(Updates with chairman’s comment in fourth paragraph.)
Aug. 19 (Bloomberg) -- United Co. Rusal, the world’s largest aluminum producer, will further reduce production this year after reporting a second-quarter loss.
Rusal posted a net loss of $458 million in the three months ended June 30, compared with net income of $19 million in the first quarter, the Moscow-based company said today in a statement to the Hong Kong exchange. Analysts compare with the prior quarter rather than year-earlier results 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, following the continued decline in aluminum prices, Rusal said today. 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 today in the statement.
“There is no doubt that the aluminum industry now faces a looming crisis of over supply,” Chairman Matthias Warnig said in a statement. “The whole industry needs time to produce unconventional solutions to overcome this structural crisis.”
Rusal fell 3.3 percent to HK$2.36 as of 11:01 a.m. in Hong Kong trading, the lowest since Jan. 27, 2010.
“Whilst demand remains strong for aluminum, the sustainability of our industry relies on industry players to taking a uniformed and disciplined approach towards inefficient and unprofitable production,” Deripaska said in the statement. Rusal plans to accelerate aluminum output cuts in the second half, he said, adding that it had cut production by about 100,000 tons, or 4.5 percent, in the first half.
The second-quarter loss includes a $234 million writedown from selling part of its stake in OAO GMK Norilsk Nickel in April, Rusal said today. The sales proceeds of $620 million were used to repay debt, the company said.
Second-quarter adjusted earnings before interest, taxes, depreciation and amortization fell 29 percent from the first quarter to $174 million, according to the statement. Revenue slid 6 percent from the previous quarter to $2.5 billion.
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.
Aluminum averaged $1,871 a ton on the London Metal Exchange in the quarter, down 8 percent from the previous three months.
--Editors: Andrew Hobbs, Madelene Pearson