Rusal Q4 core earnings surge, Deripaska steps down

MOSCOW – Russian aluminium giant Rusal posted a 42% jump in fourth-quarter core earnings on Friday, helped by higher aluminium prices, and announced billionaire Oleg Deripaska would step down as president, as expected.

Hong-Kong listed Rusal said fourth-quarter earnings before interest, taxation, depreciation and amortisation (Ebitda) rose to $586-million from $412 million in the last quarter of 2016. Analysts had expected core earnings of $598-million.

"The company delivered robust operating results and sales volumes growth, which, coupled with the (aluminium) price's solid improvement, led to the fourth quarter revenue increasing," CE Vladislav Soloviev said in a statement.

"Overall, the company (is) in good shape for 2018."

Rusal confirmed Deripaska would step down as president after his inclusion, along with dozens of other tycoons, on a US government list of Russian oligarchs, which could create risks for funding from Western banks.

The world's second-largest aluminium producer after China's Hongqiao said its fourth-quarter revenue rose 35% to $2.75-billion.

London Metal Exchange aluminium rose 35% over the course of 2017 on prospects that China's winter pollution controls would curb supplies but has eased slightly so far this year.

Rusal's quarterly net profit came in at $440-million, down from $645-million a year ago when it recorded a $299 million gain from the sale of its Alpart alumina refinery in Jamaica to China's state-owned Jiuquan Iron & Steel Group.

Rusal shares finished up by 0.6 percent in Hong Kong on Thursday before the results announcement at HK$5.39 ($0.69) slightly outperforming a 1.4 percent drop in the benchmark index .

NORILSK STRUGGLE
Some analysts have said that positive impact from Rusal's strong financial results could be limited by an ongoing power struggle at Russian mining company Norilsk Nickel, in which Rusal owns a stake.

The struggle over Nornickel resurfaced on Feb. 16 as billionaire Vladimir Potanin offered to buy Roman Abramovich's 4% stake in the group for $1.5-billion and Rusal tried to block the deal.

The tensions could end with Potanin buying the stake from Abramovich, or with Potanin and Rusal sharing the 4% stake between them, analysts said.

However, they could use another option, known as a "shoot out", from a separate agreement between Rusal and Potanin, to buy or sell existing stakes.

This agreement allows the parties to offer the six-month average price of Nornickel shares plus 20%, a copy of court documents, obtained by Reuters, showed.

Rusal currently owns 27.8% of Nornickel, while Potanin, also Nornickel's chief executive, has a 30.4% stake.

Rusal said on Friday that it had proposed to seek the approval of its shareholders of a mandate that would authorise the board to effect the potential shoot-out transaction as and when appropriate.

Further details of the shoot-out are expected to be sent to Rusal's shareholders on or before March 16, it added.

Rusal expects global aluminium demand to grow by 5% to 67.3-million tonnes in 2018, with the global deficit widening to more than two-million tonnes from around one-million tonnes in 2017.

Like global miners BHP Billiton and Glencore, Rusal saw cost inflation, mostly due to raw materials prices which, outside alumina and bauxite, rose by 22.3%.

The company also said it had cut net debt to $7.65-billion by the end of 2017 from $8.42-billion at the end of 2016.