(Reuters) - Russian aluminum giant Rusal said on Friday lifting the share of high value-added products (VAP) in its sales might prove to be tough in coming months due to the weaker market for the metal which caused a 38% slump in its first-half net profit.
Rusal’s recurring net profit fell to $599 million in the six months ended June 30, from $971 million a year earlier, as London aluminum prices were down by 17%, it said on Friday.
It posted an adjusted net loss of $98 million in the first six months of 2019.
Hong-Kong listed Rusal, the world’s largest aluminum producer outside China, has been restoring operations after U.S. sanctions - first imposed on Rusal and its co-owner Oleg Deripaska in April 2018 - were lifted in January this year.
Despite the lifting of the sanctions, the company’s sales of VAP metal - alloyed ingots, slabs and some other products - were affected in the first half of 2019 since the contracts were constrained by being signed while the company was still under the sanctions.
“We acknowledge, that with the current market conditions improving our VAP share might be difficult,” Chief Executive Officer Evgenii Nikitin said in a statement.
Rusal is looking forward to the upcoming “mating” season when aluminum contracts for 2020 are signed.
However, it is concerned that U.S.-China trade tensions and reciprocal trade duties coupled with the global contraction of manufacturing activity may affect aluminum demand in the second half of 2019, CEO added.
Reporting by Polina Devitt in Moscow and Aditya Soni in Bengaluru; Editing by Stephen Coates