Aug. 19 (Bloomberg) -- United Co. Rusal, the world’s largest aluminum producer, will extend output cuts this year after reporting a second-quarter loss.
Rusal posted a net loss of $458 million, compared with net income of $19 million in the first quarter, the Moscow-based company said today in a statement. Analysts compare results with the prior quarter rather than year-earlier figures to track performance amid market volatility.
The company plans to shutter 357,000 metric tons of uneconomic capacity in 2013, up from a March estimate of 300,000 tons, as prices decline, Rusal said today. It’s among aluminum producers to suspend plants after slowing economic growth in Asia and recessions in Europe curtailed demand for the metal.
Rusal may shift the start of output at the Boguchansk smelter in Siberia to 2014, First Deputy Chief Executive Officer Vladislav Soloviev said on a conference call. The plant, designed to produce an annual 588,000 tons, was previously scheduled to begin in the third quarter of this year.
Rusal closed at HK$2.46 in Hong Kong trading, up 0.8 percent, having earlier dropped as much as 4.9 percent.
A glut of aluminum on the market has made about a third of global production unprofitable on a cash basis, Chief Executive Officer Oleg Deripaska said in the statement. “Whilst demand remains strong for aluminum, the sustainability of our industry relies on industry players to take a uniformed and disciplined approach towards inefficient and unprofitable production.”
Rusal plans to accelerate output cuts in the second half, having cut production by about 100,000 tons, or 4.5 percent, in the first half.
“There is no doubt that the aluminum industry now faces a looming crisis of oversupply,” Chairman Matthias Warnig said. “The whole industry needs time to produce unconventional solutions to overcome this structural crisis.”
Aluminum averaged $1,871 a ton on the London Metal Exchange in the quarter, down 8 percent from the previous three months.
Rusal’s quarterly loss included a $234 million writedown that the company incurred after selling part of its stake in OAO GMK Norilsk Nickel in April. The proceeds of $620 million were used to repay debt, it said today.
The sale of 3.87 million Norilsk shares to billionaire Roman Abramovich’s Millhouse Capital LLC formed part of a settlement between Rusal and fellow Norilsk shareholder Vladimir Potanin to end a four-year feud over influence at the nickel producer.
Second-quarter adjusted earnings before interest, taxes, depreciation and amortization fell 29 percent from the first quarter to $174 million, according to today’s statement. Revenue slid 6 percent to $2.5 billion.
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