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Russia’s Rusal, the largest aluminum producer outside China, boosted its first-half adjusted net profit by 42% as cost reductions offset a decline in sales and prices, it said on Thursday.
The Hong Kong-listed company has been under pressure as Moscow’s actions in Ukraine have led some Western consumers to shun new deals for Russian metal even though Hong Kong-listed Rusal is not directly targeted by Western sanctions.
In April, the London Metal Exchange banned Russian aluminum, copper and nickel produced from April 13 to comply with new US and UK sanctions.
“Uncertainty in the global economy and weak demand, worsening market conditions and new restrictions imposed on Russian metal traded in global markets, primarily premium ones, as well as weak global prices continued to put pressure on the company’s operational and financial performance”, Rusal said in a statement.
Rusal’s first-half sales decreased by 2.9% to 1.879 million metric tons, while production rose by 2.3% to 1.957 million tons as the Taishet plant has gradually increased output.
However, Rusal said its deliveries to China touched a record high, and the Russian market reached its pre-Ukraine conflict volume.
China has became the company’s largest market after Russia, Rusal reported last year.
Asia accounted for 42% of Rusal’s revenue up from 33% in the first half of 2023 and 38.4% in 2023.
The average price of aluminum on the LME reached $2,360 per ton in the first half of 2024, while the price of Rusal’s metal fell by 2.2% to $2,447 per ton following a reduced premium.
Combined with lower sales, that meant Rusal’s revenue fell by 4.2% to $5.695 billion in the first half of 2024, while a 15.9% fall in costs to $4,385 billion, largely because of cheaper raw materials, ultimately saw profits increase.
The cost of purchasing alumina fell by 5% to $992 million, Rusal said.
It has sought to reduce its reliance on imported material after losing supplies from Ukraine and Australia.
Last year, it bought a 30% stake in a Chinese alumina refinery and plans to build an alumina plant in Russia.
Rusal’s CEO Evgenii Nikitin said in a statement the company was further working on “material self-reliance” with a pilot operation for a second furnace at the Taishet anode plant, in Russia, was expanding bauxite production in Guinea, and seeking new deposits elsewhere.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) jumped by 171% to $786 million and adjusted net profit was $446 million compared with $315 million a year ago.
(By Anastasia Lyrchikova, Sameer Manekar and Himanshi Akhand; Editing by Barbara Lewis)
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