25 August 2017

UC RUSAL ANNOUNCES 2017 SECOND QUARTER AND INTERIM RESULTS

UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, Moscow Exchange: RUAL), a leading global aluminium producer, announces its results for the three and six months ended 30 June 2017.

 

Key highlights

  • During the first half of the year, the market environment was favorable for the aluminium industry. Recovery in the London Metals Exchange (“LME”) aluminium price in the first half of 2017 by 21.8% to an average of USD1,880 per tonne as compared to USD1,543 per tonne in the first half of 2016 as well as an increase in volumes of primary aluminium and alloys sales by 3.8% between the same periods resulted in the growth of RUSAL revenue in the first half of 2017 by 22.3% to USD4,764 million as compared to USD3,896 million for the same period in 2016.

  • Revenue in the second quarter of 2017 increased by 7.4% to USD2,467 million, as compared to USD2,297 million for the first quarter of 2017, following the slight improvement in the LME aluminium price and increase in the share of value added products (“VAP”) in total aluminium sales to 49.2% in the second quarter of 2017 in comparison with 44.3% in the previous quarter.

  • Despite an increase in cost per tonne, the Company’s focus on efficiency and cost reduction initiatives resulted in Adjusted EBITDA of USD510 million in the second quarter of 2017 as compared with USD475 million for the preceding quarter. Aluminium segment cost per tonne increased by 5.9% to USD1,497 in the second quarter of 2017 in comparison with USD1,414 in the first quarter of 2017 as a result of the increase in key raw material costs and transportation tariffs as well as continuous appreciation of Russian Ruble by 2.9% as compared to the previous quarter.

  • RUSAL achieved Adjusted Net Profit and Recurring Net Profit of USD465 million and USD686 million, respectively, for the first half of 2017, as compared to USD67 million and USD425 million for the first half of 2016.

  • During the first 6 months of the year, the Company successfully tapped global capital markets through a number of refinancing transactions including the following: (1) the debut global offering of Eurobonds with principal amount of USD600 million, tenor of 5 years and coupon rate of 5.125% per annum, (2) Panda Bonds debut tranche for the amount of RMB1 billion with tenor of 2+1 years and coupon rate of 5.5% per annum offered to investors in Mainland China, (3) the second offering of Eurobonds with principal amount of USD500 million, with tenor of 6 years, coupon rate of 5.3% per annum.

  • Furthermore, the Company entered into a new syndicated Pre-Export Finance Term Facility Agreement (“New PXF”) for the amount of USD1.7 billion, with interest rate of 3M LIBOR+3% per annum and maturity of 5 years (repayment to start in 2 years).

  • The Company has agreed with Sberbank to extend final maturity under loans secured by Norilsk Nickel shares to 2024 and decrease interest margin from 4.75% to 3.75% and adjusting covenants broadly in line with the New PXF.

  • On the back of solid financial performance through 1H2017 and constructive outlook for aluminium for the rest of the year, the Board of directors approved an interim dividend of USD0.0197/share payable in October 2017 subject to compliance with applicable restrictions in debt agreements and relevant legal requirements.

 

Commenting on the second quarter and interim 2017 results, Vladislav Soloviev, CEO of RUSAL, said:

“During the first half of the year, the market environment was favorable for the aluminium industry. On the back of global economy growth, demand for aluminium since the beginning of the year was robust reaching 5.7% in 1H2017 YoY. On the supply side, the market outside of China remained in deficit, supporting the LME price. Such trends positively impacted RUSAL’s 1H2017 financial results.

RUSAL’s revenue in 2Q2017 was up by 24% YoY reaching USD2,467 million, while revenue for the first two quarters of 2017 was USD4,764 million compared to USD3,896 million in 1H2016. Apart from a favorable LME price environment, revenues strongly benefitted from stronger VAP sales in the reporting period. During 2Q2017, RUSAL reached a record of 49.2% share of VAP sales, thanks to the expansion of our product mix achieved as a result of continuous upgrades in relevant capacities. RUSAL is on target to further increase its VAP capacity in order to meet growing customer demand in various sectors from the automotive and electrical to construction and consumer sectors.

During the first half of the year RUSAL achieved impressive results in part of diversification of its liquidity sources and re-rating its credit portfolio through refinancing of some of the existing debt on more attractive terms.

Looking ahead to the second half of the year, our outlook for the aluminium industry is positive. Consumption of aluminium is set to remain healthy until the end of the year, increasing by 5.9% for the whole 2017. On the supply side, the spotlight is now on China following the recent announcements from Chinese regulators regarding capacity cuts, which may result in global market deficit widening to around 1 million tonnes in 2017.”

 

Financial and operating highlights

 

Three months ended
30 June

Three months ended 31 March

Six months ended

30 June

 

2017

2016

2017

2017

2016

Key operating data[1]

 

 

 

 

 

(‘000 tonnes)

 

 

 

 

 

Primary aluminium

921

919

910

1,831

1,835

Alumina

1,928

1,851

1,889

3,817

3,724

Bauxite (wet)

3,090

3,126

2,869

5,959

6,135

 

 

 

 

 

 

(‘000 tonnes)

 

 

 

 

 

Sales of primary aluminium and alloys

1,002

958

985

1,987

1,915

 

 

 

 

 

 

(USD per tonne)

 

 

 

 

 

Production cost per tonne in Aluminium segment[2]

1,497

1,334

1,414

1,456

1,330

Aluminium price per tonne quoted on the LME[3]

1,911

1,571

1,850

1,880

1,543

Average premiums over LME price[4]

174

162

153

163

167

Alumina price per tonne[5]

296

253

340

318

236

 

 

Key selected data from the consolidated interim condensed statement of income

 

(USD million)

 

 

 

 

 

Revenue

2,467

1,982

2,297

4,764

3,896

Cost of sales

(1,790)

(1,507)

(1,688)

(3,478)

(3,053)

Gross profit

677

475

609

1,286

843

Adjusted EBITDA

510

344

475

985

656

margin (% of revenue)

20.7%

17.4%

20.7%

20.7%

16.8%

Profit for the period

283

135

187

470

261

margin (% of revenue)

11.5%

6.8%

8.1%

9.9%

6.7%

Adjusted Net Profit for the period

202

40

263

465

67

margin (% of revenue)

8.2%

2.0%

11.4%

9.8%

1.7%

Recurring Net Profit

252

276

434

686

425

margin (% of revenue)

10.2%

13.9%

18.9%

14.4%

10.9%

 

Key selected data from the consolidated interim condensed statement of financial position

 

As at 30 June 2017

As at 31 December 2016

(USD million)

 

 

 

 

 

Total assets

14,946

14,452

Net Debt

8,335

8,421

 

Key selected data from the consolidated interim condensed statement of cash flows

 

Six months ended 30 June

 

2017

2016

(USD million)

 

 

Net cash generated from operating activities

569

597

Net cash generated from investing activities

8

1

Interest paid

(261)

(211)

 

Overview of trends in the aluminium industry

 

Highlights for the first half of 2017

  • RUSAL estimates that global aluminium demand grew by 5.7% year-on year (“YoY”) in the first half of 2017 (“1H2017”) to 31.7 million tonnes, as a result of strong demand in China, Europe, Asia ex-China, North America and India.

  • RUSAL forecasts that global aluminium demand will increase by 5.9% YoY to 63.3 million tonnes in 2017, driven by ex-China growth of 4.3% to 29.5 million tonnes and China growth of 7.4% to 33.8 million tonnes.

  • Based on CRU estimates, global aluminium demand ex-China rose by a strong 3.5% in 1H2017 YoY to 14.7 million tonnes while production (including eight non-reporting countries) increased by 2.3% YoY to 13.5 million tonnes. This left the ROW (rest of the world) aluminium market with approximately 1.2 million tonnes in deficit in 1H2017.

  • The reported inventories of aluminium have declined further to 3.1 million tonnes as at the end of June 2017 (7.5% down from inventories level at end of April 2017). The days of consumption decreased to 37 days from 110 days in 2015 and continued to decline at a steady rate.

  • Key for the remainder of 2017 is the announcement made by the Chinese regulators regarding capacity cut in winter that is expected to result in an annualized production loss of 1.2 million tonnes, according to RUSAL estimates. As a consequence of the above factors, the global aluminum market deficit is expected to grow to c.1 million tonnes in 2017 vs 0.7 million tonnes in 2016.

 

Aluminium demand

RUSAL forecasts that global aluminium demand grew by 5.7% in the first half of 2017 YoY to 31.7 million tonnes and will increase in 2017 by 5.9% YoY to 63.3 million tonnes, as global demand will rise (excluding China) by 4.3% to 29.5 million tonnes, while in China the aluminium demand will grow by 7.4% YoY to 33.8 million tonnes.

According to RUSAL’s estimates, demand in China grew by 7.5% in 1H2017 YoY to 17.0 million tonnes implying that the Chinese market was oversupplied by 1.2 million tonnes during this period. The Chinese economy continued to show strong growth through 1H2017. The official Purchasing Managers Index (PMI) reached 51.7 in June 2017 and Caixin showed 50.4 level. At the same time, industrial production grew by 7.6% in June YoY and GDP in 2Q2017 increased 6.9% YoY.

The world economy witnessed broad based growth in 1H2017, with an increase in business activity, particularly in the developed economies. The main drivers for demand for aluminium were from the increases in consumer spending particularly for cars, durable goods and also fixed asset investments. Global PMI remains strongly above the 52.6 level with EU and Japan leading the way with 57.4 and 52.4 respectively, and the US ISM index reached 52, a healthy level for 1H2017.

US housing starts are at levels not seen since before the Global Financial Crisis. This has underpinned the firm demand for extrusions and building sheet across the sector, in addition to supporting demand for consumer durables. Although automotive sales and production have posted small declines in the US in the first half of the year, these have been offset by sharp increases in Mexico, resulting in North American vehicle production slightly up overall in the first half. Interestingly, the intensity of use gains has resulted in double-digit growth in demand for automotive body sheet, leading to a net overall sectoral demand for aluminium that is well ahead of vehicle production growth. Overall, the North America aluminum demand is estimated at 3.4 million tonnes in 1H2017, up 2.0% YoY.

In Europe, Germany led strong increases in manufacturing and industrial production across the EU. A spike in production of capital goods was partially behind the rise in industrial output, supporting metals demand from the machinery and equipment sector. This investment in plant and equipment has also benefited non-residential construction, and this is reflected in elevated Euro area construction output and associated demand for aluminium architectural sections of all sizes. This supported an accelerated extrusions production growth of 2.4% in 2Q2017, according to CRU. Vehicle production has softened in Europe this year but increased aluminum content per vehicle, driven by need to lightweight, is offsetting this, resulting in an increased demand from the sector. This helped to drive aluminium rolled products shipments, resulting in a 3.3% increase in 2Q2017 in Europe, according to CRU. The net effect of these increases in demand across Europe (incl. Turkey excl. Russia) is 2.8% YoY to 4.8 million tonnes in 1H2017.

Looking at ex-China Asian markets, Japan enjoyed a strong recovery in the first half of 2017. Industrial production rose by 6.8% in May, while manufacturing PMI at 52.4 in June remains comfortably in expansionary territory. This is underpinning continued growth in semis production, with domestic rolled products and extrusions shipments climbing an estimated 0.6% and 3.6% respectively, in the first half of 2017.

Elsewhere in the region, South Korea is recovering from the weakness in the final quarter of 2016, with PMI back above the key 50 threshold. The combined strength in Asia-ex India and China resulted in demand accelerating from the run rate of last year, to reach 3.2 million tonnes, representing a year-on-year expansion of 4.1%. Another major engine of growth in Asia, i.e. India, is also comfortably in expansion mode to enable demand growth of 7.3% to 1.1 million tonnes in 1H2017.

 

Aluminium supply

RUSAL estimates that global supply in 1H2017 was up by 11.5% YoY to 31.8 million tonnes, leaving the aluminum market roughly balanced.

Global aluminum supply in 2017 will grow by 5.3% to 62.4 million tonnes and will be affected by a tight supply in China due to the new antipollution plan and the closure of illegal capacities. Chinese supply will grow by 8.3% to 35 million tonnes. Ex-China supply will grow by 1.8% to 27.4 million tonnes.

When considering the expected curtailments of the so-called “illegal capacities”, RUSAL expects that the Chinese aluminium market balance will improve in 2H2017 leading to a much tighter market situation in 2018. As of 30 June 2017, according to SMM, around 1.8 million tonnes of illegal operating capacities and 2 million tonnes of projects under construction have been closed and RUSAL expects another 2-3 million tonnes of operating capacities will be closed by the end of this year.

In addition, the continued aluminium cost push in China, mainly driven by a surge in carbon materials prices, provides further support for growth of domestic aluminum prices amid the backdrop of the above mentioned expected winter cuts. Thus, even historically low cost producing regions such as Xinjiang and Inner-Mongolia experienced growth of all-inclusive production costs, including transportation, to RMB13,000 per tonne as at the end of June 2017 as compared to their level of RMB12,400 per tonne on average through 2016.

 

Financial overview

 

Revenue

 

Six months ended

30 June 2017

Six months ended

30 June 2016

 

USD

million

‘000 t

Average sales
price (USD/t)

USD

million

‘000 t

Average sales price (USD/t)

 

 

 

 

 

 

 

Sales of primary aluminium and alloys

4,005

1,987

2,016

3,234

1,915

1,689

Sales of alumina

364

1,024

355

301

1,131

266

Sales of foil and other aluminium products

141

 

 

113

 

 

Other revenue[6]

254

 

 

248

 

 

Total revenue

4,764

 

 

3,896

 

 

 

 

Three months ended

30 June 2017

Three months ended

31 March 2017

 

USD

million

‘000 t

Average sales
price (USD/t)

USD

million

‘000 t

Average sales price (USD/t)

 

 

 

 

 

 

 

Sales of primary aluminium and alloys

2,085

1,002

2,081

1,920

985

1,949

Sales of alumina

175

515

340

189

509

371

Sales of foil and other aluminium products

82

 

 

59

 

 

Other revenue

125

 

 

129

 

 

Total revenue

2,467

 

 

2,297

 

 

 

Total revenue increased by USD868 million, or 22.3% to USD4,764 million in the first six months of 2017 from USD3,896 million in the corresponding period of 2016. The increase in total revenue was mainly due to the growth of sales of primary aluminium and alloys, which accounted for 84.2% and 83.0% of RUSAL’s revenue for the first six months of 2017 and 2016, respectively.

Revenue from sales of primary aluminium and alloys increased by USD771 million, or 23.8% to USD4,005 million in the first six months of 2017, from USD3,234 million for the corresponding period in 2016, primarily due to a 19.4% increase in the weighted-average realized aluminium price per tonne driven by an increase in the LME aluminium price (to an average of USD1,880 per tonne in the first six months of 2017 from USD1,543 per tonne in the same period of 2016), as well as an increase in the sales volumes by 3.8%, which was partially offset by a decrease in premiums above the LME prices in the different geographical segments (to an average of USD163 per tonne from USD167 per tonne in the first six months of 2017 and 2016, respectively).

The Company’s revenue from sales of primary aluminium and alloys increased by 8.6% to USD2,085 million in the second quarter of 2017 from USD1,920 million in the first quarter of 2017. This growth resulted primarily due to a 6.8% increase in the weighted average realised aluminium price per tonne, which was driven by an increase in the LME aluminium price (to an average of USD1,911 per tonne in the second quarter of 2017 from USD1,850 per tonne in the first quarter of 2017) and an increase in the share of VAP in total aluminium sales to 49.2% in the second quarter of 2017 in comparison with 44.3% in the previous quarter.

Revenue from sales of alumina increased by 20.9% to USD364 million in the first six months of 2017 from USD301 million in the corresponding period of 2016 primarily due to an increase in the average sales price by 33.5%, which was partially offset by a decrease in the sales volumes by 9.5%.

Revenue from sales of foil and other aluminium products increased by USD28 million, or by 24.8%, to USD141 million in the first six months of 2017, as compared to USD113 million for the corresponding period in 2016, primarily due to a 19.4% increase in sales volumes of foil.

Revenue from other sales, including sales of bauxite and energy services increased by 2.4% to USD254 million for the first six months of 2017 from USD248 million in the same period of 2016 due to an increase in sales of other materials.

The table below shows the breakdown of the Group’s revenues by geographic segment for the six months ended 30 June 2017 and 30 June 2016, showing the percentage of revenue attributable to each region:

 

 

Six months ended 30 June

 

2017

 

2016

 

USD million

% of Revenue

USD million

% of Revenue

Europe

1,989

42%

1,783

46%

CIS

1,128

24%

925

24%

Asia

797

17%

610

16%

America

833

17%

559

14%

Other

17

-

19

-

Total

4,764

100%

3,896

100%


Note: Data based on location of customers, which may differ from the location of final consumers.

 

Cost of sales

The following table shows the breakdown of RUSAL’s cost of sales for the six months ended 30 June 2017 and 30 June 2016 and for the three months ended 30 June 2017 and 31 March 2017:

 

 

Six months ended 30 June

Change, year-on- year

Share of costs,%

(Six months ended 30 June 2017)

Three months ended

Change, quarter- on-quarter

Share of costs,%

(Three months ended 30 June 2017)

 

2017

2016

30
June 2017

31 March 2017

(USD million)

 

 

 

 

 

 

 

 

Cost of alumina

475

458

3.7%

13.7%

245

230

6.5%

13.7%

Cost of bauxite

180

136

32.4%

5.2%

94

86

9.3%

5.3%

Cost of other raw materials and other costs

1,136

925

22.8%

32.7%

556

580

(4.1%)

31.1%

Purchases of primary aluminium from JV

132

112

17.9%

3.8%

69

63

9.5%

3.9%

Energy costs

1,049

795

31.9%

30.2%

514

535

(3.9%)

28.7%

Depreciation and amortisation

234

221

5.9%

6.7%

125

109

14.7%

7.0%

Personnel expenses

286

257

11.3%

8.1%

146

140

4.3%

8.2%

Repairs and maintenance

29

27

7.4%

0.8%

18

11

63.6%

1.0%

Net change in provisions for inventories

(3)

(3)

0.0%

0.0%

(3)

-

100.0%

(0.2%)

Change in finished goods

(40)

125

NA

(1.2%)

26

(66)

NA

1.3%

Total cost of sales

3,478

3,053

13.9%

100.0%

1,790

1,688

6.0%

100.0%


Total cost of sales increased by USD425 million, or 13.9%, to USD3,478 million for the first six months of 2017, as compared to USD3,053 million for the corresponding period of 2016. The increase was primarily driven by the increase in volumes of primary aluminium and alloys sold as well as significant increase in electricity prices, railway transportation tariffs and other raw material costs in Russian Ruble terms in the first six months of 2017.

Cost of alumina increased to USD475 million in the first six months of 2017 by USD17 million from USD458 million as compared to the same period of 2016 as a result of a 14.3% increase in alumina purchase price as well as an increase in the aggregate volumes of primary aluminium and alloys sales by 3.8% (or 72 thousand tonnes).

Cost of bauxite increased by 32.4% in the first six months of 2017 compared to the same period of the previous year, primarily as a result of an increase in purchase volume and a slight increase in the purchase prices.

Cost of raw materials (other than alumina and bauxite) and other costs increased by 22.8% in the first six months of 2017 compared to the same period of previous year, due to a rising raw materials purchase price (prices for raw pitch coke increased by 88.2%, raw petroleum coke by 15.0%, pitch by 50.0%, soda by 50.1%).

Energy costs increased by 31.9% in the first half of 2017 compared to the same period of 2016, primarily due to 21.2% appreciation of Russian Ruble against US dollar between the comparable periods. Increase was also a result of change in terms of long-term electricity contracts and overall market price growth.

The finished goods mainly consist of primary aluminium and alloys (approximately 92%). The dynamic of change between the reporting periods was primarily driven by the fluctuations of primary aluminium and alloys physical inventory between the reporting dates: 7.0% increase for the first half of 2017 as compared to 12.0% decrease for the same period of 2016.

 

Results from operations and Adjusted EBITDA

 

Six months ended

30 June

Change, year-on-year

 

 

 

 

 

2017

2016

 

(USD million)

 

 

 

Reconciliation of Adjusted EBITDA

 

 

 

Results from operating activities

660

368

79.3%

Add:

 

 

 

Amortisation and depreciation

243

231

5.2%

Impairment of non-current assets

81

55

47.3%

Loss on disposal of property, plant and equipment

1

2

(50.0%)

Adjusted EBITDA

985

656

50.2%


Adjusted EBITDA, defined as results from operating activities adjusted for amortisation and depreciation, impairment charges and loss on disposal of property, plant and equipment, increased to USD985 million during the first six months of 2017, as compared to USD656 million for the corresponding period of 2016. The factors that contributed to the increase in Adjusted EBITDA margin were the same that influenced the operating results of the Company.

Results from operating activities increased in the six months of 2017 by 79.3% to USD660 million, as compared to USD368 million for the corresponding period of 2016, representing operating margins of 13.9% and 9.4%, respectively.

 

Profit for the period

As a result of the above, the Company recorded a profit of USD470 million for the first half of 2017, compared to USD261 million for the same period of 2016.

 

Adjusted and Recurring Net Profit

 

Six months ended

30 June

Change, year-on-year

 

2017

2016

 

(USD million)

 

 

 

Reconciliation of Adjusted Net Profit

 

 

 

Profit for the period

470

261

80.1%

Adjusted for:

 

 

 

Share of profits and other gains and losses attributable to Norilsk Nickel, net of tax effect, with

(221)

(358)

(38.3%)

Change in the fair value of derivative financial liabilities, net of tax (20.0%)

135

109

23.9%

Impairment of non-current assets, net of tax

81

55

47.3%

 

 

 

 

Adjusted Net Profit

465

67

594.0%

 

 

 

 

Add back:

 

 

 

Share of profits of Norilsk Nickel, net of tax

221

358

(38.3%)

 

 

 

 

Recurring Net Profit

686

425

61.4%


Adjusted Net Profit for any period is defined as the Net Profit adjusted for the net effect of the Company’s investment in Norilsk Nickel, the net effect of derivative financial instruments and the net effect of impairment of non-current assets. Recurring Net Profit for any period is defined as Adjusted Net Profit plus the Company’s net effective share in Norilsk Nickel’s results.

 

Segment reporting

The Group has four reportable segments, as described in the Annual Report, which are the Group’s strategic business units: Aluminium, Alumina, Energy and Mining and Metals. These business units are managed separately and results of their operations are reviewed by the CEO on a regular basis.

 

The core segments are Aluminium[7] and Alumina.

 

Six months ended 

30 June

 

 

2017

2016

 

Aluminium

Alumina

Aluminium

Alumina

(USD million)

 

 

 

 

Segment revenue

 

 

 

 

kt

1,879

3,795

1,948

3,987

USD million

3,783

1,102

3,286

954

Segment result

870

42

509

(27)

Segment EBITDA[8]

1,048

90

697

12

Segment EBITDA margin

27.7%

8.2%

21.2%

1.3%

 

 

 

 

 

Capital expenditure

139

102

126

55



In the first half of 2017 and 2016, respectively, segment result margins (calculated as the percentage of segment result to total segment revenue) from continuing operations were positive 23.0% and 15.5% for the aluminium segment, and positive 3.8% and negative 2.8% for the alumina segment. Key drivers for the increase in margin in the aluminium segment are disclosed in “Cost of sales” and “Results from operations and Adjusted EBITDA” above. Detailed segment reporting can be found in the consolidated interim condensed financial information included in the Interim Report.

 

Forward-looking statements

This press-release contains statements about future events, projections, forecasts and expectations that are forward-looking statements. Any statement in this announcement that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements  expressed or implied by such forward-looking statements. These risk and uncertainties include those discussed or identified in the prospectus for UC RUSAL. In addition, past performance of UC RUSAL cannot be relied on as a guide to future performance. UC RUSAL makes no representation on the accuracy and completeness of any of the forward-looking statements, and, except as may be required by applicable law, assumes no obligations to supplement, amend, update or revise any such statements or any opinion expressed to reflect actual results, changes in assumptions or in UC RUSAL’s expectations, or changes in factors affecting these statements. Accordingly, any reliance you place on such forward-looking statements will be at your sole risk.



[1] Figures based on total respective attributable output.


[2] For any period, “Production cost per tonne in Aluminium segment” is calculated as aluminium segment revenue (excluding sales of third parties’ metal and other products sales) less aluminium segment results less amortisation and depreciation (excluding margin on sales of third parties’ metal and alumina intersegment margin) divided by sales volume of the aluminium segment (excluding volumes of third parties’ aluminium sold).


[3] Aluminium price per tonne quoted on the LME represents the average of the daily closing official LME prices for each period.


[4] Average premiums over LME realized by the company based on management accounts.


[5] The average alumina price per tonne provided in this table is based on the daily closing spot prices of alumina according to Non-ferrous Metal Alumina Index FOB Australia USD per tonne.


[6] Including energy and bauxite.


[7] Starting 2017 the Company presents two metrics for Aluminim segment: (1) total segment information and (2) information on own aluminum produced. The difference between two metrics relates to the intersegment margins (primarily – between the alumina and Aluminium), margin on sales of third parties metal and other non-production costs and expenses. Segment information for the six months ended 30 June 2017 presented above relates to the own aluminium produced, that is different from relevant segment information presented in the Company’s consolidated interim condensed financial information for six months ended 30 June 2017.


[8] Segment EBITDA for any period is defined as segment result adjusted for amortization and depreciation for the segment.



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