United Company RUSAL Plc

United Company RUSAL — Q1 2017 Earnings Presentation

38 slides from United Company RUSAL's earnings presentation, May 12, 2017

  1. Slide 1: 1Q 2017 Financial Results Presentation

    1Q 2017 FINANCIAL RESULTS PRESENTATION 12 May, 2017

  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

    AGENDA Overview Operating and financial results review Debt, Investment in Norilsk Nickel and Growth Projects Market overview Appendix 3

  4. Slide 4: Overview

    OVERVIEW FURTHER STRENGTHENING OF INDUSTRY LEADING FURTHER DELEVERAGING AND DEBT OPTIMISATION EBITDA MARGIN $ mn Net debt reduction 17% of total debt is of 25% public unsecured 25% 11,049 10,829 debt* 10,109 20% 21% 8,837 8,421 8,372 20% 20% 8,221 20% 17% 17% 16% 15% 551 610 631 677 516 452 132 10%

  5. Slide 5: Health and Safety

    HEALTH AND SAFETY LTAFR DYNAMICS Lost Time Accident Frequency Rate (employee) per 1 000 000 mwh 2.0 1.70 1.70 1.6 1.50 1.50 1.2 1.20 1.10 0.95 0.90 0.8 0.85 0.85 0.4 0.0 2013 2014 2015 2016 1Q 2017 UC Rusal Aluminium Industry* * Source International Aluminium Institute and Company internal data Note

  6. Slide 6: Agenda

    AGENDA Overview Operating and financial results review Debt, Investment in Norilsk Nickel and Growth Projects Market overview Appendix 6

  7. Slide 7: Aluminium Price and Sales Structure

    ALUMINIUM PRICE AND SALES STRUCTURE  Total aluminium sales in 1Q17 increased 6.8% QoQ to LME ALUMINIUM PRICE AND REGIONAL 985 kt, including value added product sales of PREMIUM Range 436 kt (+7.7% QoQ). Range impacted $/t 1Q17 results $/t impacted  1Q17 average realised price increased to $1,949/t

  8. Slide 8: Financials Overview: Revenue Structure

    FINANCIALS OVERVIEW: REVENUE STRUCTURE 1Q17 REVENUE STRUCTURE REVENUE QUARTERLY DYNAMICS $ mn 3%6% +13.3 % $ 2,297 8% QoQ Aluminium 129 Alumina $ 2,027 59 $2,297 bn 2100 Foil +2,4% 189 Other 139 QoQ 65 84% 164 1700  Total revenue in 1Q17 increased 13.3% QoQ to $2.3 bn  Revenue from aluminium sales

  9. Slide 9: Financials Overview: Key Segments Cash Cost

    FINANCIALS OVERVIEW: KEY SEGMENTS CASH COST  In 1Q17, presentation of the aluminium segment’s cash costs was changed to reflect the performance of RUSAL core operations. The key change relates to the exclusion of the impact of aluminium resales. RUSAL’s cash cost per 1 tonne of aluminium in 1Q17 to

  10. Slide 10: Energy Cost Dynamics

    ENERGY COST DYNAMICS QUARTERLY ELECTRICITY PURCHASE PRICE ANALYSIS Cent/ Purchase price range contributed to 1Q17 results kWh h Purchase price range contributed to 4Q16 results 0.19 0.09 0.18 0.19 0.01 0.2 0.06 3.28 2.62 2.35 3Q16 Exchange Capacity "Day-ahead" 4Q16 Exchange Capacity "Day-ahead" Long

  11. Slide 11: Financial Overview: EBITDA

    FINANCIAL OVERVIEW: EBITDA  1Q17 EBITDA totaled 475 mn (+15.3% QoQ). LME component growth in aluminium price QoQ, on the back of favourable aluminium market momentum, more than offset aluminium cash cost increase and were largely behind robust QoQ EBITDA dynamics  Aluminium segment remained the la

  12. Slide 12: Capital Expenditures

    CAPITAL EXPENDITURES  In 1Q17 capex totaled $129 mn (-23% QoQ, +53% YoY), including CAPEX DYNAMICS maintenance capex of $92 mn. $ mn  The company continued its investment into key projects as per its 300 2016 strategic priorities of preserving its competitive advantages of vertical integration int

  13. Slide 13: Free Cash Flow

    FREE CASH FLOW A POSITIVE FREE CASH FLOW REMAINED A CORNERSTONE OF RUSAL’S FINANCIAL POLICY 1Q 2017 $ mn  In 1Q17 RUSAL continued to EBITDA 475 generate positive free cash flow (FCF). Total quarter’s FCF was Change in WC 237 $170 mn Tax 24  The working capital related cash Including movements tota

  14. Slide 14: Agenda

    AGENDA Overview Operating and financial results review Debt, Investment in Norilsk Nickel and Growth Projects Market overview Appendix 14

  15. Slide 15: Debt Position Change

    DEBT POSITION CHANGE  Gross Debt as of the end of 1Q17 totaled GROSS DEBT CHANGE $8,618 mn (-3.8% QoQ) $ mn 10000  Company net settlements during the quarter 8965 8618 29 totalled (-$318 mn) 1433 1583 746 o Company made settlements of the PXF (~$907 mn), 8000 1265 trade finance (~$400 mn) and othe

  16. Slide 16: Debt Management Overview

    DEBT MANAGEMENT OVERVIEW THE COMPANY RE-RATING CONTINUES  In line with the strategy to diversify its capital structure through access to debt capital markets, the Company implemented the following transactions: o In March 2017 the first tranche of panda bonds in the amount of RMB1 billion was place

  17. Slide 17: Norilsk Nickel

    NORILSK NICKEL  The Norilsk Nickel dividends cover all of UC RUSAL’s OUTLOOK FOR NN METALS BASKET interest payments and contribute to the Company’s Nickel price outlook (Bloomberg consensus, median) accelerated deleveraging  Under the dividend agreement, Norilsk Nickel dividend 2019E 12,450 payout

  18. Slide 18: Rusal Aluminium Capacities Growth Projects: Boguchansky Smelter

    RUSAL ALUMINIUM CAPACITIES GROWTH PROJECTS: BOGUCHANSKY SMELTER BEMO PROJECT: UNIQUE INDUSTRIAL COMPLEX IN SIBERIA COMBINING BOGUCHANSKAYA HPP (3.0GWT – COMMISSIONED) AND BOGUCHANSKY SMELTER (UP TO 600KT – CONSTRUCTION) Boguchansky smelter Project partner 50/50 JV with RusHydro RA-300 Technology Bog

  19. Slide 19: Rusal Aluminium Capacities Growth Projects: Taishet Aluminium Smelter

    RUSAL ALUMINIUM CAPACITIES GROWTH PROJECTS: TAISHET ALUMINIUM SMELTER PROJECT HIGHLIGHTS* CONSTRUCTION SITE LOCATION  Location – Irkutsk Region  Capacity o PC-1 (1st line) – 428,500 tpa, 352 potcells PA 400, amperage 440 kA Taishet aluminium Russia smelter o PC-2 (2nd line) – 555,100 tpa, 352 potc

  20. Slide 20: Agenda

    AGENDA Overview Operating and financial results review Debt, Investment in Norilsk Nickel and Growth Projects Market overview Appendix 20

  21. Slide 21: Europe

    EUROPE The European manufacturing sector has been strengthening throughout the whole quarter MANUFACTURING PMI PRODUCTION IN CONSTRUCTION HIGHLIGHTS 60 101 EU28  Eurozone Manufacturing PMI rose to 58 100 highest level since April 2011 at 56.2 in 56 99 March 2017. PMI readings improved in Index, 201

  22. Slide 22: North America

    NORTH AMERICA US manufacturing in sharp recovery as construction moves higher US MANUFACTURING PMI US HOUSING STARTS HIGHLIGHTS 60 1400  US ISM PMI rose sharply in Q1 to 57.2 58 1300 by March and pointing to further Thousands, SAAR 56 1200 growth in industrial activity 54 1100  Motor vehicle produ

  23. Slide 23: Asia ex-China

    ASIA EX-CHINA Firm car production growth and higher construction investment provide strong supports to Aluminum demand in Asia. MANUFACTURING PMI HOUSING STARTS IN JAPAN HIGHLIGHTS 58 250  Manufacturing PMI shows robust +3% improvement in Japan and Taiwan, 56 while faster rises in output and new Th

  24. Slide 24: China to Cut Aluminium, Alumina and Carbon Materials Production

    CHINA TO CUT ALUMINIUM, ALUMINA AND CARBON MATERIALS PRODUCTION TO REDUCE AIR POLLUTION  The Chinese Ministry of Environmental Protection (MEP) is tightening control over pollution due to an increase in heavy smog during December 2016-January 2017  Four provinces near Beijing (namely, Hebei, Beiji

  25. Slide 25: Chinese Government Efforts to Curtail Illegal Capacity

    CHINESE GOVERNMENT EFFORTS TO CURTAIL “ILLEGAL” CAPACITY SHOULD HAVE A SIGNIFICANT IMPACT ON THE ALUMINIUM PRODUCTION LEVEL  After issuing a strict environmental policy, the The first notice to stop operations was issued by the local Chinese government proceeded in putting in government (Changji co

  26. Slide 26: More Resistance to Old Chinese Exports

    MORE RESISTANCE TO “OLD” CHINESE EXPORTS  Chinese semis exports declined by 1% in 1Q17 YoY. ANTIDUMPING AGAINST CHINESE PRODUCTS The export of Chinese extrusion significantly fell by Products: Al 33% in 1Q17 YoY amid falling exports of "fake" wheels Al foil, Al semis radiators Duty: 22.3%, 30%;  I

  27. Slide 27: Global Aluminium Market to Be in Deficit in 2017

    GLOBAL ALUMINIUM MARKET TO BE IN DEFICIT IN 2017  ROW* reported stocks have approached pre-crisis levels ROW REPORTED STOCKS as production grew at moderate pace 0,2% CAGR 2008- kt days 16 8000 130  ROW demand grew at 2,2% in 2008-16 110  Since middle of 2015, the market has moved into 6000 90 fun

  28. Slide 28: Appendix

    APPENDIX nM RUSAL 28

  29. Slide 29: Key Operating and Financial Data

    KEY OPERATING AND FINANCIAL DATA GROUP OPERATING HIGHLIGHTS GROUP FINANCIAL HIGHLIGHTS 1Q 4Q QoQ 1Q YoY 1Q 4Q QoQ 1Q YoY 17 16 chg 16 chg 17 16 chg 16 chg Aluminium production Revenue, $mn 2,297 2,027 13.3% 1,914 20.0% 910 930 (2.1%) 916 (0.7%) (kt) EBITDA, $mn* 475 412 15.3% 312 52.2% Aluminium sal

  30. Slide 30: Key Operating and Financial Data: Aluminium and Alumina Segments

    KEY OPERATING AND FINANCIAL DATA ALUMINIUM SEGMENT ALUMINA SEGMENT 1Q 4Q QoQ 1Q YoY 1Q 4Q 1Q YoY ($ mn) ($mn) QoQ chg 17 16 chg 16 chg 17 16 16 chg Aluminium sales (kt) 945 943 (0.2%) 970 (2.6%) Alumina sales (kt) 2,714 2,038 33.2% 2,032 33.6% Avg. realised price 1,930 1,789 7.9% 1,663 16.1% ($/t) A

  31. Slide 31: Aluminium Segment EBITDA Reconciliation

    ALUMINIUM SEGMENT EBITDA RECONCILIATION Alumina Total Aluminium Aluminium segment Aluminium produced purchased margin segment (USD million) (unaudited) (unaudited) (unaudited) (unaudited) Revenue kt 945 79 - 1 024 USD million 1,824 157 - 1,981 - Cost of sales, including: 1,344 149 83 1,576 Alumina 4

  32. Slide 32: Rusal's Joint Ventures Supplementary Operating and Financial Data

    RUSAL’S JOINT VENTURES SUPPLEMENTARY OPERATING AND FINANCIAL DATA BOGUCHANSKAYA HPP FINANCIALS BEMO OPERATING VOLUMES 2014 2015 2016 2014 2015 2016 Revenue $ mn 171 233 215 Boguchanskaya HPP EBITDA $ mn 89 179 167 mWh 8,362 13,077 13,969 energy generation Capex $ mn 53 20 11 Boguchanski smelter mn t

  33. Slide 33: Aluminium Segment Operating Data

    ALUMINIUM SEGMENT OPERATING DATA ALUMINIUM PRODUCTION kt 916 919 920 930 916 1000 30 31 31 31 30 800 20 20 21 20 20 600 866 868 869 878 866 400 200 0 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 Russia Siberia Russia European Part Sweden kt ALUMINIUM SALES ALUMINA EXTERNAL PURCHASES 1200 kt 46 800 1000 41 687 39 3

  34. Slide 34: Alumina Segment Operating Data

    ALUMINA SEGMENT OPERATING DATA PRODUCTION kt Bauxite 4,000 Alumina 3126 3211 3009 2841 2869 3,000 881 928 925 771 805 1873 1850 1939 281 Nepheline ore 1865 1887 244 2,000 154 147 319 250 283 152 155 146 526 184 186 192 198 187 556 532 510 503 1208 509 471 1111 1135 1056 488 477 493 978 1,000 370 370

  35. Slide 35: Income Statement and EBITDA Reconciliation

    INCOME STATEMENT AND EBITDA RECONCILIATION INCOME STATEMENT QoQ change, $ mn 1Q2017 4Q2016 3Q2016 2Q2016 1Q2016 % Revenue 2,297 2,027 13.3% 2,060 1,982 1,914 Cost of sales (1,688) (1,477) 14.3% (1,540) (1,507) (1,546) Other operating expenses (266) (106) 150.9% (264) (277) (198) Operating income (Re

  36. Slide 36: Net Income Reconciliation

    NET INCOME RECONCILIATION RECONCILIATION OF ADJUSTED NET PROFIT/(LOSS) QoQ change, $ mn 1Q 2017 4Q 2016 3Q 2016 2Q 2016 1Q 2016 % Net profit for the period 187 645 (71.0%) 273 135 126 Adjusted for: Share of profits and other gains and losses attributable to Norilsk (171) (163) 4.9% (146) (236) (122)

  37. Slide 37: Balance Sheet and Cash Flow

    BALANCE SHEET AND CASH FLOW BALANCE SHEET $ mn 1Q 2017 4Q 2016 Change, % 3Q 2016 2Q 2016 1Q 2016 Cash and Cash Equivalents 397 544 (27.0%) 525 712 782 Inventory 2,069 1,926 7.4% 1,751 1,735 1,712 Trade and other accounts receivables 937 819 14.4% 774 740 686 Equity Attributable to Shareholders of th

  38. Slide 38: IR Contacts

    IR CONTACTS Boris Krasnozhenov 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) 720-51-

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