Rusal · RUS:RUAL
Rusal — United Company Rusal — FY2019 Earnings Presentation
36 slides from Rusal's earnings presentation, Mar 13, 2020
Slide 1: 4Q and FY2019 Financial Results Presentation
4Q AND FY2019 FINANCIAL RESULTS PRESENTATION 13 March, 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, debt and investment in Norilsk Market overview Appendix 3
Slide 4: Overview: Rusal's Progress Over the Period
OVERVIEW: RUSAL’s PROGRESS OVER THE PERIOD 4Q19 3Q19 Change 12M19 12M18 Change Average Aluminium Price $1,754/t $1,761/t (0,4%) $1,792/t $2,110/t (15,1%) Macro Average Nickel Price $15,426/t $15,638/t (1,4%) $13,944/t $13,118/t 6,3% parameters 63.71 RUB / 64.57 RUB / 64.74 RUB / 62.70 RUB / Average
Slide 5: Environmental Achievements
ENVIRONMENTAL ACHIEVEMENTS RUSAL REMAINS COMMITTED TO CONTINUOUS IMPROVEMENT OF ENVIRONMENTAL FOOTPRINT Greenhouse Gas emissions (Scope 1*) reduction of 11% One of Rusal’s strategic goals is to reduce direct specific MT СО2eq./MT Al 2,28 2,33 2,30 greenhouse gas emissions at its existing aluminium
Slide 6: Investment Trends Pushing for ESG Development
INVESTMENT TRENDS PUSHING FOR ESG DEVELOPMENT CARBON FOOTPRINT T CO2/T OF ALUMINIUM INVESTORS CAST OFF COAL STAKES (SMELTER SCOPE 1&2) 350% 18 Rusal: 300% 16 2.6 tCO2e/t Al* 14 250% 12 200% 10 150% 8 6 100% 4 50% 2 0% 0 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Hydropower Gas Co
Slide 7: Health and Safety
HEALTH AND SAFETY LTIFR DYNAMICS FY19 HIGHLIGHTS In order to confidently increase the safety culture in the 1,90 Company and to develop leadership in the field of 1,70 industrial safety, the Company management approved a new Labor Protection Policy and a Statement on Industrial 1,30 1,30 and Fire
Slide 8: Agenda
AGENDA Overview Operating and financial results review Capital management: capex, debt and investment in Norilsk Market overview Appendix 8
Slide 9: Aluminium Price and Sales Structure
ALUMINIUM PRICE AND SALES STRUCTURE Total aluminium sales for 4Q19 amounted to 1,107 VAP SHARE IN SALES thousand tonnes (+1.5% QoQ). 12M19 sales volumes were 4,176 kt (+13.8% YoY). % of sales In 4Q19 average price decreased to $1,873/t (-1.2% QoQ) 44% 47% 45% 37% 40% as a result of decline in LM
Slide 10: Financials Overview: Revenue Structure
FINANCIALS OVERVIEW: REVENUE STRUCTURE REVENUE STRUCTURE REVENUE DYNAMICS 6% 6% 4% 4% Aluminium average realized price ($/t) 7% 7% 8 000 2 115 1 949 1 970 1 896 1 873 4Q19 Revenue 12M19 Revenue $2,489 mn $9,711 mn 7 000 6 000 Aluminium sales volume (kt) 83% 83% 1 082 1 091 1 107 5 000 877 896 Alumin
Slide 11: Financials Overview: Key Segments Cash Cost
FINANCIALS OVERVIEW: KEY SEGMENTS CASH COST In 4Q19 Rusal’s cash cost per 1 tonne of aluminium produced amounted to $1,588/t (-1.5% QoQ). The cash cost of aluminium was primarily affected by the increase in energy cost which was partially offset by shift in change of finished goods. In 12M19 Rusal
Slide 12: Energy Cost Dynamics
ENERGY COST DYNAMICS QUARTERLY ELECTRICITY PURCHASE PRICE ANALYSIS Cent/ kWh 0,14 0,08 0,09 0,02 0,09 0.02 0,01 0,25 0,03 0,06 3,33 3,30 0.72 2,57 2,91 3,08 4Q18 Exchange Capacity "Day- 1Q19 Exchange Capacity "Day- 2Q19 Exchange Capacity "Day- 3Q19 Exchange Capacity "Day- 4Q19 rate costs ahead" rate
Slide 13: Financial Overview: EBITDA
FINANCIAL OVERVIEW: EBITDA 4Q19 EBITDA totaled $201 mn (-15.2% QoQ); 12M19 EBITDA amounted to $966mn (-55.3% YoY). Aluminium segment remained the largest contributor to the Group EBITDA. EBITDA CHANGE BY FACTORS % margin % margin 10% 8% 21% 10% $ mn 2 4 $ mn 23 15 71 262 237 201 2 163 1 224 164
Slide 14: Agenda
AGENDA Overview Operating and financial results review Capital management: capex, debt and investment in Norilsk Market overview Appendix 14
Slide 15: Capital Expenditures
CAPITAL EXPENDITURES CAPEX DYNAMICS $ mn 2017 2018 2019 Approximate 1H 2H 1H 842 834 848 2023 400 launch schedule 20 20 21 295 292 300 Taishet anode plant 254 X (1st stage) 226 220 217 192 197 203 200 163 136 Taishet anode plant 129 X (2nd stage) 100 Taishet aluminium Smelter*** 0 1Q17 2Q17 3Q17 4Q1
Slide 16: Debt Profile
DEBT PROFILE On 25 October 2019 the Group entered into a 5-year new CREDIT RATINGS DEBT STRUCTURE sustainability-linked pre-export finance facility (PXF2019) for the amount of $1,085 mn. The interest rate is subject to the By currency 1% RMB Company’s fulfilment of the sustainability KPIs. BB- I
Slide 17: Investment in Norilsk Nickel
INVESTMENT IN NORILSK NICKEL NN METALS BASKET OUTPERFORMED LME IN 2019 NORILSK NICKEL STAKE VALUE VS RUSAL NET DEBT NN is the world’s largest high-grade nickel and palladium A 27.8% stake in Norilsk Nickel (NN) equity remains a strategic producer with exposure to copper and platinum. investment
Slide 18: Agenda
AGENDA Overview Operating and financial results review Capital management: capex, debt and investment in Norilsk Market overview Appendix 18
Slide 19: In 2019, World Primary Aluminium Demand Growth Almost Ground to a Halt
IN 2019, WORLD PRIMARY ALUMINIUM DEMAND GROWTH ALMOST GROUND TO A HALT … …AS A RESULT OF SEVERAL FACTORS In 2019, the global economy slowed down to 2.5% from 2.9% in 2018. PRIMARY Al DEMAND GROWTH 2018 2019 TRADE CHINA ECONOMIC DISPUTE TRANSFORMATION 2,5% Services 2,4% sector 2,2% 2,0% The dispute h
Slide 20: In 2020, Ex-China Primary Aluminium Demand Expected Back to Growth
IN 2020, EX-CHINA PRIMARY ALUMINIUM DEMAND EXPECTED TO BE BACK TO A POSITIVE GROWTH… …SUPPORTED BY INDUSTRIAL TRENDS, TRADE DISPUTE EASING AUTOMOTIVE CAN PRIMARY Al DEMAND GROWTH IN 2020 LIGHTWEIGHT REVOLUTION PET Al TREND 2.0 Mandatory emissions regulations in major countries prompt a Major beverag
Slide 21: Supply Growth Overtakes Demand, Keeping Market Close to Balance
SUPPLY GROWTH OVERTAKES DEMAND, KEEPING MARKET CLOSE TO BALANCE INCREMENTAL PRIMARY ALUMINIUM DEMAND VS PRIMARY ALUMINIUM MARKET BALANCE SUPPLY IN 2020 Mnt Mnt 2,5 0,3 0,3 0,04 1,8 -0,4 0,8 0,7 -1,0 0,5 0,3 -1,4 WORLD CHINA ROW WORLD CHINA ROW INCREMENTAL SUPPLY INCREMENTAL DEMAND 2019 2020 DEFICIT
Slide 22: ROW Aluminum Supply at Risk in 1H20
ROW ALUMINUM SUPPLY AT RISK IN 1H20 Reported aluminum stocks continue to draw down ROW REPORTED STOCKS with available stocks just around 750K tonnes. PMI across manufacturers of aluminium sheet/plate $/t kt and strip, foil, wire and cable, construction and 2000 1500 industrial extrusion, primary
Slide 23: Chinese Market to Stay in Surplus in 1H20
CHINESE MARKET TO STAY IN SURPLUS IN 1H20 Chinese aluminum sector is affected by virus and CHINESE SMELTERS COSTS seasonality factor shows rapid growth of aluminum inventories as a result of continued production and RMB/t 9.9 Mt (~ 27%) weak demand. 15000 Social inventory stock rose by 1 million
Slide 24: EV Penetration to Go Beyond 50% of Light Vehicle Sales by 2030
EV PENETRATION TO GO BEYOND 50% OF THE LIGHT VEHICLES SALES BY 2030 AND IMPROVE ALUMINIUM DEMAND AVERAGE ALUMINIUM CONTENT PER VEHICLE, EUROPE GLOBAL EV SALES PENETRATION UP TO 2030 MHEV (mild hybrid electric) Share in total Light Vehicles sales 360,5 Kg +19.6 Kg HEV (full hybrid electric) 320,8 Kg
Slide 25: Movement to Aluminium from Plastic and Glass Drives Packaging Growth
THE MOVEMENT TO ALUMINIUM FROM PLASTIC AND GLASS IS THE MAIN DRIVER OF THE PACKAGING SEGMENT GROWTH ALUMINUM PACKAGING WILL GROW BY 5% CAGR IN DEVELOPED MARKETS OVER NEXT 5 YEARS Mineral water brand COCA-COLA announces The first of WALLABY SENEZHSKAYA has moving its Dasani water Water’s natural spri
Slide 26: Appendix
APPENDIX nM RUSAL 26
Slide 27: Key Operating and Financial Data
KEY OPERATING AND FINANCIAL DATA GROUP OPERATING HIGHLIGHTS GROUP FINANCIAL HIGHLIGHTS QoQ YoY QoQ YoY 4Q19 3Q19 FY19 FY18 4Q19 3Q19 FY19 FY18 chg chg chg chg Aluminium production Revenue, $mn 2,489 2,486 0.1% 9,711 10,280 (5.5%) 948 942 0.6% 3,757 3,753 0.1% (kt) EBITDA, $mn* 201 237 (15.2%) 966 2,
Slide 28: Aluminium Segment Operating Data
ALUMINIUM SEGMENT OPERATING DATA ALUMINIUM PRODUCTION kt 944 932 939 940 943 928 942 949 939 1 000 32 30 31 29 29 33 33 29 32 35 36 29 21 20 35 35 35 800 21 600 883 878 885 890 878 861 873 878 884 400 200 0 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 Russia Siberia Russia European Part Swe
Slide 29: Alumina Segment Operating Data
ALUMINA SEGMENT OPERATING DATA PRODUCTION kt Bauxite 4 242 3 948 4026 4 000 3 831 3 719 Alumina 1 847 1 517 3 000 1 946 1 630 1 895 Nepheline ore 2050 1,958 1 932 1 957 1 918 126 398 358 2 000 130 109 78 88 345 403 80 76 109 120 123 253 470 467 186 177 166 168 180 480 491 429 1 144 468 479 470 475 4
Slide 30: Income Statement and EBITDA Reconciliation
INCOME STATEMENT AND EBITDA RECONCILIATION INCOME STATEMENT QoQ YoY 4Q19 3Q19 FY19 FY18 $ mn chg chg Revenue 2,489 2,486 0.1% 9,711 10,280 (5.5%) Cost of sales (2,101) (2,081) 1.0% (8,113) (7,446) 9.0% Other operating expenses (566) (341) 66.0% (1,511) (1,353) 11.7% Operating income (Results from op
Slide 31: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW BALANCE SHEET QoQ YoY 4Q19 3Q19 FY19 FY18 $ mn chg chg Cash and Cash Equivalents 1,781 1,616 10.2% 1,781 844 111.0% Inventory 2,460 2,631 (6.5%) 2,460 3,006 (18.2%) Trade and other accounts receivables 1,351 1,304 3.6% 1,351 1,102 22.6% Equity Attributable to Shareholders
Slide 32: Aluminium Segment EBITDA Reconciliation
ALUMINIUM SEGMENT EBITDA RECONCILIATION Other non- production costs and margin on other Total Aluminium and Aluminium Alumina intra-group Aluminium 4Q19 alloys produced purchased segment margin services segment $ mn (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenue kt 1,049 90 - -
Slide 33: Net Income Reconciliation
NET INCOME RECONCILIATION RECONCILIATION OF ADJUSTED NET PROFIT/(LOSS) QoQ YoY FY19 FY18 $ mn 4Q19 3Q19 chg chg Net profit for the period 141 194 (27.3%) 960 1,698 (43.5%) Adjusted for: Share of profits and other gains and losses attributable to Norilsk (505) (274) 84.3% (1,543) (839) 83.9% Nickel,
Slide 34: 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 35: 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 technology(1) coke(3) and green anodes production with the ca
Slide 36: 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