Rusal profits double after sanctions help boost prices
RUSSIAN aluminium producer Rusal has defied the imposition of swingeing US sanctions to post a rise in profits in the first half of the year.
The company, 48pc owned by billionaire Oleg Deripaska’s EN+ group, saw a doubling in pre-tax profits to $1bn (£777m) in the six months to June, while revenues rose 4.7pc to $5bn.
Earlier this year Rusal’s shares in Hong Kong plunged by half after it became one of a number of entities targeted by the US to punish Russia for its “malign activity”. It warned that the sanctions would be “materially adverse” to its business, as it would restrict its ability to trade in US dollars.
But Rusal reported yesterday that the disruption caused by the sanctions, along with supply shortages in Canada, resulted in a “significant growth of premiums and prices” since April, boosting its profits. It was also helped by falling output in China, the world’s biggest supplier of the lightweight metal, which is used to build planes, trains and drinks cans.
While average prices jumped, lifting Rusal’s profits, revenues and sales volumes dipped in the second quarter after the sanctions were imposed, indicating that they are having some effect in throttling the company’s ability to trade.
Rusal’s products have been suspended from trading on the London Metal Exchange – one of the world’s biggest commodity exchanges – since April.
It was given until late October by the US Treasury to unwind its connections to Mr Deripaska, who is himself under sanctions. The company has since replaced nearly all of its board, including Mr Deripaska, while its chief executive resigned.
Rusal said it had been “in continuous communication” with US authorities “trying to find a solution aimed at its delisting from the list of SDNS [Specially Designated Nationals]”.
Rusal’s stock in Hong Kong closed up 4.5pc at HK$2.30 (23p). It has fallen 58pc this year.