, VAZ, UAZ)
Slide 8: Continued focus on cost control and optimization of power expenses
Continued focus on cost control and optimization of power expenses… Cost of sales (1) Operating expenses US$m US$m 0.4% 2,273 2,282 447 (32%) 5% 306 (2%) (40%) 2% (10%) Reduction of power tariff (2) Power consumption and tariffs in 3Q 2011 USc/KWh Aluminium Power Power Aluminium production consumpti
Slide 9: Decrease of aluminium cash operating cost
…resulted in a decrease of aluminium cash operating cost UC RUSAL Aluminium cost structure vs Industry average Source: UC RUSAL management accounts for 3Q 2011 Source: Brook Hunt 2011 C1 cash cost Industry cost curve Cash cost decrease US$t Aluminium cash operating cost decreased by 4% in 3Q2011 v
Slide 10: Debt repayment and evolution
Debt repayment and evolution Net Debt evolution in 2011 (1) US$m Cash repayments for 9M 2011 of more than US$700m due to strong cash generation (1) Total IFRS Net Debt is recognized at fair value. Adjustments include accrued and effective interest, PIK and FX factors. 10
Slide 11: Finalized refinancing
Finalized refinancing Net Debt by lenders post-refinancing (1) Current debt composition Facility Amount Maturity Interest margin up to 2.85% over 3M PXF 2011 - Tranche A US$3.75bn 2016 LIBOR (no PIK) 3.85% over 3M LIBOR PXF 2011 - Tranche B US$1.0bn 2018 (no PIK) Sberbank US$4.6bn 2016 4.50% over 1Y
Slide 12: Share liquidity improvement and indices inclusion
Share liquidity improvement and indices inclusion Average daily trading volume Indices inclusion mln shares Launch Review/rebalanc Index Weight date e frequency MICEX Jul 25 0.95% Half-yearly RTS Jun 16 0.90% Quarterly Half-yearly HSGCI (1) Sept 5 0.21% /quarterly Half-yearly HSFCCI (2) Sept 5 10% /
Slide 13: Financial and operational results; Market update; Growth projects
Financial and operational results Market update Growth projects Summary results 13
Slide 14: Aluminium consumption expected to continue to grow in 2011
Aluminium consumption expected to continue to grow in 2011 Global aluminium consumption Aluminium demand by regions 2011vs2010 Mt China +15.0% 19.0 India +11.0% 1.9 Brazil +9.8% 1.1 Russia +6.1% 0.9 North America +5.0% 5.5 Europe +1.6% 6.4 Japan -3.0% 1.7 Total (Mt) +13% 46.0 Source: Brook Hunt (Woo
Slide 15: Regional premiums remain firm on reduction of visible stocks
Regional premiums remain firm on reduction of visible stocks LME inventories Regional physical premiums US$/t days US$/t US$200/t US$187/t US$120/t Source: Bloomberg Source: Bloomberg Reported global stocks declined in Q3 by over 170kt(1), largely in China, lending support to premiums UC Rusal est
Slide 16: Chinese domestic aluminium consumption creates potential for imports
Chinese domestic aluminium consumption creates potential for imports Total estimated stocks and price arbitrage Monthly production of semis in China US$/t Kt Kt Aluminim import Aluminim export Source: Bloomberg, SHFE, UC RUSAL Source: Bloomberg Chinese production of semis significantly increased i
Slide 17: Aluminium price fundamentals well supported by production costs
Aluminium price fundamentals well supported by production costs and cost of carry Aluminium financial deals profitability Aluminium marginal cost versus price Source: BrookHunt, RUSAL Source: Bloomberg, UC RUSAL Source: Bloomberg, SHFE, UC RUSAL Carry trade investments retain level of profitabilit
Slide 18: Financial and operational results; Market update; Growth projects
Financial and operational results Market update Growth projects Summary results 18
Slide 19: Growth projects – Taishet smelter
Getting closer to the completion of growth projects – Taishet smelter Recent developments 91% of the earth works (9 mln cubic meters) of ground excavation has occurred 4 ceiling travelling cranes of the casting house assembled 11 th tonnes of metal structures have been constructed Completed
Slide 20: Growth projects – BEMO HPP
Getting closer to the completion of growth projects – BEMO HPP Latest developments all 9 turbines delivered on site, 5 installed 99% of the concrete placing and assembly of pre-cast reinforced concrete has occurred 96% of the hydromechanical equipment and metal structures and the cranes have b
Slide 21: Growth projects – BEMO smelter
Getting closer to the completion of growth projects – BEMO smelter Recent developments Earth works comprising 9.4 mln cubic meters of ground excavation has occurred Earth works comprising back-filling of 6.2 mln cubic meters has occurred 41.2 th cubic meters of cast-in-place reinforced concret
Slide 22: Financial and operational results; Market update; Growth projects
Financial and operational results Market update Growth projects Summary results 22
Slide 23: Summary results Income statement
Summary results Income statement US$m 3Q 2011 2Q 2011 % Change Revenue 3,162 3,330 (5%) Cost of sales 2,282 2,273 (0.4%) Adjusted EBITDA (1) 705 743 (5%) Adjusted EBITDA Margin 22% 22% - Share of profits of associates 178 192 (7%) Income tax (79) (81) (2%) Net Profit 432 328 32% Adjusted Net Profit
Slide 24: Summary results Balance sheet and cash flow
Summary results Balance sheet and cash flow US$m As at 30 As at 30 % Change Sept 2011 June 2010 Cash and Cash Equivalents 540 326 66% Equity Attributable to Shareholders of the 11,619 13,451 (14%) Company Total Liabilities 14,516 14,721 (1%) Net Debt 10,919 11,426 (4%) US$m 3Q 2011 2Q 2011 % Change
Slide 25: Summary results Segment results
Summary results Segment results US$m 3Q 2011 2Q 2011 Aluminium Alumina Aluminium Alumina Segment Revenue 2,743 630 2,883 628 EBIT 603 (23) 620 3 EBITDA 704 1 724 28 EBITDA margin 26% 0.2% 25% 4% Aluminium segment is involved in the production and sale of primary aluminium and related products Al
Slide 26: Summary results
Summary results US$m 1Q 2011 2Q 2011 3Q 2011 9M 2011 Revenue 2,993 3,330 3,162 9,485 Adjusted EBITDA 682 743 705 2,130 Finance income & expenses, net 298 (381) (215) (298) Share of profits of associates (138) 192 178 232 Share of profits/(losses) of jointly 20 1 (4) 17 controlled entities Profit bef