Rusal · RUS:RUAL
Rusal — UC Rusal — FY2011 Earnings Presentation
31 slides from Rusal's earnings presentation, Mar 19, 2012
Slide 1: 2011 Results Presentation
2011 Results Presentation 19 March 2012
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 results
Operational and Financial results 3
Slide 4: 2011 highlights
2011 highlights Maintained leading position in the industry and profitability Increased revenue by 12% up to US$12,291m and maintained EBITDA margin above 20% Adjusted Net profit increased by 25% reaching US$987m, Recurring Net Profit (1) by 18% to US$1,981m Free cash flow (2) of US$1,482m in
Slide 5: 2011 production results
2011 production results 2011 production Kt 4,123 aluminium +1% 4,083 100% self-sufficiency in alumina 8,154 alumina +4% 7,840 13,473 bauxite 11,798 +14% 2011 2010 World’s largest aluminium producers World’s largest alumina producers Kt Kt 42% of the global market in 2011 52% of the global market in
Slide 6: Maintained strong margins and profitability
Maintained strong margins and profitability LME aluminium price Revenue US$/t US$m 2 900 2010 av. 2011 av. +10% +12% 12,291 US$2,173/t US$2,395/t 2 700 10,979 2 500 2 300 2 100 1 900 1 700 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 2010 2011 Around 100Kt of aluminium sales shifte
Slide 7: Achieved strong level of premiums and share of VAP output
Achieved strong level of premiums and share of VAP(1) output Realized premiums above LME Al price (2) Aluminium sales by regions 3 400 US$/t 2011 av. US$160/t 200 3 200 164 180 161 159 153 160 3 000 131 140 2 800 114 Asia 120 18% 95 2 600 7.6% 100 83 Europe Global America 2,600 80 End-users 40% 2 40
Slide 8: VAP production hub in the Western part of Russia – first results
VAP production hub in the Western part of Russia – first results Creating VAP production cluster Modernisation of 5 aluminium smelters located in European part of Russia and Urals Targeted share of VAP: up to 100% of total production at all 5 smelters Production of wire rod, slabs, foundry alu
Slide 9: Casting houses modernization program in the Eastern Siberia
Casting houses modernization program in the Eastern Siberia New VAP production capacity in Siberia Decision made in 2011 to modernise 5 aluminium smelters located in Siberia Upgrades at KrAZ and BrAZ will include melt quality analyzers to produce high quality slabs for lithographic plates and pa
Slide 10: Continued focus on cost control and optimization of power expenses
Continued focus on cost control and optimization of power expenses Cost of sales (1) Aluminium segment cost per tonne (2) US$m US$/t 2,273 2,282 2,227 2,004 212 189 219 2,058 140 234 245 162 219 659 645 602 629 1,980 1,244 1,952 1,168 1,203 1,944 1,016 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q11 2Q11 3Q11
Slide 11: Finalized refinancing
Finalized refinancing Completion of debt refinancing Current debt composition Average interest rate reduced from 5.7%p.a. before Other Russian refinancing to 4.7%p.a. as of the end of 2011 lenders 17% Interest rate under tranche A of the PXF Sberbank reduced to 2.35%+3M LIBOR in Jan 2012 as 38%
Slide 12: Corporate Governance
12 Corporate Governance ry RUSAL
Slide 13: Changes of the Board composition
Changes of the Board composition Shareholder structure Board of Directors EN+ Group 47.41% VEB Glencore (1 non- (1 non- executive) executive) 4 Onexim Holdings 17.02% INEDs Onexim Sual Partners 15.80% (1 non- executive) Glencore 8.75% EN+ (6 executive, SUAL 3 non- Management 0.27% (2 non- executive
Slide 14: New Chairman of the Board of Directors to improve corporate governance standards
New Chairman of the Board of Directors to improve corporate governance standards Mr. Barry Cheung joined RUSAL’s Board as an independent Director in January 2010 Mr. Barry Cheung, GBS, JP, is the Chairman of the Hong Kong Mercantile Exchange Ltd. He is also Chairman of both the Urban Renewal Aut
Slide 15: Market update
hi RUSAL eet ee) = Market update 15
Slide 16: Aluminium consumption is forecast to grow by 7% in 2012
Aluminium consumption is forecast to grow by 7% in 2012 Global aluminium consumption Aluminium consumption by regions RoW Russia 9% 48.2 2% 45.1 Japan 40.6 38.0 37.8 4% 34.4 35.6 31.9 30.0 27.8 North America China 12% 45% Western Europe 13% Asia ex-China 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 17: Regional premiums and aluminum price perspective
Regional premiums and aluminum price perspective LME cash official and Forward curve Regional physical premiums US$/t US$/t LME cash official Forward curve Europe Japan US 3500 250 US$200/t 3000 200 150 US$175/t 2500 2000 100 US$112/t 1500 50 1000 0 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 J
Slide 18: Aluminium financial demand continue to be strong
Aluminium financial demand continue to be strong Aluminium financial deals profitability Aluminium marginal cost % year US$/t US TB 10Y (CoC 3M - LIBOR 12M) LME Stock, kt (rhs) Aluminium Cash Off. Price Aluminium Marginal Cost 15 6000 3500 10 5000 3000 5 4000 2500 0 01.2007 04.2007 07.2007 10.2007 0
Slide 19: Aluminium production cuts to support price
Aluminium production cuts to support price Aluminium production rate & price Capacity curtailments US$/t 3500 % 95 Since June 2011 more than 3.3% (around 1.8Mt ) of global capacity was terminated 3000 90 In the beginning of 2012 companies 2500 85 announced termination of 1.7Mt of capacity 2000 8
Slide 20: Market update: A focus on China's aluminium industry
Market update A focus on China’s aluminium industry 20
Slide 21: Outlook for China's aluminium market balance
Outlook for China’s aluminium market balance China’s semis vs. primary aluminium output Scenarios of capacity/market balance Kt Kt 2015E 2011 base case MIIT case Consumption 19,463 28,211 24,000 Production 19,100 26,762 24,000 Capacity 23,386 30,703 27,586(1) Operating rate 82% 87% 87% Deficit (impo
Slide 22: Western Development Strategy vs. structural challenges
Western Development Strategy vs. structural challenges China’s aluminium production by region Bauxite supply balance in China 2010 – 17mtpa 2015 – 31mtpa Mt Source: Brook Hunt Sources: CNIA, Antaike, SMM, China Customs, UC RUSAL Research Western Development Strategy to balance regional Self-suff
Slide 23: Capacity shutdown outlook
Capacity shutdown outlook Regulatory pressure for permanent shutdowns: China’s capacity by technology 1) specific closure target stipulated by MIIT guidelines: - 800ktpa of obsolete capacity during 12th FYP 4.2mtpa 2) potential additional closures of inefficient capacity - similar to the ordered c
Slide 24: Growth projects
Growth projects 24
Slide 25: Getting closer to the completion of growth projects – BEMO project
Getting closer to the completion of growth projects – BEMO project BEMO HPP BEMO Smelter Partner RusHydro (50%) Partner RusHydro (50%) Design capacity 3,000 MW Design capacity 588Ktpa Remaining capex(1) US$376m Remaining capex(2) US$404m Finishing of the tail-water cutoff Around 16 mln c
Slide 26: Getting closer to the completion of growth projects – Taishet smelter
Getting closer to the completion of growth projects – Taishet smelter UC RUSAL capital expenditure (1) US$m 2011 2010 Growth projects 89 184 BEMO HPP off balance sheet 158 BEMO smelter off balance sheet 13 Taishet smelter (2) 89 13 Maintenance 533 354 Pot rebuilds 181 140 Re-equipment 352 214 To
Slide 27: Appendix - Summary results
Appendix - Summary results 27
Slide 28: Summary results: Income statement
Summary results Income statement US$m 2011 2010 % Change Revenue 12,291 10,979 12% Cost of sales 8,786 7,495 17% EBITDA 2,512 2,597 (3%) EBITDA Margin 20% 24% - Share of profits of associates (349) 2,435 - Income tax (373) (144) - Net Profit 237 2,867 (92%) Adjusted Net Profit 987 792 25% Recurring
Slide 29: Reconciliation of Adjusted and Recurring Net Profit
Reconciliation of Adjusted and Recurring Net Profit US$m 2011 2010 % Change Net profit for the year 237 2,867 (91.7%) Adjusted for: Share of profits and other gains and losses 534 (2,508) - attributable to Norilsk Nickel, net of tax effect (9%) Share in profits, net of tax (994) (891) 12% Reversal o
Slide 30: Summary results: Balance sheet and cash flow
Summary results Balance sheet and cash flow US$m As at 31 As at 31 % Change Dec 2011 Dec 2010 Cash and Cash Equivalents 646 491 32% Equity Attributable to Shareholders of the 10,539 11,456 (8%) Company Total Liabilities 14,806 15,069 (2%) Net Debt 11,049 11,472 (4%) US$m 2011 2010 % Change Net cash
Slide 31: Summary results: Segment results
Summary results Segment results US$m 2011 2010 Aluminium Alumina Aluminium Alumina Segment Revenue 10,600 2,444 9,360 1,983 Segment Results (EBIT) 2,072 (24) 1,929 151 EBITDA 2,472 76 2,323 237 EBITDA margin 23% 3% 25% 12% Segment capex 416 177 234 115 Aluminium segment is involved in the producti