Rusal · RUS:RUAL
Rusal — United Company RUSAL — H1 2010 Earnings Presentation
33 slides from Rusal's earnings presentation, Aug 31, 2010
Slide 1: 2010 Interim Results Presentation
2010 Interim Results Presentation 31 August 2010
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
Highlights and key achievements of 1H 2010 Strategic investments Market update 2010 outlook and growth projects Q&A 3
Slide 4: Highlights
Highlights Strong return to profitability in 1H 2010 Adjusted EBITDA increased to US$1,325m for the first half of 2010 Adjusted EBITDA margin has returned to historically comfortable level of 24.9% Net profit of US$1,268m for the first six months of 2010 Financial stability VEB loan refinanc
Slide 5: Strong return to profitability in 1H 2010
Strong return to profitability in 1H 2010 Revenue Adjusted EBITDA US$m US$m 1,325 5,321 +41.6% 3,757 1H 2009 (144) 1H 2010 1H 2009 1H 2010 Results from Operations Net Profit US$m US$m 1,268 1,034 1H 2009 1H 2009 1H 2010 1H 2010 (868) (487) UC RUSAL has delivered a strong return to profitability 5
Slide 6: Operating momentum continued to build in 2Q 2010
Operating momentum continued to build in 2Q 2010 Revenue Aluminium production US$m Kt 2,990 +5% 1,023 +28.3% 973 2,331 1Q 2010 2Q 2010 1Q 2010 2Q 2010 Aluminium cash cost Adjusted EBITDA and Net Profit US$/t US$m +313.4% +73.2% (2.3%) 1,021 1,706 1,666 840 485 247 1Q 2010 2Q 2010 1Q 2010 2Q 2010 Adj
Slide 7: Income statement
Income statement US$m 1H 2009 1H 2010 % Change LME aluminium price (US$/t) (1) 1,422 2,130 50% Revenue 3,757 5,321 41.6% Cost of sales (3,449) (3,495) 1% Adjusted EBITDA (2) (144) 1,325 nm (3) Adjusted EBITDA Margin (3.8%) 24.9% nm Share of profits/(losses) and 348 458 31.6% impairment of associates
Slide 8: Balance sheet and cash flow
Balance sheet and cash flow US$m As at 31 As at 30 % Change December 2009 June 2010 Cash and Cash Equivalents (1) 236 308 30.5% Equity Attributable to Shareholders of the Company 6,332 9,457 49.4% Total Liabilities 17,554 14,948 (14.9%) Net Debt 13,633 12,152 (10.9%) US$m 1H 2009 1H 2010 % Change Ne
Slide 9: Aluminium
Aluminium Revenue Production volume US$m 1H 2009 Av. LME Al 1H 2010 Av. LME Al US$1,422/t US$2,130/t Kt 4,524 +1% 1,980 1,996 +43.2% 3,160 +6% 1,023 963 1,017 973 1H 2009 1H 2010 1H 2009 1H 2010 1Q 2Q Increase in aluminum revenue in 1H 2010 was due to higher weighted-average realised prices per to
Slide 10: Alumina
Alumina Revenue – third party shipments (1) Production volume US$m Kt (1%) 3,738 3,712 269 +59.2% +16.7% 1,889 1,619 169 2,119 1,822 1H 2009 1H 2010 1H 2009 1H 2010 1Q 2Q Note: (1) Represents revenue from alumina sales to third parties under specific long-term contracts Increase in revenue in 1H 2
Slide 11: UC RUSAL has maintained its leading position
UC RUSAL has maintained its leading position Aluminium production 1H 2010 Source: LME as of 06/01/10 Alumina production 1H 2010 Kt Kt 4,930 4,654 1,996 4,451 1,930 1,889 1,782 3,712 701 615 962 518 (1) UC Chalco Rio Tinto Alcoa Norsk BHP Chalco Alcoa Rio Tinto UC BHP Norsk RUSAL Hy dro Billiton RUSA
Slide 12: Other businesses
Other businesses Revenue - Foil Revenue - Others US$m US$m 393 135 +21.3% +29.8% 45 324 104 51 109 52 221 239 1H 2009 1H 2010 1H 2009 1H 2010 Other products Transportation Energy Foil revenue increased significantly driven by production volumes (+32%) and sales prices growth (+10%) in 1H 2010 comp
Slide 13: Aluminium price is the key driver of revenue growth
Aluminium price is the key driver of revenue growth Revenue bridge (1H 2009 – 1H 2010) US$m 59 (114) 1,620 5,321 3,757 1H 2009 Realised price Sales volume Other income and 1H 2010 products Increase in revenue mostly resulted from primary aluminium and alloys, which accounted for 85% and 84.1% of t
Slide 14: Aluminium cash operating cost
Aluminium cash operating cost Aluminium cash cost bridge US$/t (2.3%) (10) (81) 19 34 (3) 1,706 1,666 1Q 2010 Exchange rate Power Alumina Raw materials Other expenses 2Q 2010 Long-term electricity supply contracts in Siberia are partially linked to the LME aluminium price facilitating a power cost
Slide 15: Agenda
Highlights and key achievements of 1H 2010 Strategic investments Market update 2010 outlook and growth projects Q&A 15
Slide 16: Norilsk Nickel
Norilsk Nickel Market value of UC RUSAL strategic Norilsk Nickel net profit shareholding US$m 4,403 US$m +58.7% 7,186 6,707 +66.1% 4,527 2,651 (1) 2009 2010 consensus As at Jun 30 2009 As at 31 Dec 2009 As at 30 Jun 2010 Note: (1) Bloomberg Consensus Net Income GAAP at 10/08/2010 – MNOD LI Source: R
Slide 17: Strategic investment in coal
Strategic investment in coal Coal production (100% basis) Partnership with Kazakhstan Kt 19,632 The mining assets are operated as a 50/50 JV between +38.5% UC RUSAL and Samruk-Kazyna, the Kazakh State's 14,176 holding company. Sales are split ca. 50:50 between Russia and Kazakhstan Coal is shipp
Slide 18: Agenda
Highlights and key achievements of 1H 2010 Strategic investments Market update 2010 outlook and growth projects Q&A 18
Slide 19: Global industrial production growth supports aluminium fundamentals
Global industrial production growth supports aluminium fundamentals Global metals consumption per capita Consumption Beta to world GDP growth index (1980=1) (1977–2009) 2.4 2.3 1,6 1,4 1.6 1,2 1.0 1,0 0,8 1980 1985 1990 1995 2000 2005 2010E Aluminium Nickel Copper Zinc Steel Nickel Copper Aluminium
Slide 20: Chinese and Indian aluminium consumption potential
Chinese and Indian aluminium consumption has the potential for further exponential growth USA metal consumption per capita China and India metal consumption per (period 1910-1915 = 1) capita (1980 = 1) 87x 15 years 80 Al 70 60 Kg per capita Kg per capita 50 40 30 22x Al 20 10 4x 0 1980 1985 1990 199
Slide 21: Price momentum supported by a tight physical market
Recovery in price momentum in the short-term is supported by a tight physical market Global Inventories Regional physical premiums kt US$/t 7 000 Producers Japanese ports SHFE LME 200 Europe US Japan 6 000 160 5 000 4 000 120 3 000 80 2 000 40 1 000 0 0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-
Slide 22: Rising power costs in China increase marginal cost
Rising power costs in China increases marginal cost of production of aluminium… 2010 aluminium smelter energy costs by Source: LME as of 06/01/10 Increasing thermal coal prices geography US$/t US$/t 1200 180 China 160 1000 E. Europe 140 Energy costs 800 LatAm 120 W. Europe India USA Australia 600 Mi
Slide 23: Chinese aluminium cutbacks have started
… and Chinese aluminium cutbacks have started Cash Costs C1 2010 China aluminium production and SHFE price US$/t RM//t kt 2700 1 600 25 000 1 400 2500 20 000 1 200 Current SHFE price 2300 1 000 15 000 2100 800 600 10 000 1900 400 5 000 1700 200 1500 0 0 0 5000 10000 15000 20000 Jul-06 Jan-07 Jul-07
Slide 24: Alumina price de-linkage
Alumina price de-linkage Historic alumina price and costs 2009 EBITDA margin by segment US$/t 700 70% 62% 600 60% 56% 57% 500 47% 50% 46% US$400/t potential de-linked price (1) 41% 400 38% 40% 2009 cost 300 US$226/t 30% 200 20% 14% 100 1990 cost 10% 5% 5% US$161/t -2% -6% 0 0% 1980 1982 1984 1986 19
Slide 25: Efficiency of investments in aluminium
Efficiency of investments in aluminium Aluminium LME price vs Indexes 5 year forward curve price change (indexed to 100 - June 2010 to June 2015) 30% 20% 25% 20% 13% 15% 10% 10% 5% 2% 0% - S&P 500 USD/EUR Al cash LME (5%) -0,6% -10% (10%) (15%) -12% Since 2000 -13% (20%) -20% YTD Aluminium Zinc Lead
Slide 26: Agenda
Highlights and key achievements of 1H 2010 Strategic investments Market update 2010 outlook and growth projects Q&A 26
Slide 27: Successful debt restructuring
Successful debt restructuring UC RUSAL Total Debt (1) Successful debt restructuring US$m 13,869 (10.2%) US$2.143bn payment to creditors from IPO 12,460 proceeds (including debt and fees) Ahead of the debt restructuring schedule and deleveraging obligations Decreased interest margin (from 7% to
Slide 28: Attractive growth options: BEMO
Attractive growth options: BEMO BEMO Hydro Power Plant Smelter Location Krasnoyarsk region, Russia Existing partner RusHydro (50%) RusHydro (50%) Technology RA-300 Projected capacity 3,000 MW 588 ktpa (incl. phase 1 of 147 ktpa) Construction commenced 2006 2006 Construction completion 70
Slide 29: Attractive growth options: Taishet
Attractive growth options: Taishet Taishet smelter Location Irkutsk region, Russia Technology RA-400 Projected capacity 750 ktpa Construction commenced 2007 Construction completed 60% Remaining cost in US$ per tonne of capacity US$1,959 / tonne of capacity Time to complete 3 years from
Slide 30: Growth: Restarting existing world class capacity
Growth: Restarting existing world class capacity Aluminium production vs full capacity Alumina production vs full capacity Mt Mt +3% 4.6 4.4 11.3 11.5 4.1 3.9 +11% 8.1 7.3 2008 2009 2010 projected Full capacity 2008 2009 2010 projected Full capacity Key steps to meet 2010 aluminium and alumina pro
Slide 31: New steps to broaden investor base
New steps to broaden investor base Reduction of the board lot size Hong Kong Securities and Futures Commission (“SFC”) has approved a reduction of the board lot size of UC RUSAL on the Hong Kong Stock Exchange from 24,000 Shares to 6,000 Shares UC RUSAL will take the necessary steps to implement
Slide 32: On track to meet key targets for the year
On track to meet key targets for the year Key priorities for 2010 Key achievements in 1H 2010 Continued focus on operational efficiency, cost Decreased aluminium operating cash cost by 2.3% management and HSE performance in 2Q 2010 vs 1Q 2010 Restart of 100,000 tonnes of aluminium Restarts o
Slide 33: Agenda
Highlights and key achievements of 1H 2010 Strategic investments Market update 2010 outlook and growth projects Q&A 33