"Rusal" has published the first semi-annual reporting since the introduction of April US sanctions against the company and its shareholders Oleg Deripaska and Viktor Vekselberg. As expected, aluminum sales fell sharply in the second quarter, but against the background of high metal prices EBITDA and Rusal's net profit increased significantly. But the sanctions have already had a negative impact on production: the Nadvoitsky Rusal plant, which produced products for the United States of Nadvoitsky, which worked in the warehouse since April, the company is forced to begin the conservation of capacities.
On August 6, Rusal issued its first half and second quarter results. Revenues for the half-year increased by 4.8%, to $ 5 billion, adjusted EBITDA - by 14.4%, to $ 1.12 billion. Net profit more than doubled, reaching $ 952 million against $ 470 million a year earlier.
The second quarter was almost entirely sanctioned: on April 6, the Office of Foreign Assets Control of the US Treasury Department (OFAC) included Oleg Deripaska and his assets, including Basel, En + and Rusal, in the SDN list. Its defendants are prohibited from doing business with US residents and access to the financial system of the country. As a result, for the second quarter, Rusal produced 939 thousand tons of aluminum, which is 2% more than a year earlier, but sales fell by 21.7%. The company's revenue in the quarter decreased by 8.7%, to $ 2.25 billion. At the same time, EBITDA increased by 8.2%, to $ 552 million, net profit - by 44.2%, to $ 408 million, which is not the least be associated with a jump in the price of aluminum by 18.2% (to $ 2.26 thousand per tonne).
Sanctions against Rusal led to a rally in metal prices in the spring, which is considered one of the reasons that the original conditions for US restrictions were relaxed.
The deadline for the withdrawal from the debt and shares of Oleg Deripaska's companies, initially limited on May 7, was repeatedly extended - first until June 6, then until August 5, and last week - until October 23, when the temporary license for doing business with RusAl . But the company warns in the report that it still assesses the very high probability that the sanctions will have a noticeable negative impact on its business, although its scale is not yet predicted.
Rusal declares that it is looking for new markets and actively develops the domestic market. The growth of the share of the segment "Russia and CIS" in the first half of the year from 24% to 29% can be considered a reflection of this process. But the sales in foreign markets are also falling in parallel. The US share in sales declined from 17% in the first half of 2017 to 14%, Asia - from 17% to 13%. The source of Kommersant on the investment market notes that the decline in the share of Asia reflects the caution of consumers in Japan, as well as of Taiwan and Korea in dealing with a company under sanctions. At the same time, in his opinion, the domestic market has a limited capacity, and it is premature to say that the shares will continue to be redistributed.
At the same time, because of the sanctions since August, "Rusal" starts to conserve electrolysis capacities at the Nadvoitsky aluminum plant (NAZ) in Karelia. As explained in the company, as a result of imposing sanctions, NAZ "lost market outlets and stable supplies of raw materials, the plant's products were unclaimed, since the production was completely oriented to the American market." Therefore, since April, NAZ only works for a warehouse, generating significant losses.
NAZ, like a number of other low-margin assets that Rusal acquired as a result of merger with SUAL Viktor Vekselberg, stood in the line for closing for many years, but due to the social factor, it was not decided to stop it. Back in 2011, Rusal wanted to close the NAZ on the background of low world aluminum prices and high energy costs, the issue was raised again in 2013, intending to solve it through the purchase of the Ondsk Hydroelectric Power Station (TGK-1) from Gazprom Energoholding (bought in 2014). Now RusAl in Nadvoitsy is developing an enterprise for the production of aluminum radiators for heating and intends to also build a data center (data center) using the energy of the hydroelectric power station. It is assumed that employees of electrolysis production of NAZ will be employed at these enterprises.