Earnings of United Co Rusal take a mauling
Russian aluminium producer reports 95pc fall in first-half profitdue to Guinean losses
United Co Rusal, the world's largest aluminium producer, yesterday reported a 95.25 per cent plunge in net profit to US$37 million in the first half, largely because of a US$37 million net loss in the second quarter.
A major reason for the loss in the second quarter was a one-off impairment loss of US$167 million taken on an alumina and bauxite plant in Guinea where production decreased, Hong Kong-listed Rusal said.
The Russian firm was embroiled in a legal dispute with the government of Guinea over the privatisation of its subsidiary there, which Guinea opposes, Rusal said. The plant has suffered production disruptions because of a strike that ended in April, according to press reports.
Excluding the impairment, Rusal's recurring net profit fell 74.4 per cent in the first half, because of lower aluminium prices as well as increased transport and raw material costs. Revenue fell 9.7 per cent to US$5.71 billion.
To save costs, it said it would cut 275 million tonnes of annual aluminium production at its inefficient smelters by 2018, including up to 150,000 tonnes this year.
"New lows in aluminium prices, compounded with uncertainty as to when prices would rebound, have made planning especially difficult," Rusal chairman Barry Cheung Chun-yuen said. "China, in particular, remained a key market for Rusal."