UC Rusal incurs losses

UC Rusal continues to incur losses. Aluminium prices are still below the cost of production of the company. The dividends of "Norilsk Nickel" will help to pay off the company's debts. 
Yesterday, UC Rusal reported for the first nine months, the company's loss was $ 611 million versus $ 117 million a year earlier. UC Rusal lost more only in 2008 (because of the outbreak of the crisis, the company received $ 5.8 billion loss) and in 2011 (due to aluminum prices fall by 13% - $ 974 million). Analyst, "Renaissance Capital" Boris Krasnozhenov believes that the results of 2013 the company had a net loss of about $ 700-800 million due to aluminum prices fall by 15%. UC Rusal's revenue decreased by 7.6% in the first nine months compared with 2012 - up to $ 7.6 billion, EBITDA - by 20.7% to $ 550 million.

Investors reports disappointed: UC Rusal on the stock exchange in Hong Kong fell 1.3% to $ 4.4 billion (index lost 0.73%).

To deal with UC Rusal losses beginning in early 2013 - the Board of Directors approved the first aluminum giant drop in production compared to 2012 by 7% (300 000 tons of aluminum), then increased it to 8%. Total UC Rusal plans to reduce aluminum production by 325 000 tonnes. By sequestering hit aluminum production at the Volgograd, Theology, Ural, Nadvoitsy, Volkhov plants. In 2014, aluminum smelting in these enterprises a complete stop, and should bes presentation of the company to investors. Total UC Rusal plans by the end of 2014 (including by reducing the current strength in the factories) to reduce aluminum output to 3.5 million tonnes (in 2012 it was 4.2 million tons).

Closing businesses with low profitability, UC Rusal has reduced the cost of aluminum since the beginning of the year by 5% to $ 1872 per 1 ton (at the level of 2010), according to the presentation, however, the average price of 1 ton of aluminum on the London Metal Exchange was $ 1760. "The main effect of production cuts affect the operating results until next year", - said the representative of UC Rusal. But the company continues to reduce costs and expenses. Annual savings of UC Rusal on rent eight hydraulic units of Bratsk hydroelectric power station to supply electricity Bratsk plant could range from 1 billion to 2 billion rubles, said on a conference call CFO aluminum holding Alexander Burik (her words conveyed "Prime" ).

Oleg Deripaska CEO of the company at the end of the summer suggested the government to create state aluminum warehouse to improve the situation in the industry. "For the state, it is not speculation, but a powerful instrument to support the Russian domestic demand ", - he said (according to" Interfax quoted "). A week later, Deputy Prime Minister Arkady Dvorkovich instructed to study the mechanism of creation and functioning of such a fund. On the future of the initiative is not known: the representative UC Rusal said that the company is in dialogue with the government, and a representative Dvorkovich declined to comment.

At 30 September, net debt of UC Rusal is $ 10.1 billion (it is 3% more than in July 2013). As the company will reduce the debt burden, the presentation does not say a representative UC Rusal said that the company is considering options to refinance part of its loan portfolio, but on any specific conditions, refused to speak. In 2014-2016 gg. UC Rusal coming significant repayment: $ 1.4 billion, $ 1.6 billion and $ 6.1 billion respectively. "Pay off the debt for 2013 and 2014. the company is not in a position at current prices for aluminum, - says the analyst "VTB Capital" Igor Lebedynets. - UC Rusal intends to repay part of the seventh series of ruble bonds ($ 0.3 billion from $ 1.5 billion), which will be presented in the I quarter of 2014, etc.ngi this company will draw from the dividends of "Norilsk Nickel". The rest will have to refinance. " During 2013 UC Rusal can get at least $ 556 million in the form of dividends, and if the "Norilsk Nickel" will be able to sell non-core energy assets, the amount will increase by $ 278 million, it said in a presentation.

After the aluminum surplus will disappear in the market, the price will start to recover, confident Krasnozhenov. The same opinion is shared by UC Rusal management - by 2017 the total production of aluminum in the world will be 60.3 million tons, and consumption - 63 million tons, is written in the presentation.