* Q2 recurring net profit climbs to $129 mln from loss
* Rusal sees aluminium market deficit growing in H2
* Sees 60 pct of shut global smelter capacity never
* Rusal shares slip 0.5 pct, but up 72 pct this year
(Adds Rusal executive comments)
By Sonali Paul
MELBOURNE, Aug 27 Russia's United Company Rusal
Plc returned to profit for the first time in five
quarters on Wednesay and gave a bullish outlook for aluminium
prices, driven by growing demand from carmakers and supply cuts
The aluminium giant emerged from the red thanks to higher
aluminium prices, cost cuts and smelter closures and forecast
further gains, as it sees a global supply deficit more than
doubling in the second half of the year to 1.5 million tonnes.
"In the first half of 2014, we witnessed some important
trends which signaled that the global aluminium industry has
turned a corner," Chief Executive Oleg Deripaska said in a
Rusal last week completed a crucial restructuring of $5.15
billion in debt and has no payments due until January 2016. The
deal gives it flexibility to pre-pay debt when cash flows are
strong and pay less when London Metal Exchange prices fall.
"We're quite bullish on the aluminium price, which means
that our expectation is that the company will deleverage faster
than slower," deputy CEO for strategy Oleg Mukhamedshin told
reporters on a conference call.
For the June quarter, Rusal's recurring net profit -
adjusted net profit plus its share of Norilsk Nickel's
earnings - jumped to $129 million from a $203 million loss a
year earlier as it cut costs. Rusal owns 28 percent of Norilsk.
Revenue fell 10 percent to $2.26 billion from a year earlier
as it cut aluminium output. It expects to produce 1.8 million
tonnes of aluminium in the second half, in line with the first.
Higher prices boosted the bottom line, with aluminium prices
on the London Metal Exchange having surged 24 percent
off a 4-1/2-year low hit in February.
At the same time, premiums paid on top of LME prices for
physical shipments have risen to record levels, taking the
all-in price to a three-year high of $2,400 a tonne last week.
"Looking at the rest of the year, we expect the LME spot
aluminium price to remain around its current level and view
potential upside for physical premiums," Deripaska said.
The company confirmed it was seeking a premium of $460 a
tonne for deliveries into Japan in the December quarter, up
about 15 percent from the September quarter.
Core earnings jumped 26 percent to $220 million, but that
missed analysts' forecasts for earnings before interest, tax,
depreciation and amortisation (EBITDA) of $255 million,
according to a Reuters poll of six brokers.
Rusal, which has a primary listing in Hong Kong and
secondary listings in Paris and Moscow, said it expected EBITDA
to top $600 million in the second half of this year at current
Its shares slipped 0.5 percent after the result, but the
stock is up 72 percent this year.
Rusal said it did expect any of the 6 million tonnes of
smelter capacity outside China that has been shut since 2007 to
reopen in the near term, with 60 percent of that capacity likely
to remain permanently shut.
On the demand side, consumption rose 6 percent to 27 million
tonnes in the first half of the year, and is expected to grow
over the next four years as auto makers like BMW, Ford and
Mercedes use more aluminium in cars, said sales and marketing
director Steve Hodgson.
"The significant shift in materials used from steel to
aluminium in the automotive sector will be a game changer for
the industry," Hodgson told reporters.
(Reporting by Sonali Paul; Editing by Richard Pullin)