HONG KONG--(BUSINESS WIRE)--Regulatory News:
United Company RUSAL Plc (Paris:RUSAL) (Paris:RUAL):
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
UNITED COMPANY RUSAL PLC
(Incorporated under the laws of
Jersey with limited liability)
(Stock Code: 486)
FIRST QUARTER 2017 TRADING UPDATE
This announcement is made by United Company RUSAL Plc (“UC RUSAL” or the “Company”) pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and applicable French laws and regulations.
Shareholders and potential investors are advised to exercise caution when dealing in the securities of UC RUSAL.
UC RUSAL announces its operating results for the first quarter (“1Q17”) 20171.
Aluminium
- Aluminium production2 in 1Q17 totaled 910 thousand tonnes (-2.1% QoQ), with Siberian smelters representing 94% of total aluminium output. The total production dynamics is largely explained by the number of calendar days in the periods (92 days in 4Q16 and 90 days in 1Q17). Smelters utilization remained on average at a high of 95%.
- In 1Q17 aluminium sales totaled 985 thousand tonnes (+6.8% QoQ), including value added product (VAP3) sales of 436 thousand tonnes (+7.8% QoQ). The increased level of inventories in 4Q16 which were subsequently sold out in 1Q17 was largely behind the QoQ total sales dynamics.
- In 1Q17 the average aluminium realized price4 increased by 8.3% QoQ to USD1,949/t. The increase was driven by positive dynamics in London Metal Exchange (“LME”) QP5 component (+9.0% QoQ to USD1,796/t) and average realized premium component growth (+1.4% QoQ to USD153/t).
Alumina
- In 1Q17, total alumina production declined by 2.6% QoQ, totaling 1,889 thousand tonnes. Russian operations accounted for 37% of total output. Production volumes at refineries were largely in line with production plans. Seasonal repair works performed at Windalco, Auginish and Bogoslovsk were offset by production performance at Achinsk and Urals.
- Capacity upgrades which were completed at Nikolaev and Urals refineries were largely behind the YoY production increase at refineries in 1Q17.
Bauxite and nepheline ore
- In 1Q17, bauxite output totaled 2,869 thousand tonnes (+1.0% QoQ). Nepheline output increased by 7.9% QoQ to 1,056 thousand tonnes. Production volumes at Timan and Kia Shaltyr (nepheline ore6) increased by 8.0% and 7.9% QoQ to meet the production plan needs of the Urals and Achinsk alumina refineries, respectively. North Urals production volumes were also driven by the performance of Bogoslovsk refinery. Kindia production in 1Q17 remained below the historic average but according to mining works schedule we anticipate the volumes to improve in 2H17. Bauxite Company of Guyana production increased by 13.2% QoQ, which is largely explained by a low base effect.
Market overview7
- The world economy witnessed a broader based growth in 1Q17, with an increase in business activity, particularly in the advanced economies. Consumer spending particularly for cars, durable goods sales and fixed asset investments continue to be the main driver for metal demand.
- In the Eurozone, household spendings increased, unemployment fell, consumer confidence grew and interest rates remained low. Fixed asset investments in the US are expected to grow by 3.5% in 2017 YoY, boosted by the possibility of approval of USD1 trillion investment plan. Japanese industrial production continues to rise and exports are expected to grow by 4.5% in 2017 YoY boosted by the strong demand in the neighbouring Chinese economy.
- The Chinese economy showed strong growth at the beginning of the year. The official PMI reached 51.8 in March 2017, while industrial production grew 7.6% in March YoY and GDP in 1Q17 went up 6.9% YoY vs 6.8% estimated growth.
- The LME aluminium price reached its highest level of USD1,955/t in March 2017 and has, on average remained stable above USD1,900/t in 1Q17. This was attributable to a growing global metal deficit driven by the US, EU and the expectation of supply disruptions in China coupled with significant production cost inflation.
- Aluminum premiums in key consuming regions continued to improve in 1Q17 with, on average, a 27.8% rise compared to 4Q16. This was due to strong demand and a reduced supply in key regions after various smelting capacity reduction/closures (North America, Australia).
- The ROW (rest of the world) reported that inventories have approached to pre-crisis levels of 3.6 mn tonnes in March 2017 and the days of consumption decreased to 46 days from 110 days in 2014-15 and continue to decline at rapid pace.
- Based on CRU estimates, aluminium demand excluding China rose by a strong 3.4% in 1Q17 YoY to 7.1 mn tonnes while production (including eight non-reporting countries) increased by 1.2% YoY to 6.7 mn tonnes, leaving the ROW aluminium market with approximately 0.4 mn tonnes deficit in 1Q17.
- According to the CNIA’s production figures, in 1Q17 China`s primary aluminum production rose 14.2% Y-Y to 8.191 Mt. However, the annualized production fell in February by 4.9% MoM and in March by 3.5% MoM, which may witness the beginning of supply matching process in line with China’s policy to strictly control overproduction
- In terms of additional regulatory measures on April 12, 2017, a joint regulation was issued by the NDRC, MIIT, Ministry of lands and resources, MEP “On the word to streamline the situation with illegal projects in the primary aluminium industry”. The preamble of the regulation states the necessity to take measures to standardize investment in the construction of aluminium projects and to strictly control overproduction. The government of Changji country (Xinjang) subsequently issued a notice that the construction of three aluminium smelters with total capacity of 2 mn tonnes per annum is illegal and should be suspended immediately. Other projects and capacities are potentially under risk of termination.
- In addition, a significant aluminium cost push in China by more than 40% in 1Q17 and continued cost pressure mainly in carbon raw materials prices brought in a significant impact on high cost non-integrated Chinese smelters operating on thin margins or losses.
KEY OPERATING DATA
GROUP PRODUCTION DATA8
(‘000 tonnes) | 1Q17 | 4Q16 | Change, % (QoQ) | 1Q16 | Change, % (YoY) | ||||||||||
Aluminium |
910
95% |
930
95% |
-2.1% |
916
95% |
-0.6% | ||||||||||
Aluminium foil |
23.1 | 22.5 | 2.8% | 18.8 | 22.9% | ||||||||||
Alumina | 1,889 | 1,939 | -2.6% | 1,873 | 0.4% | ||||||||||
Bauxite | 2,869 | 2,841 | 1.0% | 3,009 | -4.6% | ||||||||||
Nepheline | 1,056 | 978 | 7.9% | 1,111 | -5.0% | ||||||||||
GROUP SALES DATA
(‘000 tonnes) | 1Q17 | 4Q16 | Change, % (QoQ) | 1Q16 | Change, % (YoY) | ||||||||||
Aluminium sales |
985 | 922 | 6.8% | 957 | 2.9% | ||||||||||
BOAZ aluminium |
33 | 31 | 6.0% | 38 | -14.2% | ||||||||||
other third party |
46 | 39 | 18.5% | 5 | |||||||||||
VAP sales | |||||||||||||||
(included in the |
436 | 405 | 7.7% | 390 | 11.7% | ||||||||||
Realized price, |
1,949 | 1,799 | 8.3% | 1,666 | 17.0% | ||||||||||
ALUMINIUM PRODUCTION
(‘000 tonnes) | Interest | 1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||
Russia (Siberia) | ||||||||||||||||||
Bratsk |
100% | 248 | 254 | -2.2% | 251 | -1.1% | ||||||||||||
Krasnoyarsk |
100% | 253 | 257 | -1.4% | 256 | -1.0% | ||||||||||||
Sayanogorsk |
100% | 131 | 135 | -3.3% | 130 | 0.3% | ||||||||||||
Novokuznetsk |
100% | 53 | 54 | -1.1% | 53 | 0.0% | ||||||||||||
Irkutsk |
100% | 103 | 105 | -1.7% | 103 | 0.3% | ||||||||||||
Khakas |
100% | 72 | 74 | -2.4% | 73 | -1.7% | ||||||||||||
Russia — |
||||||||||||||||||
Nadvoitsy |
100% | 3 | 3 | -2.1% | 3 | -8.6% | ||||||||||||
Kandalaksha |
100% | 18 | 18 | -0.2% | 17 | 5.2% | ||||||||||||
Sweden | ||||||||||||||||||
Kubikenborg |
100% | 30 | 31 | -4.0% | 30 | -2.1% | ||||||||||||
Total |
910 | 930 | -2.1% | 916 | -0.6% | |||||||||||||
Remelting of |
6 | 9 | -33.6% | 12 | -50.8% | |||||||||||||
Total |
916 | 939 | -2.4% | 928 | -1.3% | |||||||||||||
Foil and packaging production results
(‘000 tonnes) | Interest | 1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||
Russia | ||||||||||||||||||
Sayanal | 100% | 9.0 | 9.2 | -2.1% | 6.9 | 31.0% | ||||||||||||
Ural Foil | 100% | 5.9 | 5.3 | 11.8% | 3.9 | 53.0% | ||||||||||||
Sayana Foil | 100% | 0.8 | 1.1 | -26.8% | 0.8 | -3.7% | ||||||||||||
Armenia | ||||||||||||||||||
Armenal | 100% | 7.4 | 6.9 | 7.2% | 7.2 | 2.1% | ||||||||||||
Total production | 23.1 | 22.5 | 2.8% | 18.8 | 22.9% | |||||||||||||
Other aluminium products output and silicon output
(‘000 tonnes) | 1Q17 | 4Q16 | Change, % (QoQ) | 1Q16 | Change, % (YoY) | ||||||||||
Secondary alloys | 7.2 | 6.3 | 13.9% | 5.6 | 29.2% | ||||||||||
Silicon | 14.3 | 15.5 | -7.6% | 15.2 | -6.2% | ||||||||||
Powder | 4.6 | 4.3 | 9.2% | 4.0 | 15.9% | ||||||||||
ALUMINA PRODUCTION
(‘000 tonnes) | Interest | 1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||
Ireland | ||||||||||||||||||
Aughinish |
100% | 471 | 509 | -7.5% | 488 | -3.4% | ||||||||||||
Jamaica | ||||||||||||||||||
Alpart11 | 100% | — | — | |||||||||||||||
Windalco | 100% | 146 | 155 | -6.0% | 154 | -5.0% | ||||||||||||
Ukraine | ||||||||||||||||||
Nikolaev |
100% | 397 | 407 | -2.4% | 370 | 7.4% | ||||||||||||
Italy | ||||||||||||||||||
Eurallumina | 100% | — | — | — | ||||||||||||||
Russia | ||||||||||||||||||
Bogoslovsk |
100% | 234 | 250 | -6.0% | 235 | -0.3% | ||||||||||||
Achinsk |
100% | 243 | 214 | 13.5% | 244 | -0.4% | ||||||||||||
Urals Alumina |
100% | 209 | 205 | 2.1% | 197 | 6.2% | ||||||||||||
Boxitogorsk |
100% | — | — | — | ||||||||||||||
Guinea | ||||||||||||||||||
Friguia |
100% | — | — | — | ||||||||||||||
Australia (JV) | ||||||||||||||||||
Queensland |
20% | 187 | 198 | -5.2% | 184 | -1.6% | ||||||||||||
Total alumina |
1,889 | 1,939 | -2.6% | 1,873 | 0.9% | |||||||||||||
BAUXITE MINING
(‘000 tonnes wet) | Interest | 1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||
Jamaica | ||||||||||||||||||
Alpart | 100% | — | — | 44 | ||||||||||||||
Windalco | 100% | 503 | 510 | -1.3% | 488 | 3.1% | ||||||||||||
Russia | ||||||||||||||||||
North Urals | 100% | 589 | 607 | -3.0% | 551 | 7.0% | ||||||||||||
Timan | 100% | 723 | 669 | 8.0% | 683 | 5.7% | ||||||||||||
Guinea | ||||||||||||||||||
Friguia | 100% | — | — | — | ||||||||||||||
Kindia | 100% | 771 | 805 | -4.1% | 925 | -16.6% | ||||||||||||
Guyana | ||||||||||||||||||
Bauxite |
90% | 283 | 250 | 13.2% | 319 | -11.1% | ||||||||||||
Total bauxite |
2,869 | 2,841 | 1.0% | 3,009 | -4.6% | |||||||||||||
Nepheline ore production12
(‘000 tonnes |
Interest | 1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||
Kiya Shaltyr |
100% | 1,056 | 978 | 7.9% | 1,111 | -5.0% | ||||||||||||
JOINT VENTURE OPERATING RESULTS
1Q17 | 4Q16 |
Change, % |
1Q16 |
Change, % |
||||||||||||||
Boguchanskaya |
||||||||||||||||||
Electricity |
50% | 3,176 | 3,452 | -8.0% | 3,127 | 1.6% | ||||||||||||
Boguchansky |
||||||||||||||||||
Aluminium |
50% | 37 | 37 | -1.5% | 38 | -2.5% | ||||||||||||
Bogatyr |
||||||||||||||||||
Coal |
50% | 5,071 | 6,023 | -15.8% | 4,465 | 13.6% | ||||||||||||
Transportation |
50% | 1,571 | 1,663 | -5.5% | 1,516 | 3.6% | ||||||||||||
By order of the Board of Directors of United Company RUSAL Plc Aby Wong Po Ying Company Secretary |
24 April 2017
As at the date of this announcement, the executive Directors are Mr. Oleg Deripaska, Mr. Vladislav Soloviev and Mr. Siegfried Wolf, the non-executive Directors are Mr. Maxim Sokov, Mr. Dmitry Afanasiev, Mr. Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan Moldazhanova, Mr. Daniel Lesin Wolfe, Ms. Olga Mashkovskaya, Ms. Ekaterina Nikitina and Mr. Marco Musetti, and the independent non-executive Directors are Mr. Matthias Warnig (Chairman), Mr. Philip Lader, Dr. Elsie Leung Oi-sie, Mr. Mark Garber, Mr. Dmitry Vasiliev and Mr. Bernard Zonneveld.
All announcements and press releases published by the Company are available on its website under the links http://www.rusal.ru/en/investors/info.aspx, http://rusal.ru/investors/info/moex/ and http://www.rusal.ru/en/press-center/press-releases.aspx, respectively.
1 Operating data is based on preliminary data and may be updated in the 1Q17 financial results. |
2 Aluminium production represented by salable products output (the number includes all facilities excluding Volgograd remelting). |
3 VAP includes alloyed ingots, slabs, billets. wire rod and high, super, medium purity aluminium. The VAP sales for 1Q16 were updated as a result of addition of high, super, medium purity aluminium volumes. |
4 The realised price includes three components: LME component, commodity premium and VAP upcharge. |
5 QP (quotation period) prices differs from the real time LME quotes due to a time lag between LME quotes and sales recognition and due to contract formula speciality. |
6 Kiya Shaltyr Nepheline ore is used as a feedstock for alumina production at Achinsk alumina refinery. |
7 Unless otherwise stated data for the “Market overview” section is sourced from Bloomberg, CRU, CNIA, IAI and Antaike. |
8 Unless stated otherwise the production data throughout the report is presented on equity-adjusted basis (for exceptions please refer to the data of the Boguchansky smelter and Boguchanskaya HPP). Production volumes are calculated based on the pro rata share of the Company´s (and its subsidiaries´) ownership. |
9 Does not include remelting of the metal from other UC RUSAL smelters |
10 Here and further “total production” may not be equal to the arithmetic addition of the numbers above presented in the table. The differences arise due to the rounding of exact numbers (including decimals). |
11 The Alpart was sold to an external party (see UC RUSAL’s announcement dated 19 July 2016). The results of Alpart are excluded from UC RUSAL Consolidated Financial |
12 Nepheline ore used as a feedstock for alumina production at the Achinsk alumina refinery. |
13 Boguchanskaya HPP data is represented by 100% of energy generated (not on an ownership pro rata basis). |
14 Boguchansky aluminium smelter data is represented by 100% of volumes produced (not on an ownership pro rata basis). |