Rusal · RUS:RUAL

Rusal — United Company RUSAL — Q4 2013 Earnings Presentation

30 slides from Rusal's earnings presentation, Jun 29, 2014

  1. Slide 1: 4Q2013 Results Presentation

    4Q2013 Results Presentation

  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: Operational and financial highlights

     Operational and financial highlights  Market overview  Appendix Potroom, Sayanogorsk Aluminum smelter (SAZ) 3

  4. Slide 4: 4Q 2013 highlights

    4Q 2013 highlights Record low LME price exerted further pressure on UC RUSAL’s top line  Average LME price decreased to US$1,769/t in 4Q 2013 – the lowest since 2Q 2009. The year-on-year decline comprised 9% - from an average of US$2,018 in 2012 to US$1,845 in 2013  The decrease in the LME price w

  5. Slide 5: EBITDA bridge: sharp LME price decline weighs on results

    5 US$m FY2012 8% 915 margin EBITDA Exchange rate 123 Macro LME 656 FY 2012 comparable 383 Sale premium, structure, 112 production volumes operating margins Quotation 172 period change Influence of mothballed 33 smelters Mathballing expenses 56 (Western division) Mathballing expenses (other 14 smelte

  6. Slide 6: Aluminium cash cost in 4Q 2013 at lowest level since 2010

    Aluminium cash cost in 4Q 2013 at lowest level since 2010 Combined management efforts for cash cost …in the midst of adverse macro optimization performed in 2013… environment… US$m US$/t LME(1) RUB/USD(1) RUB -5.4% (-1%) QoQ (0.9%) QoQ 2 200 34 1 971 1 911 1 872 1 864 2,001 33 2 100 32.8 33 105 44 5

  7. Slide 7: Value added product (VAP) production overview

    Value added product (VAP) production overview Average premium levels US$/t, FOB 61 111 178 208 271 (kt) 50% 45% 2 000 42% 39% 40% 37% 35% 33% 1 500 398 30% 407 325 259 25% 320 1 000 300 275 20% 19% 276 151 452 15% 453 470 500 418 203 10% 171 397 459 5% 359 387 205 0 0% 2009 2010 2011 2012 2013 Alumi

  8. Slide 8: Inefficient capacity curtailment program

    Inefficient capacity curtailment program Change in Change in FY2012 Production Primary aluminium capacity reduction Aluminium smelter (Kt) production FY2013 production FY2014 vs. FY2012 (Kt) (1) vs. FY2012 (Kt) (1)  As of Dec 31, 2013 four smelters in the European, Volgograd (VgAZ) 168 -56 -168 Ura

  9. Slide 9: Debt refinancing

    Debt refinancing The Company is at the final stage of negotiations on the amendments to its debt portfolio: Net debt dynamics US$mln  Public debt: RUSAL Bratsk performed its obligations under the terms of bondholders put-option (rouble bonds series 07 for the amount of RUR15.0bn) on March 03, 2014

  10. Slide 10: Fulfillment of obligations for BEMO project

    Fulfillment of obligations for BEMO project BEMO HPP BEMO smelter BEMO Smelter. Potroom BEMO HPP main generator hall as of Dec-31,2013 BEMO smelter as of Dec-31,2013  Partner RusHydro (50%)  Partner RusHydro (50%)  Design capacity 3,000 MW  Design capacity 588Ktpa  Key events in - All sections

  11. Slide 11: Market overview

     Operational and financial highlights  Market overview  Appendix Potrooms, Brats Aluminum smelter (BrAZ) 11

  12. Slide 12: Aluminum consumption forecast strong growth through to 2018

    Aluminum consumption forecast strong growth through to 2018 Primary Aluminium consumption Key regions +50 mln.t 78  2013’s global aluminum demand growth rate 61 64 66 was 6%. 6% growth expected in 2014. 58 Largest contributors are still expected to be 55 52 48 China, ASEAN countries and the United

  13. Slide 13: Production ex-China declined on closure of unprofitable capacities

    Production ex-China declined on closure of unprofitable capacities Ex.China aluminum production Announced & actual production cuts since 2012 kt Kt 2300 15% 15% 100% 10% 13% 8% 2200 2100 2000 766 647 1900 609 313 377 1800 280 (1) Alcoa RUSAL Klesch + Rio Tinto Norsk Hydro Others World excl China (IA

  14. Slide 14: Global aluminum stocks expected to decline steadily in 2014 and beyond

    Global aluminum stocks expected to decline steadily in 2014 and beyond Aluminum Ex.China total stocks LME registered stocks kt kt 9 800 6000 9 600 5000 9 400 4000 9 200 3000 9 000 2000 8 800 1000 8 600 0 Feb-12 Feb-13 Feb-14 Jul-12 Jul-13 Jan-12 Jun-12 Aug-12 Sep-12 Jun-13 Aug-13 Sep-13 Mar-12 Apr-1

  15. Slide 15: Upcoming projects do not compensate for closing non-profitable capacity in 2014

    Upcoming projects do not compensate for closing non-profitable capacity in 2014 Incremental Supply structure in 2014, ex-China Highlights 2014 Ex-China -89 Production ex-China is  Middle East projects come in form of VAP or as part of liquid projected to go down by metal supply chain to integrated/

  16. Slide 16: Strong demand coupled with capacity closures generate a significant deficit from 2014

    String demand coupled with capacity closures generate a significant deficit from 2014 Ex. China aluminum balance Deficit growth by region mt kt 29 0 -149 29 CENTRAL & SOUTH AMERICA -200 28 -455 28 -400 INDIA 27 -600 2014F 27 NORTH AMERICA 2013 26 -800 2012 26 -1 000 EUROPE 25 -1 326 -1 275 -1 200 25

  17. Slide 17: Aluminium premiums have reached record highs on strong demand and tight supply

    Aluminium premiums have reached record highs on strong demand and tight supply Aluminium premiums  Market premiums soared to record high closer to new LME USD$/t regulations to take affect after April 1. Market premiums 500 remain well supported due to: 400 Supply and demand balance 300  Market to

  18. Slide 18: China – continued capacity and production growth in 2013

    China – continued capacity and production growth in 2013 China’s operating capacity Chinese aluminium capacity utilization rate Kt Kt 33 000 90% 27 292 88% 24 542 4 332 541 30 000 -2 123 87% 88% 27 000 85% 86% 24 000 84% 21 000 82% 18 000 15 000 80% Capacity 2012 Idled New Resumed Capacity Dec- 2012

  19. Slide 19: SHFE price collapse and sharply increasing industry losses

    … resulting in SHFE price collapse and sharply increasing industry losses Chinese Smelting Cash Cost Curve evolution in 2013 China Aluminum Smelters’ Profit Margin RMB/t Loss-making capacities in RMB/t kt 18 000 Feb 2014 - 14.2 Mt (53%) 19 000 2000 Тысячи 17 000 SHFE Dec 2012, RMB 15224 18 000 -32%

  20. Slide 20: China State Council guidance on addressing severe overcapacity

    China State Council guidance on addressing severe overcapacity and its impact on aluminum industry Policy overview  On Oct-15, 2013 the State Council issued its “guiding opinions” ordering a halt to the construction of new capacity in sectors burdened by excess production facilities in the steel, f

  21. Slide 21: Chinese semis export influences ex.China semis market

    Chinese semis export influences ex.China semis market not primary aluminum supply/demand balance …while a number of countries have already introduced China is a major net exporter of semis… protective antidumping measures (Kt) (USD/t) 450 3 200 350 Products: Al wheels, Al foil, 250 2 700 Al radiator

  22. Slide 22: Appendix

     Operational and financial highlights  Market overview  Appendix Potrooms, Krasnoyarsk Aluminum smelter (KrAZ) 22

  23. Slide 23: Summary results: Income statement

    Summary results Income statement US$m 2013 2012 % Change Revenue 9,760 10,891 (10.4%) Cost of sales 8,429 9,232 (8.7%) EBITDA 651 915 (28.9%) EBITDA Margin 7% 8% (1p.p.) Share of results of associates and JVs (367) 333 NA Income tax (81) (26) 211.5% Net Loss/Profit (3,222) (528) 510.2% Adjusted Net

  24. Slide 24: Summary results: Balance Sheet and Cash Flow

    Summary results Balance Sheet and Cash Flow As of 31 As of 31 US$m % Change December 2013 December 2012 Cash and Cash Equivalents 716 505 41.8% Equity Attributable to Shareholders of the 6,650 10,732 (38.0%) Company Total Liabilities 13,930 14,478 (3.8%) Total working capital 1,593 1,893 (15.8%) Net

  25. Slide 25: Summary results: Segment results

    Summary results Segment results 2013 2012 US$m Aluminium Alumina Aluminium Alumina Segment Revenue 8,314 2,035 9,515 2,044 Segment Results (EBIT) 523 (270) 722 (190) EBITDA 937 (174) 1,150 (86) EBITDA margin 11% (9%) 12% (4%) Segment CapEx 332 197 327 155 Segment cash cost per tonne 1,907 365 1,946

  26. Slide 26: Summary results: Quarterly results

    Summary results Quarterly results US$m 4Q 2013 3Q 2013 2Q 2013 1Q 2013 Revenue 2,125 2,432 2,521 2,682 Cost of sales (1,856) (2,127) (2,196) (2,250) EBITDA 101 130 174 246 EBITDA Margin 5% 5% 7% 9% Share of results of associates and JVs (581) 91 9 114 Income tax (7) (19) (51) (4) Net Loss/Profit (2,

  27. Slide 27: Key demand drivers in N.America in 2014

    Key demand drivers in N.America in 2014 End-use demand structure Automotive production in NA, mln units Housing Starts in US, th. units Machinery & in USA in 2013 1 400 25 Other 18 YoY growth, % 6,0 equipment 3% 7% 1 200 18 5,2 5,0 YoY growth, % 20 Consumer 19,7 durables 17 1 000 17,6 17,6 6% 4,0 17

  28. Slide 28: Key demand drivers in Europe in 2014

    Key demand drivers in Europe in 2014 End-use demand structure in W.Europe in 2013 Focus of economic recovery shifting from EU exports to domestic consumption Other Machinery & 5% EU production of motor vehicles, in equipment 10% particular heavy goods vehicles, is growing Transport faster than most

  29. Slide 29: Key demand drivers in South East Asia in 2014

    Key demand drivers in South East Asia in 2014 Primary aluminium demand dynamics in SE Asia Incremental Aluminium demand in 2014 Total Growth 3% in 2014 vs 2013 Incremental 156 kmt 5 600 Other SEA 4 800 510 452 494 Vietnam Taiwan Vietnam 474 532 558 Japan 10% 10% 4 000 Malaysia 12% 542 549 597 Taiwan

  30. Slide 30: Further development of downstream industry in Middle East

    Further development of downstream industry in Middle East Downstream 2012 Downstream 2015 kmt 2012 2015 Add Metal Source 750 750 Cast 58 90 +32 Secondary 600 600 215 450 450 310 EMAL 60 kmt (Billets) Extruded 503 621 +118 Ma’aden 30 kmt (Billets) KMT KMT 310 300 165 300 250 400 Ma’aden 380 kmt (slab

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