Rusal to cut aluminium output after lower prices, higher costs eat into interim earnings

Russian aluminium giant Rusal said Monday it would cut production after seeing its net profit fall 95.25 per cent in the first six months of the year, hit by falling prices and rising costs.

The Hong Kong-listed company said net profit for the six months ending June 30 was US$37 million, from US$779 million a year earlier. Revenue fell 9.66 per cent to US$6.32 billion.

The world’s biggest aluminum producer said it expects to cut up to 150,000 tons of aluminum production capacity by the end of 2012 to improve efficiency.

“During the first half of 2012, continuing financial problems in the eurozone and a slower-than-expected growth in emerging economies resulted in a further weakening of global economic recovery,” Chief Executive Oleg Deripaska said in a statement.

“These challenging market conditions put a significant pressure on the aluminium industry, especially in the second quarter of 2012, leading to a sharp downturn in the price of aluminium,” he added.

The aluminium price has slumped to close to its lowest level for three years on the London Metal Exchange, hitting a low of $1,810 a tonne at the end of June.

“The market conditions have warranted the company to introduce a series of cost-cutting measures to sustain its profitability,” Deripaska said, adding these would be helped by the weaker ruble.