Russia's Rusal reports 21% drop in net profit

29th August 2011, Comments 0 comments

Russia's Rusal aluminium giant Monday reported a 20.5-percent drop in first-half net profit due to higher debt-servicing costs and smaller returns from its partial holding in Norilsk Nickel.

Rusal chief executive Oleg Deripaska also predicted sector volatility for the mid-term while noting continued strong demand for aluminium "in both established and fast-growing emerging markets".

The firm reported a net profit of $1.09 billion -- down from the $1.37 billion reported in the first six months of 2010.

It also noted an aluminium output increase of one percent and said it had reduced its debt under various restructuring agreements by $1.67 billion.

"While the volatility across the sector and in the global economy is likely to persist in the mid-term, UC Rusal's strong fundamentals and leading position in the metals and mining industry will allow the company to continue delivering value and growth for all stakeholders," Deripaska said in a company statement.

Rusal was confronted with massive debts during the 2008-2009 financial crisis and Deripaska reported making "significant strides in refinancing ... debt ahead of schedule with new facilities."

Renaissance Capital estimated Rusal's net debt at $11.4 billion and praised the firm for making progress on extending the maturity of some debts while moving to refinance nearly $5.0 billion in others in moves aimed at meeting strict restructuring terms.

The debt deals should free up management to start paying dividends and Rusal shares traded up nearly four percent in later afternoon trading in Hong Kong.

Analysts said the stock was also boosted by Moscow news reports that billionaire Alisher Usmanov was ready to purchase a stake in Rusal now held by another Russian tycoon.

But Moscow-based VTB Capital said that Rusal's 2011 annual numbers had "downside risks" associated with future aluminum prices and cash costs.

Rusal is responsible for about 10 percent of global aluminium production and currently holds an estimated 25-percent stake in the world's largest nickel producer Norilsk Nickel.

© 2011 AFP

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