United Company RUSAL Plc

United Company RUSAL — FY2012 Earnings Presentation

28 slides from United Company RUSAL's earnings presentation, Mar 4, 2013

  1. Slide 1: 2012 Results Presentation

    2012 Results Presentation 4 March 2013

  2. 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

  3. Slide 3: Agenda

     Operational and financial highlights  Norilsk Nickel Investment  Growth projects  Market update  Appendix Sayanogorsk Aluminium Smelter 3

  4. Slide 4: 4Q and FY2012 highlights

    4Q and FY2012 highlights Top-line improved due to higher LME price, product mix and premiums despite started capacity cuts  Aluminium production decreased by 2% to 1,038Kt in 4Q2012 vs 4Q2011 following the launch of the capacity curtailments program and despite the restart to full capacity at the S

  5. Slide 5: Production results reflect the launch of inefficient capacity curtailments

    Production results reflect the launch of inefficient capacity curtailments Aluminium production by regions Mt 4.2 4.1 (7%) 3.6% 3.2% 3.9 11.7% 12.8% 84.0% 84.7% 2011 2012 2013F Siberia European Russia and Urals RoW Krasnoyarsk Aluminium Smelter. Potroom Quarterly aluminium production World’s largest

  6. Slide 6: Market recovery from summer lows reflected in quarter's revenue growth

    Market recovery from summer lows reflected in quarter’s revenue growth LME aluminium & sales price US$/t 3Q2012 4Q2012 Change 1,918 LME price 1,997 4% UC RUSAL’s 2,115 2,222 5% sales price 2 200 2 150 2 100 1Q 2 050 2013(1) 2 000 1 950 1 900 1 850 1 800 1 750 Jul-12 Oct-12 Jan-13 Source: Bloomberg,

  7. Slide 7: Sales shifted to regions with higher demand supported by VAP output

    Sales shifted to regions with higher demand supported by VAP output Realized premiums above LME Al price(1) 2012 aluminium sales by regions(2) US$/t US$/t 3,600 249 3,400 226 250 Asia 3,200 191 26% Europe 200 35% 3,000 161 164 165 153 159 2,800 150 2,600 6.1% 12.5% 2,600 11.8% America 2,399 100 12%

  8. Slide 8: Cost reduction initiatives reflected in position shift on the industry's cost curve

    Cost reduction initiatives reflected in position shift on the industry’s cost curve Aluminium segment cash cost Power tariff(1) US$/t USc/kWh Share in power consumption Av. tariff in 2012 Siberia 2,058 84% 85% (2.90 USc/kWh) Europe & Urals 16% 15% (4.73 USc/kWh) (9%) 1,979 1,963 1,944 1,952 1,947 1,

  9. Slide 9: 4Q operating margins supported by procurement savings and better metal pricing

    4Q operating margins supported by procurement savings and better metal pricing 2012 EBITDA development US$m EBITDA margin 11.6% 82 EBITDA margin 17 EBITDA 110 margin 8.2% 17 (46) 8.4% (10) (40) (39) EBITDA 327 margin 5.1% 237 221 130 1Q 2012 2Q 2012 3Q 2012 LME Quotation RUB/USD Premium Volume & Raw

  10. Slide 10: Reduced debt pressure in 2013 due to early debt repayments

    Reduced debt pressure in 2013 due to early debt repayments Maintaining flexibility Reduction of Net Debt and interest expenses(1)  Debt repayments of US$1,041m during 2012 US$m 12000  ~US$441m out of the Company’s own cash; 11,049 10,829 700  ~US$600m from available credit lines 10000 (11%) 600 6

  11. Slide 11: Norilsk Nickel Investment

     Operational and financial highlights  Norilsk Nickel Investment  Growth projects  Market update  Appendix Norilsk Nickel’s Nadezhdensky Plant. Smelting shop 11

  12. Slide 12: Agreement in the interest of both companies

    Agreement in the interest of both companies Key takeaways Dividend flow Composition of the Board Financial implications Total UC RUSAL dividends gross share Mllhouse  Agreed dividend flow in 2013-15 of US$8bn (1) and 50% of EBITDA after 2015 (2)  Additional cash flow following potential sale of US

  13. Slide 13: Growth projects

     Operational and financial highlights  Norilsk Nickel Investment  Growth projects  Market update  Appendix BEMO Smelter. Potroom construction. 13

  14. Slide 14: Signed amendment extending financing to 50% of BEMO smelter's design capacity

    Signed amendment extending financing to 50% of BEMO smelter’s design capacity BEMO HPP BEMO Smelter. Gas insulated switchgear BEMO HPP BEMO Smelter  Partner RusHydro (50%)  Partner RusHydro (50%)  Design capacity 588Ktpa  Design capacity 3,000 MW  Remaining US$878m  Remaining CapEx(1) US$252m

  15. Slide 15: Securing access to low cost resources and getting closer to innovative technologies

    Securing access to low cost resources and getting closer to innovative technologies Dian Dian Project Development Mtpa 12.0 6.0 3.0 2.4 1.2 (1) (2) 1st Phase 2nd & 3rd Phases 4th Phase (by end-2015) (by end-2019) Bauxite Capacity Alumina Capacity Friguia Bauxite and Alumina Complex Key projects  Wo

  16. Slide 16: Market update

     Operational and financial highlights  Norilsk Nickel Investment  Growth projects  Market update  Appendix Friguia Bauxite and Alumina Complex 16

  17. Slide 17: Global aluminium consumption outlook remains positive…

    Global aluminium consumption outlook remains positive… Global aluminium consumption Key Regions Mt  Global demand for aluminium will maintain its 54.2 57.7 growth and increase by 6% reaching 50 Mt in 50.1 44.8 47.4 2013 primarily driven by China, other Asian 40.6 countries and the United States 38.

  18. Slide 18: …supported by continuous growth in major consuming industries

    …supported by continuous growth in major consuming industries Primary aluminium end-usage in 2012 Key Drivers Machinery & Other Transportation Transport equipment 6% 11% 23%  Aluminium demand in transportation to grow by 5-6% in 2013. It will be a combination of an increase in global automotive pro

  19. Slide 19: Retained balance in ex-China aluminium market supported by capacity cuts

    Retained balance in ex-China aluminium market supported by capacity cuts Aluminium ex-China balance Ex-China utilization rate and price Kt Ex-China capacity utilization LME price US$/t 500 94% 3100 92% 2900 400 2700 90% 300 2500 88% 2300 200 86% 2100 84% 1900 100 82% 1700 0 80% 1500 78% 1300 -100 -2

  20. Slide 20: Tight market increases premiums

    Tight market increases premiums LME aluminium inventories Aluminium premium and price Kt US$/t US$/t 6 000 250 3200 5 000 230 210 4 000 2700 190 170 3 000 2200 150 130 2 000 110 1700 1 000 90 70 0 1200 50 Jan-05 Jun-05 Jan-10 Jun-10 Jul-07 Jul-12 Nov-05 Sep-06 Dec-07 Aug-09 Nov-10 Sep-11 Dec-12 Apr-

  21. Slide 21: Financial demand influencing aluminum price

    Financial demand influencing aluminum price Al LME turnover and physical demand Ex-China cost/price dynamics Mt US$/t 60 40 3 000 55 35 34 50 31 30 2 500 30 45 25 23 40 20 2 000 35 15 47 30 41 10 1 500 34 25 5 25 20 0 1 000 2002 2006 2010 2012 Global Primary aluminium demand, mln tonnes LME Aluminiu

  22. Slide 22: New capacity commissioning and overproduction in China had a negative effect on the market

    New capacity commissioning and overproduction in China had a negative effect on the market China’s capacity dynamics in 2012 China inventories and SHFE price (Kt) (RMB/t) (Kt) 27,111 1 330 18 500 1 600 23,836 3 966 18 130 -1 211 17 760 (18%) 1 200 Installed capacity 17 390 17 020 24 542 16 650 800 2

  23. Slide 23: China faces oversupply and declining price

    China faces oversupply and declining price Aluminium production and price Profit margin of aluminium smelters in China RMB/t RMB/t RMB/t 20 000 95% 2 500 20 000 19 000 2 000 19 000 90% 18 000 1 500 18 000 85% 1 000 17 000 17 000 80% 500 16 000 16 000 0 15 000 15 000 75% -500 14 000 14 000 70% -1 000

  24. Slide 24: Appendix

     Operational and financial highlights  Norilsk Nickel Investment  Growth projects  Market update  Appendix Krasnoyarsk Aluminium Smelter. Casthouse 24

  25. Slide 25: Summary results: Income statement

    Summary results Income statement US$m 2012 2011 % Change Revenue 10,891 12,291 (11%) Cost of sales 9,232 8,786 5% EBITDA 915 2,512 (64%) EBITDA Margin 8% 20% - Share of profits of associates and JVs 806 (324) - Income tax (26) (373) (93%) Net Loss/Profit (55) 237 - Adjusted Net Profit (498) 987 - Re

  26. Slide 26: Summary results: Balance Sheet and Cash Flow

    Summary results Balance Sheet and Cash Flow As at 31 As at 31 US$m % Change Dec 2012 Dec 2011 Cash and Cash Equivalents 505 646 (22%) Equity Attributable to Shareholders of the 11,108 10,539 5% Company Total Liabilities 14,478 14,806 (2%) Total working capital 1,893 2,367 (20%) Net Debt 10,829 11,04

  27. Slide 27: Summary results: Segment results

    Summary results Segment results 2012 2011 US$m Aluminium Alumina Aluminium Alumina Segment Revenue 9,515 2,043 10,600 2,444 Segment Results (EBIT) 722 (190) 2,072 (24) EBITDA 1,150 (86) 2,472 76 EBITDA margin 12% (4%) 23% 3% Segment CapEx 328 155 416 177 Segment cash cost per tonne 1,946 348 1,984 3

  28. Slide 28: Summary results: Quarterly results

    Summary results Quarterly results US$m 4Q 2012 3Q 2012 2Q 2012 1Q 2012 Revenue 2,624 2,563 2,822 2,882 Cost of sales 2,191 2,266 2,318 2,457 EBITDA 221 130 327 237 EBITDA Margin 8% 5% 12% 8% Share of profits of associates and JVs 201 184 146 220 Income tax 90 (21) (74) (21) Net Loss/Profit 62 (118)

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