Rusal · RUS:RUAL
Rusal — United Company RUSAL — FY2015 Earnings Presentation
35 slides from Rusal's earnings presentation, Mar 9, 2016
Slide 1: 4Q 2015 and 12M 2015 Financial Results Presentation
4Q 2015 and 12M 2015 Financial Results Presentation March 9, 2016
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: Agenda
AGENDA 1 Results overview 2 Operating and financial results review 3 Debt management 4 Market overview 5 Appendix 3
Slide 4: Results Overview
RESULTS OVERVIEW KEY OPERATING INDICATORS 4Q 2015 o 4Q15 aluminium production totalled 921 thousand t (flat QoQ). 12M 12M % o Aluminum sales were seasonally lower, totaling 876 thousand t 4Q15 3Q15 % chg 15 14 chg (-6.7% QoQ). o 4Q15 realised price decreased by 6.2% QoQ to USD1,729/t Aluminium pro
Slide 5: Health and Safety
HEALTH AND SAFETY LTAFR QUARTERLY DYNAMICS LTAFR YEAR DYNAMICS Lost Time Accident Frequency Rate (employee) per 1 000 000 mwh Lost Time Accident Frequency Rate (employee) per 1 000 000 mwh 2.00 2.00 1.80 1.80 1.70 1.70 1.60 1.60 1.25 1.30 1.25 1.20 1.15 1.15 1.20 1.20 1.10 1.10 1.10 0.95 0.80 0.85 0
Slide 6: Agenda
AGENDA 1 Results overview 2 Operating and financial results review 3 Debt management 4 Market overview 5 Appendix 6
Slide 7: Aluminium Sales and Price Dynamics
ALUMINIUM SALES AND PRICE DYNAMICS LME aluminium prices remained volatile in 4Q15 and on average declined from 3Q15. RUSAL’s realised price decreased by 6.2% QoQ to $1,729/t o LME component of RUSAL’s price and commodity component in premium declined by 5.3% QoQ (to $1550/t) and 29.5% (to $79t) Qo
Slide 8: Sales Revenue
SALES REVENUE 4Q15 total sales revenue was $1,857 mn (-10.4%, REVENUE BY PRODUCT QoQ) $ mn Revenue from aluminium sales declined by 12.4% 2500 2,073 -10.4% QoQ QoQ 1,857 2000 187 o 4Q15 aluminium sales decreased by 6.7% QoQ to 155 195 876 thousand t due largely to seasonal factors. 1500 147 o 4Q
Slide 9: Operating Costs
OPERATING COSTS COST OF GOODS SOLD* CHANGE FACTORS $ mn 1466 1500 -10.2% QoQ 1316 1200 (-) Lower aluminium sales (-) Ruble depreciation 900 (-) Strict control over costs 600 300 0 3Q15 4Q15 COST OF GOODS SOLD STRUCTURE SG&A ** 1% 0% $ mn 100% 300 28% 28% +25.5% QoQ 241 80% 2% 1% 192 60% 9% 9% 200 40
Slide 10: Operating Costs (Continued)
OPERATING COSTS (CONTINUED) In 4Q15 RUSAL managed to further reduce aluminium cash cost to $1410/t (-2.1% QoQ) o USDRUR rate depreciation (~7-10%) supported cost reduction offsetting seasonal increase in domestic electricity tariffs RUSAL continued to move to the left side of the 1st quartile on
Slide 11: Profitability
PROFITABILITY 4Q15 EBITDA totalled $306 mn (-27.1%, QoQ) 3Q15 - 4Q15 EBITDA BRIDGE o According to quotation period the bottom LME Al prices $mn 24 were reflected in 4Q15 sales. This largely contributed to a 4Q15 EBITDA QoQ decline. 76 25 11 o Lower QoQ premiums and seasonal decrease in sales were
Slide 12: Capital Expenditures
CAPITAL EXPENDITURES 4Q15 capex increased by 10.3% QoQ to $160 mn in accordance with planned payment schedule. CAPEX QUARTERLY $ mn 12M15 $522 mn capex 200 o The maintenance capex is ~$328mn in 2015, including pot rebuilds. The maintenance capex projection for 150 2016 is ~$300 mn. o 66% of RUSA
Slide 13: Free Cash Flow
FREE CASH FLOW RUSAL generated positive free cash flow in the period. 12M15 free cash flow totalled $928 mn (including $23 mn in 4Q 2015). 2015 free cash flow was largely used to deleverage. 4Q15 EBITDA TO CASH FLOW BRIDGE $ mn 350 300 $ +40 mn net investing CF $ -185 mn net financing CF 250 116
Slide 14: Agenda
AGENDA 1 Results overview 2 Operating and financial results review 3 Debt management 4 Market overview 5 Appendix 14
Slide 15: Debt Position Change
DEBT POSITION CHANGE Since the beginning of 2015, overall debt has reduced by 5.6% ($527 mn). Net debt, including derivative liabilities GROSS DEBT CHANGE $ mn YoY change -5.6% declined YoY by $770 mn. Covenant Net Debt/ covenant LTM EBITDA was reduced from 4.3 to 2.7 in 4Q15. QoQ change +3.0% 4
Slide 16: Debt Profile and Maturity
DEBT PROFILE AND MATURITY Manageable debt profile REPAYMENT SCHEDULE *** o At the end of 2015 cash and equivalent totalled $ bn $0.5 bn covering a substantial part of ST obligations 2.7 o The ST obligations (~$1.3bn) are mostly represented by Cash and PXF, GPB and other bilaterals equivalents 1.8
Slide 17: Norilsk Nickel
NORILSK NICKEL Recent and upcoming dividends METALS PRICES 2016 OUTLOOK o In May 2015 RUSAL received $535 mn of dividends for (3) $/t $/t 2014 FY Nickel Palladium 11000 700 o In October 2015 RUSAL received $192 mn of interim dividends 626 for 6M 2015 8995 9407 600 541 o In January 2016 RUSAL recei
Slide 18: Agenda
AGENDA 1 Results overview 2 Operating and financial results review 3 Debt management 4 Market overview 5 Appendix 18
Slide 19: Surplus Accumulated Ex-China Since 2009 Forecast to Reduce to Zero
SURPLUS ACCUMULATED EX-CHINA SINCE 2009 FORECAST TO REDUCE TO ZERO BY END OF 2016 MARKET BALANCE EX-CHINA Market ex-China has remained in deficit since 2012 as unfavorable aluminum prices 33 5 forced the curtailailment of unprofitable Mn mt 4 31 3.7 capacity 3 29 2 27 0.8 0.8 1 Deficit is foreca
Slide 20: Transportation Sector Continues to Fuel Global Aluminium Demand Growth
THE TRANSPORTATION SECTOR CONTINUES TO FUEL GLOBAL DEMAND GROWTH IN PRIMARY ALUMINIUM WORLD EX-CHINA SEMIS DEMAND CHINA PRIMARY ALUMINIUM DEMAND GROWTH IN 2016 BY END-USE* GROWTH IN 2016 BY END-USE In KMT In KMT Total 1577 +4% Total 2160 +7% Other 43 +2% Others 50 +7% Machinery & Equipment 87 +2% Ma
Slide 21: Aluminium in Transport
ALUMINIUM IN TRANSPORT An aluminium-intensive vehicle can achieve up to a ALUMINIUM DEMAND IN TRANSPORTATION 20% reduction in total life cycle energy consumption SEGMENT EX-CHINA , MLN MT and a 17% reduction in CO2 emissions CAGR 2015-2020 5% Every kilogram of aluminium used in a car reduces 18.
Slide 22: Aluminium in Construction
ALUMINIUM IN CONSTRUCTION Aluminium can be used in any climatic conditions ALUMINIUM DEMAND IN CONSTRUCTION SEGMENT and does not loose its properties in even EX-CHINA , MLN MT temperatures ranging between –80°C and +300°C CAGR 2015-2020 4% High strength-to-weight ratio of aluminium makes it 9.0
Slide 23: Aluminium in Power Engineering
ALUMINIUM IN POWER ENGINEERING Compared to copper, aluminium is lighter. Therefore, ALUMINIUM DEMAND IN ELECTRICAL SEGMENT EX- only aluminium wires are used in main overhead CHINA , MLN MT power lines CAGR 2015-2020 4% 6.2 These wires have such a high chemical resistance 6.0 5.7 that they can wo
Slide 24: Growth in Global Supply Has Abated as Smelter Curtailments Intensify
GROWTH IN GLOBAL SUPPLY HAS ABATED AS SMELTER CURTAILMENTS INTENSIFY China’s aluminium daily output volumes declined in December 15 (-8.7% MoM) and January 16 (-2.0% MoM)* and according to preliminary estimations are ** expected to decline further in February 16. CHINA DAILY ALUMINIUM PRODUCTION S
Slide 25: Regional Premium Outlook Remains Firm Despite Disruptive Market Influences
THE REGIONAL PREMIUM OUTLOOK REMAINS FIRM DESPITE DISRUPTIVE MARKET INFLUENCES EUROPEAN DU PREMIUM VS 3M CONTANGO US PREMIUM VS DEFICIT IN N.AMERICA 20 48 660 600 Europe DU premium changes, WoW, Average, 10 weekly basis 38 550 500 cash - 3M spread, USD/mt MW premium, $/t 0 28 Defecit,kt 440 400 -10
Slide 26: Supply Side Reform in China Will Facilitate Closure of Loss Making Capacities
SUPPLY SIDE REFORM IN CHINA WILL FACILITATE CLOSURE OF LOSS MAKING CAPACITIES CHINA HAS ACKNOLEDGED A STRUCTURAL …AND WILL IMPLEMENT SUPPLY SIDE REFORM IMBALANCE IN ITS ECONOMY… “Reform the supply side and upgrade the Key short-term tasks: economy” - announced December 26, 2015. o Curtail excess
Slide 27: Further Cost Deflation in China Is Limited
FURTHER COST DEFLATION IN CHINA IS LIMITED DUE TO EXPECTED RISES IN INPUT COSTS 35% of Chinese capacity is operationally loss-making CURRENT CHINESE SMELTING CASH COST CURVE at January 2016 prices. If the full cost, including RMB/t interest payments, sustaining capex and depreciation 15000 are tak
Slide 28: Scale of Chinese Aluminium Exports Related to Short Term Price Arbitrage
THE SCALE OF CHINESE ALUMINIUM EXPORTS IS LARGELY RELATED TO SHORT TERM PRICE ARBITRAGE SEMIS EXPORTS (HS 7603 – 7609) China’s exports of aluminum semis fell 11.3% M-M and was down 13.2% Y-Y to 330 kt 500 December 15: -24% YoY January 16: -13% YoY kt in January 2016 due to lower export arbitrage o
Slide 29: Agenda
AGENDA 1 Results overview 2 Operating and financial results review 3 Debt management 4 Market overview 5 Appendix 29
Slide 30: Investments Projects Pictures: RUSAL/RUSHYDRO JV
INVESTMENTS PROJECTS PICTURES RUSAL/RUSHYDRO JV (PROJECT FINANCE) Boguchanskiy Aluminium smelter Boguchanskiy Aluminium smelter Boguchanskaya HPP Boguchanskaya HPP 30
Slide 31: Aluminium Segment Operating and Financial Data
ALUMINIUM SEGMENT OPERATING AND FINANCIAL DATA ALUMINIUM PRODUCTION ALUMINIUM SALES kt kt 1000 916 921 1000 29 29 20 20 800 800 600 600 939 876 400 867 872 400 200 200 0 0 3Q'15 4Q'15 3Q15 4Q15 Russia Siberia Russia European Part Sweden Столбец1 SEGMENT RESULTS SUMMARY ALUMINA EXTERNAL PURCHASES kt
Slide 32: Alumina Segment Operating and Financial Data
ALUMINA SEGMENT OPERATING AND FINANCIAL DATA PRODUCTION SALES TO THIRD PARTIES kt Nepheline kt kt Alumina Bauxite Bauxite Alumina 4,000 ore 3290* 250 700 604 2850 600 522 3,000 846 200 119 500 1870 1906 104 330 934 150 400 2,000 148 156 563 293 191 190 100 300 486 1053 196 485 504 514 952 418 1,000
Slide 33: Summary Results – Income Statement and Supplementary Information
SUMMARY RESULTS – INCOME STATEMENT AND SUPPLEMENTARY INFORMATION Income statement $ mn 4Q 2015 3Q 2015 % Change Revenue 1,857 2,073 (10.4%) Cost of sales (1,427) (1,567) (8.9%) Other operating expenses (306) (242) 26.4% Operating income (Results from operating activities) 124 264 (53.0%) Net finance
Slide 34: Summary Results Balance Sheet and Cash Flow
SUMMARY RESULTS BALANCE SHEET AND CASH FLOW Balance Sheet As of 31 As of 30 $ mn % Change December 2015 September 2015 Cash and Cash Equivalents 508 716 (29.1%) Equity Attributable to Shareholders of the Company 331 1,674 (80.2%) Total Liabilities 11,418 11,396 0.2% Total working capital* 1,606 1,40
Slide 35: RUSAL IR Contacts
RUSAL IR CONTACTS Boris Krasnojenov RUSAL | Head of Investor Relations Phone: +7 (495) 720-51-70 ext. 1528 Email: [email protected] Karen Li RUSAL | Head of Hong Kong office Phone: +852 3915 8798 Email: [email protected] Sergey Pavlov RUSAL | Investor Relations Manager Phone: +7 (495) 72