Russian giant Rusal’s profits surge despite US sanctions
Recurring net profit of the world’s largest aluminium producer outside China was up 75% year on year
Russian aluminium giant Rusal’s quarterly profit surged thanks to higher market prices for the metal, despite sanctions imposed by Washington.
Recurring net profit of Hong Kong-listed Rusal, the world’s largest aluminium producer outside China, was up 75 per cent from a year ago in the second quarter, but 17 per cent lower than this year’s first quarter, the company said yesterday.
Recurring net profit is defined as adjusted net profit plus the company’s net effective share in Norilsk Nickel’s results.
Its results, the first since April 6 when Washington imposed sanctions on it and Russian billionaire Oleg Deripaska, are seen as an initial indication of how Rusal is weathering curbs which have caused worldwide supply disruption.
Washington said the sanctions, which struck at allies of Russian President Vladimir Putin, were designed to punish Moscow for its alleged meddling in the 2016 US presidential election — something Russia denies — and other “malign activity”.
The sanctions seriously disrupted aluminium supplies, pushing up prices for the metal, which is widely used in different industries from aerospace to beverage packaging, before the US Office of Foreign Assets Control (OFAC) granted a waiver to Rusal’s customers.
Rusal said the US restrictions had lifted prices.
Sign of caution
Prices for aluminium were at an average $2,259 per tonne on the London Metals Exchange (LME) in the second quarter, up 18 per cent year-on-year, as “trade wars and imposed import duties, together with the OFAC Sanctions, caused significant growth of premiums and prices,” it said in a statement.
Under the sanctions, US customers have until October 23 to wind down business with Rusal.
As some orders can take up to two months to process and deliver to customers, particularly for value-added aluminium products, industry sources have said many customers will start to shun the company from August.
The sanctions hurt the rouble, pushing it lower. In the second quarter, it was trading at an average 62 per US dollar versus 57.2 the same period a year ago.
A weak rouble is supportive for Rusal and other exporters since a vast portion of their costs are rouble-denominated.
In a sign of caution, Rusal said its board had not recommended any dividend during the first half of 2018. Last year, the board approved an interim dividend of $0.0197 per share.