Russia: Rising costs reduce Rusal's H12023 profit by 75%

Russian aluminium giant, Rusal, has released its H1 2023 results, revealing its performance and strategic direction in the face of complex economic challenges. Operating across four key segments - aluminium, alumina, energy, and mining and metals - Rusal's aluminium and alumina units are vital to its operations.

Accounting for 5.6% of global aluminium production in 2022, Rusal produced 4.5% of global alumina, with nearly half of its output comprising value-added products. Particularly noteworthy is Rusal's low-carbon aluminium with a carbon footprint five times lower than the industry average.

However, H1 2023 brought formidable challenges including market pressures, external constraints, and a significant drop in aluminium prices. Rusal responded by enhancing raw material self-sufficiency, revising export strategies, and promoting sustainable development initiatives.

Financially, total revenue contracted 16.9% to $5.945 billion for H1 2023, attributed to a 24.2% plummet in aluminium prices on the London Metal Exchange (LME). Adjusted EBITDA contracted 84.0%, reaching $290 million, and adjusted net profit dropped 54.3% to $315 million, largely due to increased costs.

Despite challenges, Rusal exhibited resourceful management. A positive shift in working capital led to a net cash flow of $236 million for H1 2023 - a significant improvement from the previous year.

In the global market, base metals prices trended downward in H1 2023. Global primary aluminium demand dipped by 1.5%, while China saw 1.5% growth and the rest of the world faced a 5.5% decline. Rusal remains committed to sustainability, operational resilience, and strategic adaptation. By optimising production facilities and addressing cost dynamics, the company aims to navigate the complexities of the global aluminium market.

Note: This article has been published in accordance with an article exchange agreement between Alcircle and SteelMint.