Rusal increased revenue despite U.S. sanctions

Russian aluminum giant Rusal on April 11 warned of expected harm to its business from U.S. sanctions, sending its shares down more than 7% despite the company reporting a 20% jump in first-quarter core profit.

Washington last month announced sanctions on Russian billionaire Oleg Deripaska and several companies in which he is a large shareholder, including Rusal, En+ Group and GAZ Group, in response to what the United States said were Russia’s «malign activities».

Though Rusal said longer-term effects of the sanctions and the threat of additional future sanctions are difficult to determine, the company said it warned that the impact is highly likely to be “materially adverse”.

“In present circumstances, any forecast or outlook made or previously made should be deemed unreliable and may become irrelevant due to ongoing developments on the market at this period of time,” it said.

Rusal’s Hong Kong-listed shares were down 7.4% by 0759 GMT, reducing its market capitalization to $4.2 billion, according to the ThomsonReuters data. The company has lost about 60% of its value since the sanctions were announced on April 6.

The company had earlier reported that adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 20.4% year on year to $572 million in the three months to March 31 on revenue up 19.5%at $2.7 billion.

Profit was bolstered by a 16.7% rise in the LME aluminum price over the period, while Rusal’s aluminum output increased 2.3% year on year to 931,000 tonnes.

Net profit including returns from Rusal 28% share in Norilsk Nickel rose 22.4% to $531 million.

Rusal’s net debt slightly rose to $7.89 billion at the end of March from $7.65 billion at the end of December and net cash flow dropped 46% year on year to $116 million.

The U.S. Treasury last month gave investors an additional month to divest or transfer their holdings in sanctions targets Rusal, En+ Group and GAZ.

The extension followed an earlier U.S. Treasury announcement that it would give American companies until October 23 instead of June 5 to wind down business with Rusal.

The company plans to overhaul its board and management in an effort to persuade the United States to lift the sanctions, which have led customers to stop buying its aluminum, sources close to the company told Reuters last month.

Deripaska has agreed in principle to reduce his stake in En+ Group, which holds his 48% stake in Rusal, after the United States said it could remove Rusal from the sanctions list if he ceded control.