UC Rusal returns to profit despite fall in sales

UC Rusal, the world's largest aluminium producer, which is controlled by Russian oligarch Oleg Deripaska , yesterday said that it returned to profit last year in spite of a sharp drop in sales.

Rusal, which raised $2.2bn in a listing in Hong Kong and Paris in January, said revenues fell 48 per cent to $8.2bn in 2009 because of a steep decline in aluminium prices and lower sales volumes. However, the company reported a net profit of $821m compared with a net loss of $6bn the previous year.

The main contribution to its bottom line was a $1.4bn net profit derived from its investments in associate groups, primarily Norilsk Nickel, Russia's biggest mining company in which Rusal has a 25 per cent stake. Norilsk was forecast to report $1.7bn in net profit compared with a $555m net loss the previous year.

Analysts polled by Reuters had forecast Rusal to report a profit of $574m.

The better-than-expected results sent Rusal's shares up nearly 1 per cent to HK$9.48 against a Hang Sang index that fell slightly yesterday. The shares are still 12 per cent off their initial public offering price of HK$10.80.

Since its controversial listing in January, Rusal's share price has been under pressure because of investor concern about the size of the company's debts, which stood at $12.9bn in February after the initial public offering.

The company's share price on a rebased basis, has lagged behind the Hang Seng index by about 16 per cent since its pricing.

Speaking in Hong Kong yesterday, Mr Deripaska declined to comment on why Rusal shares had underperformed the market significantly.

"Two months represents almost nothing," he said.

The underperformance, however, has not deterred Mr Deripaska's ambition to list his other operations in the city.

Yesterday, he was named chief executive of En+ Group, the electrical power division of his conglomerate which is planning to sell shares. People familiar with the situation had said Mr Deripaska was keen to list the operation in Hong Kong to raise up to US$1bn.

Rusal said yesterday 2009 was "one of the toughest on record for the global economy, commodity markets in general and, in particular, the aluminium industry".

It said this year would be considerably better thanks to growing demand from China and India as well as Russia.

Rusal plans to increase its aluminium production by 3 per cent and alumina output by 11 per cent.

Mr Deripaska said the company intended to benefit from improving market conditions and its proximity to the fast growing market in China and other parts of Asia.

He added that Rusal aimed to utilise its access to low-cost energy and restart idle capacity and investment in greenfield projects.