United Company RUSAL — Q1 2014 Earnings Presentation
21 slides from United Company RUSAL's earnings presentation, 2014
Slide 1: 1Q2014 Results Presentation
1Q2014 Results Presentation
Slide 2: Disclaimer
Disclaimer These materials and the subsequent discussion are not an offer for sale of any securities of United Company RUSAL Plc (the “Company”). The distribution of these materials in certain jurisdictions may be restricted by law and therefore persons into whose possession these materials come sho
Slide 3: Operational and financial highlights
Operational and financial highlights Market overview Appendix Potroom, Sayanogorsk Aluminum smelter (SAZ) 3
Slide 4: 1Q 2014 highlights
1Q 2014 highlights Record high premiums kept UC RUSAL’s top line stable QoQ Realized premiums increased to record high US$336/t in 1Q 2014 (US$277/t in 4Q2013) as compared to US$264 in 1Q 2013 demonstrating more than 27% year-on-year growth VAP(2) output up to the highest level of 44% of total p
Slide 5: Production decreased in line with the capacity curtailment program
Production decreased in line with the capacity curtailment program Aluminium & VAP production Kt Solid share of 1 007 VAP output 992 44% 43% 43% 953 41% 43% 905 883 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 Aluminium production VAP, as % of total Aluminium production LME aluminium & sales price Alumin
Slide 6: Curtailment program along with record high realized premium the key drivers of EBITDA growth
Curtailment program along with record high realized premium the key drivers of EBITDA growth EBITDA bridge US$m EBITDA Margin 8% 7 Macro 30 EBITDA Margin 5% 9 19 29 48 32 173 7 101 75 sales volumes(1) Mothballing program LME LME QP 4Q 2013 comparable Sales premium and mothballed plants and 4Q 2013 E
Slide 7: Costs decreased to lowest level since 2010 despite slight physical sales growth
Costs decreased to lowest level since 2010 despite slight physical sales growth Further measures to enhance cash cost …along with strong rouble depreciation optimization… against US dollar… US$m US$/t LME(1) RUB/USD (1) RUB -6.6% (-3.4%) QoQ (7%) QoQ 2 200 39 1 864 1 741 34.9 37 6% 3% 6% 2% 2 100 9%
Slide 8: Market overview
Operational and financial highlights Market overview Appendix Potrooms, Bratsk Aluminum smelter (BrAZ) 8
Slide 9: Aluminum consumption forecast strong growth through to 2018
Aluminum consumption forecast strong growth through to 2018 Primary Aluminium consumption Key regions +50 mln.t 78 2014 aluminium consumption is 64 66 58 61 forecast to grow by 6% compared to 55 2013 52 48 45 37 41 China remains the most significant 34 growth market and is forecast to 28 expand
Slide 10: European market on track for growth as Eurozone manufacturing recovers
European market on track for growth as Eurozone manufacturing recovers Manufacturing PMI Production index in Construction 60 103 Eurozone Manufacturing PMI, sa, 50 = EU28 58 101 no change 56 99 54 97 52 95 50 93 48 91 46 89 2010 = 100 Seasonally adjusted data 44 87 42 85 Jan-11 Apr-11 Jul-11 Oct-11
Slide 11: Strong demand growth in N America despite the severe weather conditions
Strong demand growth in N America despite the severe weather conditions US Manufacturing PMI Housing starts in US (SAAR) 60 1200 58 1100 Thousands of Units, SAAR 56 1000 900 54 800 52 700 50 600 48 500 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Jan-11
Slide 12: Asian demand growth of 2.3% lead by the ASEAN countries
Asian demand growth of 2.3% lead by the ASEAN countries Japan Manufacturing PMI Housing starts in Japan 57,5 95 Thousand houses 55,0 85 52,5 50,0 75 47,5 65 45,0 42,5 55 Jan-11 Jan-12 Jan-13 Jan-14 Jul-11 Jul-12 Jul-13 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-
Slide 13: Continued improvement in the global balance due to ongoing capacity cuts
Continued improvement in the global balance due to ongoing capacity cuts Ex.China balance, Kmt Ex-China aluminium balance has been in 500 deficit since early 2012. The year to date 400 deficit in 2014 is estimated at 270kt. 300 RUSAL predicts that global aluminium 200 stocks outside China have d
Slide 14: Aluminium premiums have risen to record highs on tight metal availability
Aluminium premiums have risen to record highs on tight metal availability Aluminium premiums Market premiums have soared to record highs due to the current strong demand versus capacity curtailments Consumers believed to be operating on lower stocks due to expectation of lower premiums. Short
Slide 15: China – continued capacity and production growth in 1H2014
China – continued capacity and production growth in 1H2014 China’s operating capacity Chinese aluminium capacity utilization rate Kt 27 292 1 928 230 28 063 Kt -1 389 33 000 90% 88% 30 000 88% 87% 27 000 85% 86% 24 000 84% 21 000 82% 18 000 15 000 80% 2012 2013 2014* Capacity Dec Idled New Resumed C
Slide 16: … leading to SHFE price collapse and sharply increasing industry losses
… leading to SHFE price collapse and sharply increasing industry losses Chinese Smelting Cash Cost Curve evolution in 2013 China Aluminum Smelters’ Profit Margin Loss-making capacities in 18000 RMB/t Mar 2014 - 15.2 Mt (57%) -27% 17000 SHFE Dec 2012, RMB 15224 SHFE Jun 2013, RMB 14641 16000 SHFE Mar
Slide 17: Positive signs of Chinese aluminum market in March 2014
Positive signs of Chinese aluminum market in March 2014 Daily average aluminum production vs capacity Monthly Primary Aluminum Fundamentals utilization rate According to Aladdiny’s data, China’s daily average aluminum production in March 2014 fell by 5.3%M-M to 75.3 kt Annualized production decrea
Slide 18: Appendix
Operational and financial highlights Market overview Appendix Potrooms, Krasnoyarsk Aluminum smelter (KrAZ) 18
Slide 19: Summary results
Summary results Income statement US$m 1Q 2014 4Q 2013 % Change Revenue 2 123 2 125 (0.1%) Cost of sales 1 792 1 856 (3.4%) EBITDA 173 101 71.3% EBITDA Margin 8% 5% 3p.p. Share of results of associates and JVs 82 (681) NA Income tax (20) (7) 185.7% Net Loss (325) (2 711) (88.0%) Adjusted Net Loss (24
Slide 20: Summary results
Summary results Balance Sheet and Cash Flow As of 31 As of 31 US$m % Change March 2014 December 2013 Cash and Cash Equivalents 552 716 (22.9%) Equity Attributable to Shareholders of the 5 328 6 550 (18.7%) Company Total Liabilities 13 940 13 930 (0.1%) Total working capital 1 609 1 593 1.0% Net Debt
Slide 21: Summary results
Summary results Segment results 1Q 2014 4Q 2013 US$m Aluminium Alumina Aluminium Alumina Segment Revenue 1 784 545 1 740 510 Segment Results (EBIT) 144 (50) 65 (74) EBITDA 236 (29) 163 (53) EBITDA margin 13.2% (5.3%) 9.4% (10.4%) Segment CapEx 61 54 85 75 Segment cash cost per tonne 1 741 331 1 864