Nov. 12 (Bloomberg) -- United Co. Rusal’s quarterly loss narrowed from the previous three months after the largest aluminum producer shut unprofitable plants and cut costs.
The net loss shrank to $172 million in the third quarter from $458 million in the second, Moscow-based Rusal said today in a statement. Adjusted earnings before interest, taxes, depreciation and amortization reached $130 million, in line with the $129.8 million average of six analyst estimates compiled by Bloomberg. The year-earlier loss was $118 million.
Slowing global economic growth has eroded demand for aluminum, dragging down prices for the metal used in cars, aircraft and drink cans. Supply of the metal is outpacing demand for a seventh consecutive year, Morgan Stanley estimated. Rusal expects aluminum consumption to grow on average 6 percent annually in 2013 through 2015, it said in the presentation.
“Conditions within the aluminum market remain challenging, and there is still a long way to go before we see a marked improvement,” Chief Executive Officer Oleg Deripaska said in the statement. In the fourth quarter, “the Western aluminum market is expected to move to a production balance deficit,” he said.
The global aluminum market, excluding China, will be in deficit by 1.3 million metric tons in both 2014 and 2015, supporting aluminum prices, Rusal said today.
Rusal sales dropped 3.5 percent from the second quarter to $2.4 billion. Analysts compare quarter-on-quarter results rather than year-earlier figures to track performance amid market volatility.
Rusal shares, down 54 percent this year, fell 1.32 percent to HK$2.25 by the close in Hong Kong.
Aluminum traded at an average $1,828 a ton in the quarter, after sinking to $1,765 a ton at the end of June, the lowest price in four years.
The company raised its estimate for China’s aluminum consumption growth this year to 10 percent from 9.5 percent, according to the statement. Global use of the material is expected to reach 51.2 million tons this year, while production is estimated to be 50.9 million tons, Rusal said.
Rusal intends to reduce production by 324,733 tons in 2013 from 2012, and by 647,504 tons in 2014, the company said last month. Output fell 5.8 percent to 2.95 million tons in the first nine months of the year, today’s filing shows.
“Production cuts will have a positive impact on the fourth-quarter cost performance,” George Buzhenitsa, a Deutsche Bank analyst in Moscow, said in a report after the earnings announcement.
Rusal reduced its net debt by 9 percent to $9.88 billion as of June 30, it said today. The company is in talks with banks on refinancing a portion of its debt, deputy CEO Oleg Mukhamedshin told analysts on a conference call.
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