Rusal · RUS:RUAL
Rusal — United Company RUSAL — H1 2020 Earnings Presentation
33 slides from Rusal's earnings presentation, Aug 13, 2020
Slide 1: 1H2020 Financial Results Presentation
1 1H2020 FINANCIAL RESULTS PRESENTATION 13 August, 2020
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: Agenda
AGENDA Overview Operating and financial results review Capital management: capex and debt Market overview Appendix 3
Slide 4: Overview: RUSAL's progress over the period
OVERVIEW: RUSAL’S PROGRESS OVER THE PERIOD 1H20 1H19 Change 2H19 Change Average Aluminium Price $1,592/t $1,826/t (12.8%) $1,757/t (9.2%) Macro Average Nickel Price $12,477/t $12,318/t 1.3% $15,506/t (19.5%) parameters Average USD / RUB FX Rate 69.34 RUB/USD 65.34 RUB/USD 6.1% 64.15 RUB/USD 8.1% Tot
Slide 5: Environmental achievements
ENVIRONMENTAL ACHIEVEMENTS RUSAL REMAINS COMMITTED TO THE CONTINUOUS IMPROVEMENT OF ENVIRONMENTAL FOOTPRINT Greenhouse Gas emissions (Scope 1*) reduction of 10.5% One of Rusal’s strategic goals is to reduce direct specific greenhouse gas emissions at its existing aluminium smelters 2.4 2.33 2.30 M
Slide 6: Health and safety
HEALTH AND SAFETY LTIFR DYNAMICS 1H20 HIGHLIGHTS In order to confidently increase the safety culture in the 1.90 Company and to develop leadership in the field of industrial 1.70 safety, the Company’s management made a decision to conduct an external safety culture audit at 4 enterprises: JSC 1.30
Slide 7: Agenda
AGENDA Overview Operating and financial results review Capital management: capex and debt Market overview Appendix 7
Slide 8: Aluminium price and sales structure in 1H20
ALUMINIUM PRICE AND SALES STRUCTURE IN 1H20 In 1H20, aluminium sales amounted to 1,890 thousand tonnes VAP SHARE IN SALES (-4.4% YoY); % of sales In 1H20 the regional sales geography remained largely unchanged YoY. Key dynamics are reflected in QoQ shift. In 2Q20 on the back of 47% 45% 46% 41% 3
Slide 9: Financials overview: revenue structure
FINANCIALS OVERVIEW: REVENUE STRUCTURE REVENUE STRUCTURE REVENUE DYNAMICS 7% 7% Aluminium average realized price ($/t) 4% 4% 2 322 2 195 7% 6% 1 960 1 884 1 756 1H19 Revenue 1H20 Revenue $4,736 mn $4,015 mn Aluminium sales volume (kt) 83% 83% 1 978 2 198 1 748 1 923 1 890 Aluminium Alumina Foil and
Slide 10: Financials overview: key segments cash cost
FINANCIALS OVERVIEW: KEY SEGMENTS CASH COST In 1H20 Rusal’s cash cost per 1 tonne of aluminium produced amounted to $1,564/t (-5.5% YoY). The decrease of cash cost of aluminium was led by simultaneous YoY decline of all major items, on the back of effective cost management and shift in USD/RUB FX
Slide 11: Energy cost dynamics
ENERGY COST DYNAMICS ELECTRICITY PURCHASE PRICE ANALYSIS Cent/ kWh -11.7% YoY 0.08 0.22 0.34 0.20 3.34 0.33 0.21 2.95 2.74 1H19 Exchange Capacity "Day-ahead" 2H19 Exchange Capacity "Day-ahead" 1H20 rate costs market rate costs market tariff tariff USD/ USD/ USD/ RUB RUB RUB 65.3 64.2 69,3 In 1H20
Slide 12: Financial overview: EBITDA
FINANCIAL OVERVIEW: EBITDA 1H20 EBITDA totaled $219 mn (-58.5% YoY), due to significant decline in the LME aluminium price. This was partially offset by an improvement of production costs as a result of effective cost management, supported by depreciation of RUB against USD; Aluminium segment re
Slide 13: Agenda
AGENDA Overview Operating and financial results review Capital management: capex and debt Market overview Appendix 13
Slide 14: Capital expenditures
CAPITAL EXPENDITURES CAPEX DYNAMICS 2017 2018 2019 $ mn Approximate 1H20 2H20 1H21 2023 842 834 848 launch schedule 600 500 Taishet anode plant X (1st stage) 400 300 Taishet anode plant 521 X 495 (2nd stage) 200 417 417 401 321 353 100 Taishet aluminium Smelter*** 0 1H17 2H17 1H18 2H18 1H19 2H19 1H2
Slide 15: Debt profile
DEBT PROFILE • In June 2020 Rusal successfully placed a new tranche of local bonds CREDIT RATINGS DEBT STRUCTURE for RUB 10bn, 10 years, subject to bondholder’s put option RMB exercisable in June 2023, unsecured with a coupon rate of 6.5% p.a. By currency 0.04% RUB • During the course of July the Co
Slide 16: Agenda
AGENDA Overview Operating and financial results review Capital management: capex and debt Market overview Appendix 16
Slide 17: Global primary aluminium demand dropped by 6.6% in 1H 2020
GLOBAL PRIMARY ALUMINIUM DEMAND DROPPED BY 6.6% IN 1H 2020 GLOBAL PRIMARY ALUMINIUM DEMAND IN 1H20 DEMAND REDUCTION BY REGION IN 1H20 Others, 16% Europe, Russia & CIS, 32% 3% -6.6% 2.2Mt Asia ex-China, N.America, 21% 28% CHINA EX-CHINA Global aluminium demand contracted by 6.6% in 1H20 YoY; Chin
Slide 18: Market sentiments in key aluminium end-use sectors show improvement
MARKET SENTIMENTS IN KEY ALUMINIUM END-USE SECTORS SHOW IMPROVEMENT ACROSS MAIN REGIONS EUROPE N.AMERICA EAST ASIA CHINA TRANSPORTATION CONSTRUCTION PACKAGING ELECTRICAL 18
Slide 19: ROW production activity showed V-shape recovery in 2Q20
ROW PRODUCTION ACTIVITY SHOWED V-SHAPE RECOVERY IN 2Q20 REGIONAL PMI INDEXES LME INDEX & BRENT OIL PRICE $/t $/bbl 55 EXPANSION Flash data 3200 80 Markit U.S. 50 Manufacturing 3000 66 Eurozone, 45 Markit 2800 52 Japan, Jibun 40 2600 38 LMEX Index JPMorgan 35 Global 2400 24 CONTRACTION Oil Brent (1M)
Slide 20: Chinese aluminium net supply to reduce ROW surplus
CHINESE ALUMINIUM NET SUPPLY TO REDUCE ROW SURPLUS CHINESE PRIMARY NOT-ALLOYED ALUMINIUM TRADE UNWROUGHT ALUMINIUM, SEMIS AND ALU WHEELS EXPORT (HS 760110), QUARTERLY FROM CHINA kt 1000 886Kt Net-import -22% 800 3410Kt 3170Kt 2918Kt PSS (plates, sheets) 600 2656Kt 1,200 1,130 Foil 400 981 1,151 200
Slide 21: EV penetration to reach >50% of light vehicles sales by 2030
EV PENETRATION TO REACH >50% OF LIGHT VEHICLES SALES BY 2030 AND INTENSIFY ALUMINIUM DEMAND AVERAGE ALUMINIUM CONTENT PER VEHICLE, EUROPE GLOBAL EV SALES SHARE IN TOTAL CARS SALES PHEV (plug-in hybrid electric) BEV (battery electric) 58% 360.5 Kg +19.6 Kg 320.8 Kg 172.1 Kg 179.2 Kg 198.7 Kg 28% 10%
Slide 22: Aluminium demand in packaging sector intensified by regulation and sustainability
ALUMINIUM DEMAND IN PACKAGING SECTOR IS INTENSIFIED BY REGULATION AND SUSTAINABILITY TARGETS OF GLOBAL BRANDS FRP SHIPMENTS FOR PACKAGING APPLICATIONS IN THE US & CAN REVOLUTION 2.0 CANADA YoY dynamics 7% Highest quarterly MOVE FROM PLASTIC figure since TO ALUMINIUM 3Q2016 4% 2% 1% 0% 0% -2% -1% -3%
Slide 23: Appendix
APPENDIX nm RUSAL 23
Slide 24: Key operating and financial data
KEY OPERATING AND FINANCIAL DATA GROUP OPERATING HIGHLIGHTS GROUP FINANCIAL HIGHLIGHTS YoY HoH YoY HoH 1H20 1H19 2H19 1H20 1H19 2H19 chg chg chg chg Revenue, $mn 4,015 4,736 (15.2%) 4,975 (19.3%) Aluminium production (kt) 1,867 1,867 - 1,890 (1.2%) EBITDA, $mn* 219 528 (58.5%) 438 (50.0%) Aluminium
Slide 25: Aluminium segment operating data
ALUMINIUM SEGMENT OPERATING DATA ALUMINIUM PRODUCTION kt 1 835 1 850 1 831 1 875 1 871 1 882 1 867 1 891 1 867 2,000 63 66 59 63 58 57 61 62 61 1,800 40 41 41 54 42 55 70 71 71 1,600 1,400 1,200 1,000 1 734 1 747 1 729 1 758 1 763 1 768 1 734 1 762 1 739 800 600 400 200 0 1H16 2H16 1H17 2H17 1H18 2H
Slide 26: Alumina segment operating data
ALUMINA SEGMENT OPERATING DATA PRODUCTION kt Bauxite 8,000 7,567 8,073 7,974 7,469 7,000 Alumina 6,281 Nepheline ore 5,959 5,686 6,000 3,018 3,742 3,463 3,684 4,022 1,577 1,993 5,000 3,957 3,851 4,007 3,817 3,955 3,816 1,546 22 159 154 214 234 739 761 4,000 280 302 559 485 656 651 249 252 218 243 26
Slide 27: Income statement and EBITDA reconciliation
INCOME STATEMENT AND EBITDA RECONCILIATION INCOME STATEMENT YoY HoH 1H20 1H19 2H19 $ mn chg chg Revenue 4,015 4,736 (15.2%) 4,975 (19.3%) Cost of sales (3,520) (3,931) (10.5%) (4,182) (15.8%) Other operating expenses (601) (604) (0.5%) (907) (33.7%) Operating income (Results from operating activitie
Slide 28: Balance sheet and cash flow
BALANCE SHEET AND CASH FLOW BALANCE SHEET YoY HoH 1H20 1H19 2H19 $ mn chg chg Cash and Cash Equivalents 2,096 969 116.3% 1,781 17.7% Inventory 2,392 2,846 16.0% 2,460 (2.8%) Trade and other accounts receivables 1,157 1,275 (9.3%) 1,351 (14.4%) Equity Attributable to Shareholders of the Company 5,978
Slide 29: Aluminium segment EBITDA reconciliation
ALUMINIUM SEGMENT EBITDA RECONCILIATION Other non-production Alumina costs and margin on Total Aluminium and Aluminium segment other intra-group Aluminium 1H20 alloys produced purchased margin services segment $ mn (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenue kt 1,787 159 - -
Slide 30: Net income reconciliation
NET INCOME RECONCILIATION RECONCILIATION OF ADJUSTED NET PROFIT/(LOSS) YoY HoH 1H20 1H19 2H19 $ mn chg chg Net (loss)/profit for the period (124) 625 - 335 - Adjusted for: Share of profits and other gains and losses attributable to Norilsk 13 (764) - (779) - Nickel, net of tax effect Change in the f
Slide 31: Taishet aluminium smelter
TAISHET ALUMINIUM SMELTER Location Irkutsk region TAISHET CONSTRUCTION SITE 1st stage – 428.5 ktpa, 352 potcells RA-400, amperage 440 kA Capacity/ technology* 2nd stage – 536 ktpa, 352 potcells RА-550, amperage 550 kA (equipment purchased for power supply, infrastructure, maintenance) Power
Slide 32: Taishet anode plant
TAISHET ANODE PLANT Location Irkutsk region ANODE PLANT CONSTRUCTION SITE 1st stage – the construction of anode baking furnace with a capacity of up to 217.5 ktpa of baked anodes(2); Capacity/ 2nd stage – the arrangement of calcined coke(3) technology(1) and green anodes production with the ca
Slide 33: Contact details
www.rusal.com UC RUSAL UC RUSAL Hong Kong Office www.rusal.ru/en/investors/ Gleb Diachkov-Gertcev, Karen Li, CFA Head of Investor Relations Head of the Hong Kong Office 1 Vasilisy Kozhinoi St., Karen.li@rusal.com 121096, Moscow, Russia Phone: +852 3915 8798 InvestorRelations@rusal.com Phone: +7 (495