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Russia's Rusal Q4 core earnings surge, Deripaska steps down

Friday, Feb 23, 2018

   Russian aluminium giant Rusal posted a 42 percent jump in fourth-quarter core earnings on Friday, helped by higher aluminium prices, and announced billionaire Oleg Deripaska would step down as president, as expected.

  Hong-Kong listed Rusal said fourth-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to $586 million from $412 million in the last quarter of 2016. Analysts had expected core earnings of $598 million.
  “The company delivered robust operating results and sales volumes growth, which, coupled with the (aluminium) price’s solid improvement, led to the fourth quarter revenue increasing,” Chief Executive Vladislav Soloviev said in a statement.
  “Overall, the company (is) in good shape for 2018.”
  Rusal confirmed Deripaska would step down as president after his inclusion, along with dozens of other tycoons, on a U.S. government list of Russian oligarchs, which could create risks for funding from Western banks.
  The world’s second-largest aluminium producer after China’s Hongqiao said its fourth-quarter revenue rose 35 percent to $2.75 billion.
  London Metal Exchange aluminium rose 35 percent over the course of 2017 on prospects that China’s winter pollution controls would curb supplies. Aluminium was at $2,182 a tonne on Friday, having eased 4 percent so far this year ahead of expiry of the Chinese controls.
  Rusal’s quarterly net profit came in at $440 million, down from $645 million a year ago when it recorded a $299 million gain from the sale of its Alpart alumina refinery in Jamaica to China’s state-owned Jiuquan Iron & Steel Group.
  Rusal shares finished up by 0.6 percent in Hong Kong on Thursday before the results announcement at HK$5.39 ($0.69) slightly outperforming a a 1.4 percent drop in the benchmark index.
  Some analysts have said that the effect from Rusal’s strong financial results could be limited by news about a power struggle at Russian mining company Norilsk Nickel, in which Rusal owns a stake.
  The struggle over Nornickel resurfaced on Feb. 16 as billionaire Vladimir Potanin offered to buy Roman Abramovich’s stake in the group and Rusal tried to block the deal.
  Rusal expects global aluminium demand to grow by 5 percent to 67.3 million tonnes in 2018, with the global deficit widening to more than 2 million tonnes from around 1 million tonnes in 2017.
  Like global miners BHP Billiton and Glencore, Rusal saw cost inflation, mostly due to raw materials prices which, outside alumina and bauxite, rose by 22.3 percent.
  The company also said it had cut net debt to $7.65 billion by the end of 2017 from $8.42 billion at the end of 2016.

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