Rusal · RUS:RUAL

Rusal — UC Rusal — Q3 2012 Earnings Presentation

24 slides from Rusal's earnings presentation, Nov 12, 2012

  1. Slide 1: 3Q 2012 Results Presentation

    3Q 2012 Results Presentation 12 November 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: BEMO Hydro Power Plant: Siberian project launched on time

    BEMO Hydro Power Plant Siberian project launched on time First self-generated electricity produced on October 15th 3

  4. Slide 4: Operational and financial highlights; Growth projects; Market update

     Operational and financial highlights  Growth projects  Market update  Appendix 4

  5. Slide 5: 3Q 2012 highlights

    3Q 2012 highlights Top-line hit by lower LME aluminium price despite support from product mix improvement and higher premiums  Aluminium physical sales decreased by 3% to 1,030Kt while average LME Al price dropped by 3% to US$1,918/t in 3Q2012 vs 2Q2012  Record high realized premium of US$226/t ac

  6. Slide 6: Top-line deterioration following summer market lows smoothened by increased premiums

    Top-line deterioration following summer market lows smoothened by increased premiums LME aluminium & sales price US$/t 2Q2012 3Q2012 Change 1,978 LME price 1,918 (3%) UC RUSAL’s 2,247 2,115 (6%) sales price Avrg LME price 2,078 1,865 (10%) factoring 1M lag(1) 2 300 2 200 2 100 2 000 4Q 2012 1 900 1

  7. Slide 7: Record share of VAP production further supports premium growth

    Record share of VAP production further supports premium growth Realized premiums above LME Al price(1) Sales to end-users by regions(2) US$/t US$/t 3,400 226 Asia 20% Europe 3,200 191 37% 200 3,000 161 164 165 153 159 2,800 150 2,600 6.1% 11.8% America 2,600 2,399 9.7% 11% 100 2,400 2,503 2,177 2,20

  8. Slide 8: Achieved lowest aluminium segment cash cost and power tariff since 2011

    Achieved lowest aluminium segment cash cost and power tariff since 2011 Aluminium segment cash cost Power tariff(1) US$/t USc/kWh 2,058 3.68 3.59 1,979 3.39 1,963 1,944 1,952 1,947 3.23 1,936 3.20 3.12 3.11 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 20

  9. Slide 9: Operating margins hit by bottomed macro & electricity market inflation

    Operating margins hit by bottomed macro & electricity market inflation EBITDA bridge US$m EBITDA margin 11.6% 327 (54) 53 EBITDA margin 37 5.1% 67 130 (68) (150) (20) (61) 2Q 2012 LME Quotation period Exchange rate Premium Power Alumina Other raw Other 3Q 2012 (w/o LME factor) materials  Quotation

  10. Slide 10: Negotiated an option to extend debt covenant testing grace period

    Negotiated an option to extend debt covenant testing grace period Maintaining flexible balance sheet Interest expenses(1)  Reached an agreement with lenders extending the period US$m (23%) during which financial covenants are not to be tested until 183 174 the end of 2013. 165 146  Additional accu

  11. Slide 11: Mr Matthias Warnig appointed as new Chairman of the Board

    Mr Matthias Warnig appointed as new Chairman of the Board Changes to the Board Composition New Composition of the Board Matthias Warnig Appointed as Chairman of the BoD EN+ (4 with effect from October, 1st 2012 executive, 5 non- Petr Sinshinov Vadim Geraskin executive)  Deputy Chief Executive (1) 

  12. Slide 12: Operational and financial highlights; Growth projects; Market update

     Operational and financial highlights  Growth projects  Market update  Appendix 12

  13. Slide 13: BEMO HPP: Successful launch after decades of design and construction

    BEMO HPP(1) Successful launch after decades of design and construction 1964-1979 1980 - 1992 2006 - 2011 2012 2012-2013 Project design and approval Start of construction Resumed construction Launch Ramp-up to full capacity • HPP dislocation chosen in 1968 • First ground excavated from • UC RUSAL and

  14. Slide 14: BEMO Smelter: First metal scheduled for August 2013

    BEMO Smelter First metal scheduled for August 2013 Oct Start of pot shell installation Pot rooms 2012 End- All pot shells of the first start-up complex to be 2012 installed Aug First metal production 2013 End- All 168 pots of the first start-up complex to 2013 become operational 100% capacity utiliz

  15. Slide 15: Operational and financial highlights; Growth projects; Market update

     Operational and financial highlights  Growth projects  Market update  Appendix 15

  16. Slide 16: Global aluminium consumption outlook remains positive

    Global aluminium consumption outlook remains positive Global aluminium consumption 2012E consumption growth Mt Global 6% 57.7 54.2 50.8 44.8 47.3 China 9% 40.6 38.0 37.8 35.6 India 7% 34.4 NAmerica 6% LAmerica 5% Russia&CIS 5% Japan 3% 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E EU -2% 201

  17. Slide 17: Retained deficit in the global aluminium market supported by ex-China capacity cuts

    Retained deficit in the global aluminium market supported by ex-China capacity cuts Aluminium balance Balance change by region, 9M2012 vs 9M2011 Kt US$/t Kt 300 3 000 1 000 200 2 500 800 600 100 2 000 400 0 1 500 200 -100 1 000 0 -200 500 -200 -300 0 -400 World ex-China China LME cash (rhs) Source:

  18. Slide 18: Aluminium price has disconnected from fundamentals outside China

    Aluminium price has disconnected from fundamentals outside China LME aluminium stocks US$/t Days 3 200 Aug-11 vs Aug-09 Aug-12 vs Aug-11 60 3 000 LME price Inventory days LME price Inventory days 50 +24% (25%) (23%) +3% 2 800 50 2 600 37 38 40 2 400 2 200 30 2 000 1 800 20 1 600 1 400 10 1 200 1 000

  19. Slide 19: Attractive financial yields support demand for physical metal

    Attractive financial yields support demand for physical metal Financial deals profitability estimate Aluminium premiums % annualized Current(3) 15 300 285 254 10 250 248 200 5 150 0 100 -5 50 -10 0 (1) (2) CoC 3M-3MLibor CoC 3M-3MLibor + Premium Europe Japan US Source: UC RUSAL Source: Bloomberg, Me

  20. Slide 20: Overproduction in China caused by new capacity commissioning and industry subsidizing

    Overproduction in China caused by new capacity commissioning and industry subsidizing China’s capacity dynamics in 2012 YTD China’s inventories and SHFE price Kt RMB/t Subsidies are introduced in Kt 26,856 Henan 23,836 1,060 3,020 16,300 Subsidies are introduced in 1,600 Ningxia 16,080 Installed cap

  21. Slide 21: Operational and financial highlights; Growth projects; Market update

     Operational and financial highlights  Growth projects  Market update  Appendix 21

  22. Slide 22: Summary results: Income statement

    Summary results Income statement US$m 3Q2012 2Q2012 % Change Revenue 2,563 2,822 (9%) Cost of sales 2,266 2,318 (2%) EBITDA 130 327 (60%) EBITDA Margin 5% 12% - Share of profits of associates and JVs 184 146 26% Income tax (21) (74) (72%) Net Loss (118) (55) 115% Recurring Net Profit (76) 125 -  Re

  23. Slide 23: Summary results: Balance Sheet and Cash Flow

    Summary results Balance Sheet and Cash Flow As at 30 As at 30 US$m % Change Sept 2012 Jun 2012 Cash and Cash Equivalents 894 622 44% Equity Attributable to Shareholders of the 10,756 10,057 7% Company Total Liabilities 14,868 14,607 2% Total working capital 1,898 2,335 (19%) Net Debt 10,710 10,855 (

  24. Slide 24: Summary results: Segment results

    Summary results Segment results 3Q2012 2Q2012 US$m Aluminium Alumina Aluminium Alumina Segment Revenue 2,220 494 2,447 587 Segment Results (EBIT) 76 (19) 215 (33) EBITDA 183 5 321 (6) EBITDA margin 8% 1% 13% (1%) Segment CapEx 69 15 66 75  Aluminium segment is involved in the production and sale of

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