RUSAL's Q1 net down 84 pct, may cut capacity

 

　　RUSAL's management, led by its controlling shareholder Oleg Deripaska, has resisted pressure to sell its 25 percent share in the world's largest nickel and palladium company to pay down debts at a time when aluminium markets are weak.

 

　　Both Deripaska and his main opponent, fellow RUSAL shareholder and billionaire Viktor Vekselberg, are looking for fresh ammunition in their fight over the company's financial management.

 

　　Net debt rose 0.7 percent to $11.13 billion at the end of March from $11.05 billion in December 2011, RUSAL said in its earnings statement on Monday.

 

　　In addition to their dispute over Norilsk, Vekselberg, who resigned as chairman in March, is challenging a large aluminium supply deal with a third RUSAL shareholder, commodity trade giant Glencore.

 

　　RUSAL's first-quarter net profit, which included its share of earnings in Norilsk Nickel and non-cash items, slumped to $74 million from $451 million a year earlier as a global slowdown in demand and weak prices eroded margins.

 

　　Recurring net profit fell 77 percent to $112 million in the three months ended March, compared with an average forecast of $94 million in a poll of eight analysts by Reuters.

 

　　Shares of RUSAL, which competes with U.S. aluminium maker Alcoa Inc, have lost about half their 2010 Hong Kong IPO value of HK$10.80 each. The stock was down 0.2 percent at HK$5.02, after the earnings announcement.

 

　　Prices of aluminium, used in cars, construction and beverage cans, have fallen about 20 percent from a year ago, weighing on company's earnings and shares.

 

　　RUSAL's earnings are expected to come under further pressure as it grapples with a strengthening ruble against the U.S. dollar and high oil prices, analysts said.

 

　　"In response to continued uncertainty in the global economy, RUSAL is currently considering the curtailment of 300,000-600,000 tonnes of high-cost smelting capacity starting from the second half of 2012," RUSAL said.

 

　　Its rival Alcoa surprised the market last month with a first-quarter profit after a loss in the last quarter of 2011 as demand for aluminium in North America was strong in most industrial sectors except for building and construction.

 

　　But RUSAL's quarterly results beat those of Chinese competitor Aluminum Corp of China Ltd (Chalco) , which warned of a loss for the first half ending June 2012 after recording a net loss of 1.09 billion yuan ($172.73 million) for the first quarter. ($1 = 6.3106 Chinese yuan)