Rusal · RUS:RUAL

Rusal — United Company RUSAL — Q1 2011 Earnings Presentation

25 slides from Rusal's earnings presentation, May 12, 2011

  1. Slide 1: 1Q 2011 Results Presentation

    1Q 2011 Results Presentation 12 May 2011

  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: Financial and operational results; Market update; Norilsk Nickel investment

     Financial and operational results  Market update  Norilsk Nickel investment  Capex and maintenance  Q&A 3

  4. Slide 4: 1Q 2011 highlights

    1Q 2011 highlights Maintained margins despite cost pressure  Adjusted EBITDA increased to US$682m  Adjusted EBITDA margin of 23%  Net profit of US$746m  Cash generated from operations of US$659m before income taxes Improved product mix and premiums  Share of alloys in the total production volum

  5. Slide 5: Maintained margins

    Maintained margins Revenue Cost of sales US$m 2,993 +28% 2,004 +28% 2,331 1,566 1Q2010 1Q2011 1Q2010 1Q2011 Adjusted EBITDA Net profit US$m US$m 682 746 +41% 3.0x 485 23% 21% 247 1Q2010 1Q2011 1Q2010 1Q2011 Adjusted EBITDA margin 5

  6. Slide 6: Aluminium

    Aluminium Revenue (1) Production volume (1) US$m Kt 1,014 2,508 +4% +29% 973 1,942 1Q2010 1Q2011 1Q 2010 1Q 2011  Increase in aluminum and alloys revenue for 1Q 2011 from higher weighted-average realised prices per tonne (+16% vs 1Q 2010), due to the increase in the LME aluminium price and premiums

  7. Slide 7: Alumina

    Alumina Revenue – third party shipments (1) Production volume US$m Kt 167 1,996 +29% +10% 129 1,822 1Q2010 1Q2011 1Q 2010 1Q 2011 Note: (1) Represents revenue from alumina sales to third parties under specific long-term contracts  Increase in revenue for 1Q 2011 was primarily attributable to signif

  8. Slide 8: Cost pressure driven by change in regulations on the Russian electricity market

    Cost pressure driven by change in regulations on the Russian electricity market New regulations on the Russian wholesale electricity market  Final stage of the Russian wholesale electricity market liberalisation. Since 1 January 2011 the market if 100% liberalised The regulators ensure that electr

  9. Slide 9: …oil prices and local currencies appreciation

    …oil prices and local currencies appreciation Alumina spot price vs oil price USD/RUB exchange rate US$/t US$/bl RUB 410 120 33 390 110 32 30.5 370 100 31 350 90 30 330 80 29 28.4 310 70 28 290 60 27 270 26 250 50 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 Jan-10 Apr-10 Jul-10 Oct-10 Ja

  10. Slide 10: Income statement

    Income statement US$m 1Q 2011 1Q 2010 % Change Sales of primary aluminium and alloys (Kt) 971 873 11% Revenue 2,993 2,331 28% Cost of sales 2,004 1,566 28% Adjusted EBITDA (1) 682 485 41% Adjusted EBITDA Margin 23% 21% 10% Share of profits/(losses) and impairment of 179 263 (32%) associates Income t

  11. Slide 11: Balance sheet and cash flow

    Balance sheet and cash flow US$m As at 31 As at 31 % Change March 2011 December 2010 Cash and Cash Equivalents 519 491 6% Equity Attributable to Shareholders of the Company 13,312 11,456 16% Total Liabilities 14,920 15,069 (1%) Net Debt 11,382 11,472 (1%) US$m 1Q 2011 1Q 2010 % Change Net cash gener

  12. Slide 12: Segment results

    Segment results US$m 1Q 2011 1Q 2010 Aluminium Alumina Aluminium Alumina Segment Revenue 2,570 718 1,974 542 EBIT 659 10 451 9 EBITDA 751 33 540 29 EBITDA margin 29% 5% 27% 5%  Aluminium segment is involved in the production and sale of primary aluminium and related products  EBITDA margin of alum

  13. Slide 13: Premiums outperformed aluminium

    Premiums outperformed aluminium LME Aluminium price(1) Premiums above LME Aluminium price (2) US$/t US$/t 2 900 1Q 2010 Av. LME price 1Q 2011 Av. LME price 153 US$2,163/t US$2,503/t +84% 2 700 +16% 131 2 500 114 2 300 95 83 2 100 1 900 1 700 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 1Q10 2Q10 3Q10 4

  14. Slide 14: Continuing focus on alloys production enhances margins

    Continuing focus on alloys production enhances margins 1Q 2011 sales to end-users breakdown(1) Sales breakdown by products Other Asia Foundry alloy products 18% 8% 1% Sheet ingots America 12% 9% Europe 41% Wire rod 6% Aluminium Primary billet aluminium 9% 64% Russia & CIS 32% Production of alloys 

  15. Slide 15: Deleveraging, Debt Repayment and Refinancing

    Deleveraging, Debt Repayment and Refinancing Net Debt (1) Debt repayment and refinancing US$m 13,633  Total debt repayments of US$4bn to 12,084 12,152 12,557 lenders(3) since the Override Date(4) 11,750 11,472 11,382  Including US$2.6bn of total debt 110% repayments in 2010  Including US$1.4bn of

  16. Slide 16: Financial and operational results; Market update; Norilsk Nickel investment

     Financial and operational results  Market update  Norilsk Nickel investment  Capex and maintenance  Q&A 16

  17. Slide 17: Aluminium demand growth stronger than expected in 2011

    Aluminium demand growth stronger than expected in 2011 Global aluminium consumption Aluminium consumption by regions RoW 46.0 Russia 10% 40.6 2% 38.0 37.8 Japan 35.6 5% 34.4 31.9 30.0 China 27.8 41% North America 12% Western Europe 15% Asia ex-China 2003 2004 2005 2006 2007 2008 2009 2010 2011E 15%

  18. Slide 18: Chinese smelting costs pressured by dependency on coal and bauxite imports

    Chinese smelting costs pressured by dependency on coal and bauxite imports Chinese thermal coal imports and price Chinese bauxite imports and CIF price Mt CNY/t US$/t US$/t 20 1200 4000 80 18 3500 70 1000 16 3000 60 14 800 12 2500 50 10 600 2000 40 8 1500 30 400 6 1000 20 4 200 2 500 10 0 0 0 0 Feb-

  19. Slide 19: Global aluminium prices supported by higher energy costs

    Global aluminium prices supported by higher energy costs Aluminium price versus carbons Aluminium marginal cost evolution US/t, US/bl US/t 140% 180 3500 120% 160 3000 140 100% 2500 US$3,000/t 120 80% 100 2000 US$2,700/t 60% 80 1500 60 40% 1000 40 500 20% 20 0 0 0% Jan-03 Jan-04 Jan-05 Jan-06 Jan-07

  20. Slide 20: Regional premiums and stock levels evidence tight physical market

    Regional premiums and stock levels evidence tight physical market LME inventories Regional physical premiums US$/t days US$/t 200 3200 60 US$176/t 180 3000 2800 50 160 2600 140 US$118/t 40 2400 120 2200 US$114/t 30 100 2000 80 1800 20 60 1600 1400 40 10 1200 20 1000 0 0 1999 2000 2001 2002 2003 2004

  21. Slide 21: Financial and operational results; Market update; Norilsk Nickel investment

     Financial and operational results  Market update  Norilsk Nickel investment  Capex and maintenance  Q&A 21

  22. Slide 22: Performance of UC Rusal's investment in Norilsk Nickel

    Performance of UC Rusal’s investment in Norilsk Nickel Norilsk Nickel share price performance (Jan – Apr 2011) Norilsk Nickel key financials 120% 01 Jan 2011 =100% Financials, mln $ 2010E 2011E 118% Revenue 14,707 16,175 EBITDA 7,411 8,248 115% EBITDA margin 50% 51% 112% Net Income 5,011 5,933 110%

  23. Slide 23: Financial and operational results; Market update; Norilsk Nickel investment

     Financial and operational results  Market update  Norilsk Nickel investment  Capex and maintenance  Q&A 23

  24. Slide 24: Near-term growth projects - continuing progress

    Near-term growth projects - continuing progress BEMO HPP BEMO smelter Tashet smelter BEMO HPP BEMO smelter Taishet smelter  Existing partner RusHydro (50%) RusHydro (50%) UC RUSAL (100%)  Project finance RUR 28.1bn (~US$0.9bn) (1) RUR 21.9bn (~US$0.7bn) (2) Negotiating project finance  Loan matur

  25. Slide 25: Financial and operational results; Market update; Norilsk Nickel investment

     Financial and operational results  Market update  Norilsk Nickel investment  Capex and maintenance  Q&A 25

United Company RUSAL — Q1 2011 Earnings Presentation on 6ix