Massive Decline in LME Aluminum Prices Halved RUSALs' Q1 Profits

SEATTLE (Scrap Monster): RUSAL- the leading global aluminum producer reported results for the initial three-month period of the current year.

The sharp year-on-year decline in London Metal Exchange (LME) aluminum price by 14% led to nearly 21% decline in quarterly revenue from $2,744 million in Jan-Mar ’18 to $2,170 million in the first quarter of 2019. The company’s net profits plunged by almost 50% to $273 million, as compared with $544 million in Q1 2018. Also, adjusted EBITDA fell by over 60% from $572 million to $226 million.

During Q1 2019, overall aluminum demand reported 1.5% growth to 15.87 million tonnes. Primary aluminum demanded reported growth in North America, Europe and Asia. Aluminum production outside of China declined 1.3% over the prior quarter. Also, Chinese primary aluminum production edged lower by 1.2% year-on-year. The aluminum inventories at LME warehouses dropped by 200,000 tonnes to total 1.074 million tonnes at the end of first quarter of 2019.

Commenting on the results, Evgenii Nikitin, CEO of RUSAL noted that past year’s events including the OFAC sanctions have significantly impacted the first quarter 2019 results, thereby leading to substantial reduction of revenue and net profit.

RUSAL expects 3% year-on-year demand growth for primary aluminum in 2019, slightly lower upon comparison with 3.6% growth in 2018. Further, all the factors and risks that impacted Q1 results could continue to downgrade the demand in 2019 as well.