Aluminium: la hausse des cours profite au géant Rusal (CA +31%) mais les sanctions antirusses plombent son bénéfice (-16,7%)


From the soda can to the cabin of an airplane, passing through the construction industry, the automobile or the naval sector, aluminium, a French invention, is everywhere.

Energy-intensive aluminum manufacturing has seen its production costs soar as energy prices rise fueled by the post-Covid economic recovery. But prices really spiked after Russia invaded Ukraine.

In this context, the results published this Friday by the main Russian aluminum producer are instructive in more ways than one, in particular to measure the impact of European sanctions on exports, a double-edged sword, since, for this metal, Europe and France are very dependent on Russian supplies.

European sanctions and rise in the price of aluminum

Therefore, the Russian industrial giant announced on Friday a “adjusted” net profit of $699 million in the first half, an increase of +1.5% more than a year.

At first sight, the European sanctions seem to have had no effect during the last two thirds of this first half marked by the invasion of Ukraine by the Russian army.

Actually, it is a high-profile estimate because it is valuable to Rusal, but the Hong Kong Stock Exchange-listed industrialist’s press release specifies that, without “adjustment,” his net profit in the first semester is 16.7% less in one year, at $1.68 billion. This decrease is explained by the fall in demand in Russia and, therefore, the effect of the sanctions that hit the country.

In detail, this “adjustment” takes into account Rusal’s investment in the Norilsk Nickel mining group (of which Rusal is one of the shareholders), as well as “the net effect of derivative financial instruments” Y “the net effect of the impairment of non-current assets”write the group

the turnover which, at $7.2 billion, marks a jump of +31.3% in the first trimester for a year, while theAdjusted EBITDA increased by +37.4% at $1.8 billion.

Good figures explained by the Russian group for the “sharp increase in aluminum prices in the first quarter of 2022” who also benefited “adjusted” operating profit amortization and depreciation.

Affected domestic demand

Founded by oligarch Oleg Deripaska, the group stresses, however, that “Rising geopolitical tensions since February 2022 have significantly increased volatility in currency and commodity markets.”.

These tensions caused by the Russian offensive in Ukraine launched on February 24 and the international sanctions against Moscow that followed “have negatively affected the activities of Russian companies in different sectors of the economy, which has led to a decrease in demand for aluminum in Russia“, according to the press release.

Procurement issues and project deferrals

In addition, Australia’s ban on exporting alumina, from which aluminum is then extracted, as well as the suspension of production at the alumina refinery in Mykolaiv, Ukraine, “they have had a negative impact on the deliveries of raw materials for the production of aluminum and have caused an increase in expenses”he says.

For its part, “Investment projects and programs to modernize production facilities could be postponed due to difficulties with the delivery of equipment”he adds.

Finally, these results are in line with the forecasts made last March, both by the manufacturer and by analysts.

Thus, a week after the start of the invasion of Ukraine, Rusal, which had just announced a tripling of its profits with an Ebitda of 2.9 billion dollars in 2021 thanks, in particular, to the rise in the price of non-ferrous metals, explained in a press release about how he saw the future of the company in this war situation:

“The company may potentially encounter difficulties in the supply of equipment, which may lead to the postponement of investment projects,” the Russian industrialist summarily stated.

Meanwhile, BCS analysts said in a note that high aluminum prices, which have risen 26% since the start of the year, should at least partially offset Rusal’s ongoing operational challenges.

Rusal must “rebuild its supply chain”

Due to European bans, a large number of Russian economic actors face serious problems in the supply of equipment and spare parts.

They also have difficulty importing or exporting, as international logistics and financial chains have been partially paralyzed by retaliatory measures imposed by Europe and the United States.

Today, the Russian group explains that these difficulties force it “to rebuild its supply chain.”

(with AFP and Reuters)