Rusal net profit falls to $29 mln in Q3, sparking steep decline in share price
MOSCOW. Nov 12 (Interfax) - United Company Rusal (UC Rusal) posted a net profit of $29 million in the third quarter of 2010 compared with a profit of $64 million in the same period last year, the company said in its earnings report.
Net profit for the first nine months of 2010 was $1.42 billion compared with a loss of $826 million in the same period last year.
Rusal share prices on the Hong Kong stock exchange fell as much as 8% to HKD 9.65 at one stage but had recovered to HKD 9.8 as of 7:30 a.m. Moscow time. They closed down 6.1% at HKD 9.86.
Analysts at investment companies and banks told Interfax in a consensus forecast that the third quarter net profit would equal $383 million, or $138 million excluding non-recurring items.
Revenue in the nine months rose 36.6% to $8.029 billion, including $2.708 billion in the third quarter. Analysts forecast third quarter revenue to equal $2.721 billion. Rusal said the increase in revenue was mainly the result of higher aluminum prices.
EBITDA totaled $1.889 billion in the nine months ($564 million in the third quarter) compared with $328 million a year earlier. Analysts expected third quarter EBITDA to equal $579 million.
Key financial results for Rusal in Jan-Sept 2010 ($ mln):
| Jan-Sept 2010 | Jan-Sept 2009 | Change(%) | |
| Revenue | 8 029 | 5876 | 36.6 |
| Gross profit | 2 573 | 951 | 170.6 |
| Operating profit | 1 467 | (161) | |
| Net profit | 1 420 | (826) | |
| Adjusted EBITDA | 1 889 | (328) | 476 |
| Cost of sales | (5 456) | (4 925) | 10.8 |
| Administrative expenses | (566) | (449) | 26 |
| Net financial debt | 11 750 | 13 633 | (13.8) |
| Share of profits in associates | 849 | 342 | 148.2 |
| Total working capital | 2 151 | 1 477 | 45.6 |
Aluminium Cash Operating Costs increased by 2.6% or $43 per tonne (inclusive of exchange rate effects) from an average of $1,684 per tonne in the second quarter of 2010 to an average of $1,727 per tonne in the third quarter of 2010. However, aluminium Cash Operating Costs were S1,700 per tonne (inclusive of exchange rate effects) for the first nine months of 2010.
Key factors contributing to the increase in Aluminium Cash Operating Costs in the third quarter of 2010 were increases of $22 per tonne in power, $34 per tonne in raw materials and $10 per tonne in other expenses, which were partially offset by decreases of $18 per tonne in exchange rate effects due to the appreciation of the Ruble and $6 per tonne in alumina expenses.
Alumina Cash Operating Costs decreased by 0.1% or $0.3 per tonne (inclusive of exchange rate effects) from an average of $271.8 per tonne in the first half of 2010 to an average of $271.5 per tonne in the third quarter of 2010. Alumina Cash Operating Costs was $271.8 per tonne (inclusive of exchange rate effects) for the first nine months of 2010. The principal factors in the decrease in the Group's alumina Cash Operating Costs from in the third quarter of 2010 were decreases in other expenses and exchange rate effect, which were partially offset by the increases in power and raw materials due to the increase of the market prices of utilities (including fuel-oil and gas), plant and shop expenses and payroll.
UC RUSAL's total assets increased by $1.133 billion to $25.019 billion as at September 30, 2010 as compared to $23.886 billion as at December 31, 2009. The increase in total assets mainly resulted from the increase in interests in associates and jointly controlled entities, inventories and other current assets, as partly offset by a decrease in property, plant and equipment.
Total liabilities decreased by $2.51 billion to $15.044 billion as at September 30, 2010 as compared to $17.554 billion as at December 31, 2009. The decrease was mainly due to the partial repayment of $2.143 billion of the outstanding debt of the Group out of the IPO proceeds (net cash proceeds of $2.143 billion less a fee of $152 million to the international lenders and less the $115 million payment to Onexim). Total debt has been reduced to $12.3 billion in the nine months ended September 30, 2010. The Company is now significantly ahead of debt reduction targets and, as a result, with effect from September 10, 2010, the interest margin payable by the Company on its debt owed to international lenders has decreased from 5.5% to 4.5% as the Total Net Debt to Covenant EBITDA ratio has dropped.
The interest margin has reduced by 36% as compared to the December 2009 margin of 7%.
UC RUSAL recorded total investment in the development of existing facilities and construction
of new assets of $623 million for the nine months ended September 30, 2010.