RUSALRUAL44.02
Operational results
Most of the company's operating indicators declined in the first half of the year. Growth was shown only by the production of primary aluminum. In total, the company has nine alumina production plants in Russia, Ukraine, Guinea, Gayane, Ireland and Jamaica, but external pressure on the company continues. In March, Rusal suspended production at the Nikolaev Alumina Refinery in Ukraine — the enterprise, following the results of 2021, provided 21,3% total alumina production.
Also in March of this year, Australia imposed a ban on the export of alumina and bauxite to Russia.. Queensland Alumina, a joint venture between Rusal and Rio Tinto for the production of alumina in Australia, was hit.. In April, Rio Tinto closed Rusal's access to alumina production.
Sales volume also decreased, but the price of aluminum has reached a record high in recent years. Structurally, the company's revenue by region did not change significantly, the share of sales to Europe and Asia increased.
Production indicators, thousand tons
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| Volume of sales | 1890 | 2036 | 2000 | 1904 | 1763 |
| Average selling price or aluminum price per ton, $ | 1592 | 1852 | 2287 | 2832 | 3075 |
Production indicators, thousand tons
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| Aluminum | 1867 | 1888 | 1868 | 1896 | 1891 |
| Alumina | 4022 | 4160 | 4102 | 4202 | 3300 |
| bauxites | 7469 | 7369 | 7637 | 7394 | 6740 |
Company revenue by regions
| 1п2021 | 1p2022 | |
|---|---|---|
| Europe | 37% | 40% |
| Russia and CIS | 31% | 29% |
| Asia | 22% | 23% |
| America | 9% | 7% |
Financial and balance sheet results
The company showed an increase in revenue in the reporting half of the year due to an increase in aluminum prices - prices for it increased significantly in 1 quarter 2022, having reached the level 3985 $.
Most of the revenue and profit comes from the aluminum segment of the company.. Cost of sales increased by 24.7% due to higher prices for alumina and other raw materials and higher average tariffs for electricity and transport. Company's Adjusted EBITDA up on operating results, while the margin increased by a point and amounted to 25%.
As a result, the company's net profit decreased by 16.7% due to an increase in income tax and financial expenses. It is worth noting, that a significant impact on the results of the company is provided by revenues from Norilsk Nickel. The company's free cash flow is negative - $1.9 billion, and taking into account the proceeds amounted to minus 311 million dollars.
Recall, that Rusal has a share 26,2% in Norilsk Nickel and Rusal receives dividends from him. Shareholder agreement expires in 2022, setting the level of dividends, between the owners of Norilsk Nickel, "Rusalom" and "Interros".
In July 2022, the Chairman of the Board of MMC Norilsk Nickel and the owner of Interros announced, that the shareholders of Norilsk Nickel should not expect the usual dividend payments either by the end of 2022, us, maybe, for 2023, as the company now has other priorities. Respectively, cash support for Rusal may be reduced in the near future.
Segment performance and margin for 1 half a year, million dollars
| Aluminum | Alumina | |
|---|---|---|
| Revenue | 5622 | 1453 |
| Profit | 2053 | −43 |
| Total margin by segment | 36,50% | −3,00% |
| segment EBITDA | 2218 | 2 |
| Segment EBITDA margin | 39,50% | −0,10% |
Adjusted EBITDA of the company by half year, million dollars
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| EBITDA adjusted | 219 | 652 | 1315 | 1578 | 1807 |
| EBITDA margin | 5% | 14% | 24% | 24% | 25% |
Company revenue by half year, billion dollars
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| Revenue | 4,02 | 4,55 | 5,45 | 6,55 | 7,15 |
| Growth year on year | −15% | −9% | 36% | 44% | 31% |
Company profit and margin by half year, million dollars
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| Profit | −124 | 883 | 2018 | 1207 | 1680 |
| Margin | −3% | 19% | 37% | 18% | 22% |
The company's assets grew from $20 billion to $25 billion due to an increase in the value of a stake in Norilsk Nickel, the company also increased investments in equity securities. During the reporting period, Rusal increased its stake in RusHydro to 9%.
The company's net debt rose due to a 61.9% decrease in cash and cash equivalents in its accounts.. At the same time, the company's net debt / EBITDA ratio did not change much compared to the same period last year..
Net debt of the company by half year, billion dollars
| 1п2020 | 2п2020 | 1п2021 | 2п2021 | 1p2022 | |
|---|---|---|---|---|---|
| net debt | 5,96 | 5,56 | 4,10 | 4,75 | 5,86 |
| net debt / EBITDA | 27 | 9 | 3 | 3 | 3 |
In the reporting of "Rusal" indicated the impact of the imposed sanctions. There are the following risks:
- Postponement of investment projects.
- Postponement of production modernization.
- Account freezes and asset freezes may make it impossible to make payments to meet certain financial obligations to creditors.
Some news about Rusal
The company has released two positive news recently:
- Announces Russia's first bond placement, denominated in yuan. The coupon rate was 3,9%, volume - 4 billion yuan. This will allow the company to diversify its foreign currency debt portfolio and obtain an alternative source of borrowing..
- At the end of 2021, the company launched the first stage of the Taishet aluminum plant, and in 2022 planned to bring it to full capacity. Given the projected shortage of aluminum in the market in 2022, the launch of the enterprise can be timely and will increase the financial performance of the company.
What's the bottom line?
Rusal's operating results come under pressure due to outside influence. Key financial indicators changed in different directions. Revenue increased due to favorable market conditions, while net income declined due to taxes and finance costs.
In addition to external restrictions, there is uncertainty in future dividend income from Norilsk Nickel. Like a dividend story stock doesn't look interesting, The company last paid a dividend in 2017, And, given the drop in performance, no need to wait for repayment.
Among the potential growth drivers for Rusal is the revaluation of the company, taking into account the stake in Norilsk Nickel, and the growth in aluminum prices. The current state of affairs in the company is clearly demonstrated by its quotes. Since the beginning of this year, the share price has fallen by more than 39%.
