MOSCOW – Russian aluminium giant Rusal posted a 42% jump in fourth-quarter core earnings on Friday, helped by higher aluminium prices, and announced billionaire Oleg Deripaska would step down as president, as expected.
Hong-Kong listed Rusal said fourth-quarter earnings before interest, taxation, depreciation and amortisation (Ebitda) rose to $586-million from $412 million in the last quarter of 2016. Analysts had expected core earnings of $598-million.
"The company delivered robust operating results and sales volumes growth, which, coupled with the (aluminium) price's solid improvement, led to the fourth quarter revenue increasing," CE Vladislav Soloviev said in a statement.
"Overall, the company (is) in good shape for 2018."
Rusal confirmed Deripaska would step down as president after his inclusion, along with dozens of other tycoons, on a US government list of Russian oligarchs, which could create risks for funding from Western banks.
The world's second-largest aluminium producer after China's Hongqiao said its fourth-quarter revenue rose 35% to $2.75-billion.
London Metal Exchange aluminium rose 35% over the course of 2017 on prospects that China's winter pollution controls would curb supplies but has eased slightly so far this year.
Rusal's quarterly net profit came in at $440-million, down from $645-million a year ago when it recorded a $299 million gain from the sale of its Alpart alumina refinery in Jamaica to China's state-owned Jiuquan Iron & Steel Group.
Rusal shares finished up by 0.6 percent in Hong Kong on Thursday before the results announcement at HK$5.39 ($0.69) slightly outperforming a 1.4 percent drop in the benchmark index .
Some analysts have said that positive impact from Rusal's strong financial results could be limited by an ongoing power struggle at Russian mining company Norilsk Nickel, in which Rusal owns a stake.
The struggle over Nornickel resurfaced on Feb. 16 as billionaire Vladimir Potanin offered to buy Roman Abramovich's 4% stake in the group for $1.5-billion and Rusal tried to block the deal.
The tensions could end with Potanin buying the stake from Abramovich, or with Potanin and Rusal sharing the 4% stake between them, analysts said.
However, they could use another option, known as a "shoot out", from a separate agreement between Rusal and Potanin, to buy or sell existing stakes.
This agreement allows the parties to offer the six-month average price of Nornickel shares plus 20%, a copy of court documents, obtained by Reuters, showed.
Rusal currently owns 27.8% of Nornickel, while Potanin, also Nornickel's chief executive, has a 30.4% stake.
Rusal said on Friday that it had proposed to seek the approval of its shareholders of a mandate that would authorise the board to effect the potential shoot-out transaction as and when appropriate.
Further details of the shoot-out are expected to be sent to Rusal's shareholders on or before March 16, it added.
Rusal expects global aluminium demand to grow by 5% to 67.3-million tonnes in 2018, with the global deficit widening to more than two-million tonnes from around one-million tonnes in 2017.
Like global miners BHP Billiton and Glencore, Rusal saw cost inflation, mostly due to raw materials prices which, outside alumina and bauxite, rose by 22.3%.
The company also said it had cut net debt to $7.65-billion by the end of 2017 from $8.42-billion at the end of 2016.