Rusal · RUS:RUAL

Rusal — United Company RUSAL — Q2 2012 Earnings Presentation

24 slides from Rusal's earnings presentation, Aug 27, 2012

  1. Slide 1: 2Q 2012 Results Presentation

    2Q 2012 Results Presentation 27 August 2012

  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  Inefficient capacity curtailment program  Market update  Appendix 3

  4. Slide 4: 2Q 2012 highlights

    2Q 2012 highlights Top-line supported by product mix improvement and higher premiums despite drop in metal price  Aluminium production decreased by 0.5% to 1,044Kt and physical sales by 3% to 1,067Kt in 2Q2012 vs 1Q2012  VAP(1) output up to 38% of total production volumes in 2Q2012  Record high r

  5. Slide 5: Realized price and revenue cushioned by rising premiums

    Realized price and revenue cushioned by rising premiums LME aluminium & sales price US$/t 1Q2012 2Q2012 Change 2,177 LME price 1,978 (9%) UC RUSAL’s 2,284 2,247 (2%) sales price 2 400 2 300 2 200 2 100 2 000 1 900 1 800 1 700 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Source: Bloomberg Alumini

  6. Slide 6: VAP sales growth follows demand for automotive and flat rolled products

    VAP sales growth follows demand for automotive and flat rolled products Realized premiums above LME Al price (1) Sales to end-users by regions(2) US$/t US$/t 3,400 191 200 Asia 161 164 180 3,200 159 165 19% 153 160 Europe 3,000 38% 131 140 2,800 114 120 95 2,600 7.6% 9.7% America 2,600 83 2,503 100

  7. Slide 7: Lower costs and improved margins

    Lower costs and improved margins Aluminium segment cash cost Cost of sales US$/t US$m 2,058 (6%) 2,457 2,318 177 (0.8%) 241 165 217 1,979 676 Production optimization 618 1,963 Revision of raw materials 1,944 1,952 1,947 purchase contracts Decrease in oil price 1,363 1,318 Ruble depreciation 1Q2011 2

  8. Slide 8: Increased profitability of the core business

    Increased profitability of the core business Adjusted and Recurring Net Profit Reconciliation of Adjusted Net Profit US$m 28% 143 US$m 2Q 2012 1Q 2012 112 Net profit for the year adjusted Increase despite lower (37) 74 contribution from for: associates and JVs Share of profits and other gains and lo

  9. Slide 9: Scheduled repayments for the next 12 months can be covered by available liquidity

    Scheduled repayments for the next 12 months can be covered by available liquidity Obtained flexibility Interest expense(1) US$m  US$635m repaid to lenders under PXF and (22%) other facilities in 1H 2012, incl. US$500m of 183 190 refinancing 174 165 170  No short-term debt obligations in 2012 150 1

  10. Slide 10: Agenda

     Operational and financial highlights  Inefficient capacity curtailment program  Market update  Appendix 10

  11. Slide 11: Program of inefficient capacity curtailments to maintain competitive position

    Program of inefficient capacity curtailments to maintain competitive position Capacity reduction rationale Primary aluminium capacity reduction  Contemplating permanent closure of primary aluminium Nameplate FY2011 capacity at 4 smelters with a high relative cost position Aluminium smelter Capacity

  12. Slide 12: New capacity in Siberia to replace high cost capacity

    New capacity in Siberia to replace high cost capacity European part Production outlook Region of Russia Urals Siberia Kt 2Q2012 Average 4 600 4.47 4.87 2.95 power tariff, USc/kWh 4 400 4 200 4 000 3 800 VAZ NAZ 3 600 European part of Russia and Urals 3 400 BAZ 3 200 BEMO Siberia Taishet 3 000 NkAZ 2

  13. Slide 13: Agenda

     Operational and financial highlights  Inefficient capacity curtailment program  Market update  Appendix 13

  14. Slide 14: Aluminium market turned into deficit in 1H2012

    Aluminium market turned into deficit in 1H2012 Aluminium deficit Aluminium balance by regions Kt US$/t Kt 800 World S/D balance LME price (rhs) 3500 2000 1H2011 1H2012 700 3000 1500 600 500 2500 1000 400 300 2000 500 200 1500 0 100 0 1000 -500 -100 500 -1000 -200 -300 0 -1500 Source: Brook Hunt (A W

  15. Slide 15: Aluminium usage industries show strong growth

    Aluminium usage industries show strong growth Light Vehicle Cars Boeing & Airbus Projected Beverage cans production production Aircraft Deliveries 120 1800 350 CAGR 3-4% CAGR 4% CAGR 3% 1600 100 300 Total aircraft Deliveries 1400 250 80 1200 Millions of units Bln cans 1000 200 60 800 150 40 600 100

  16. Slide 16: Aluminium continues to be locked in warehouses

    Aluminium continues to be locked in warehouses LME aluminium stocks Aluminium premiums US$/t Days US$/t Current(1) 3200 60 300 3000 270 2800 50 250 243 2600 40 200 205 2400 2200 30 Days Inventory 2000 150 1800 20 100 1600 1400 10 50 1200 1000 0 0 Jan-11 Jul-11 Jan-12 Jul-12 Invent (days) Price LME I

  17. Slide 17: Aluminium financial profitability dominates over the market

    Aluminium financial profitability dominates over the market LME Aluminium forward curves Financial Deals Profitability Estimate $/t % 900 20 800 700 15 600 500 10 400 300 5 200 100 0 0 1M 11M 21M 31M 41M 51M 61M 71M 81M 91M 101M 111M 121M -5 7/2/2012 12/30/2011 12/31/2010 12/31/2009 CoC 3M-3MLibor (

  18. Slide 18: Slower growth in China triggered by setbacks in new project realization

    Slower growth in China triggered by setbacks in new project realization Monthly Primary Aluminum Balance in China  Chinese annualized production will be less than Kt Kt 21Mt in 2012 as compared to previous forecast of 2000 265 300 22Mt 165 200 1500 134  Chinese aluminium import in 1H2012 reached 9

  19. Slide 19: Agenda

     Operational and financial highlights  Inefficient capacity curtailment program  Market update  Appendix 19

  20. Slide 20: Summary results Income statement

    Summary results Income statement US$m 2Q2012 1Q2012 % Change Revenue 2,830 2,882 (2%) Cost of sales 2,318 2,457 (6%) EBITDA 327 237 38% EBITDA Margin 12% 8% - Share of profits of associates 166 240 (30%) Income tax (76) (23) 230% Net Profit (37) 74 - Adjusted Net Profit (22) (90) (76%) Recurring Net

  21. Slide 21: Summary results Balance Sheet and Cash Flow

    Summary results Balance Sheet and Cash Flow As at 30 As at 31 US$m % Change Jun 2012 Mar 2012 Cash and Cash Equivalents 622 558 12% Equity Attributable to Shareholders of the 10,068 12,089 (17%) Company Total Liabilities 14,611 14,771 (1%) Total working capital 2,335 2,245 4% Net Debt 10,855 11,126

  22. Slide 22: Summary results Segment results

    Summary results Segment results 2Q2012 1Q2012 US$m Aluminium Alumina Aluminium Alumina Segment Revenue 2,447 587 2,552 571 Segment Results (EBIT) 215 (33) 244 (81) EBITDA 321 (6) 354 (55) EBITDA margin 13% (1%) 14% (10%) Segment CapEx 66 75 91 30  Aluminium segment is involved in the production and

  23. Slide 23: Well on track to finalize near-term growth projects – BEMO HPP and smelter

    Well on track to finalize near-term growth projects – BEMO HPP and smelter BEMO HPP BEMO Smelter  Partner RusHydro (50%)  Partner RusHydro (50%)  Design capacity 3,000 MW  Design capacity 588Ktpa  Remaining  Remaining CapEx(1) US$252m CapEx(2) US$288m • Last bottom discharge (#5) of water • Ca

  24. Slide 24: Taishet smelter and other key projects

    Taishet smelter and other key projects UC RUSAL capital expenditure (2) US$m 2Q 2012 1Q 2012  Growth projects Taishet smelter(3) 6 25  Maintenance Pot rebuilds 40 37 Re-equipment 101 64 Total CapEx 147 126 Taishet smelter Key investment projects  Ownership UC RUSAL (100%)  Construction of a prot

United Company RUSAL — Q2 2012 Earnings Presentation on 6ix