Page 159 - RusRPTSept22

9.2.14 Mines and Minerals - other
Rusal provided robust earnings thanks to aluminium prices growth in 1H22 and the lack of harsh sanctions against the company, the company said on August 11. Aluminium output was flat h/h and y/y at 1.9mt. Revenue rose 9% h/h and 31% y/y to c$7.1bn. Adjusted EBITDA gained 15% h/h and 37% y/y to c$1.8bn. In the meantime, adjusted net income grew 22% h/h and 38% y/y to $981mn. “The company has been forced to rebuild its supply chains. Investment projects and production facilities modernization programs may be delayed due to difficulties with the supply of equipment amid geopolitical tensions,” BCS GM said in a note.
According to Rusal's IFRS reporting for 1H22, the company increased its stake in RusHydro to 9.2% in the period (40.414bn shares), up from 7.2% at end-2021. It paid $88mn to acquire the shares (R6.46bn based on the average $/RUB rate over 1H22). This implies an average price of around R0.72/share (the current share price is R0.80). The current value of Rusal's total stake in RusHydro can be estimated at R32.3bn. The news may help explain RusHydro's sharp outperformance in 1H22. While the broad MOEX index and the MOEX utilities Index dropped 42% and 26% over the period, RusHydro shares gained 6%. We think Rusal's investment in RusHydro serves strategic purposes and also benefits Rusal's portfolio. From a strategic perspective, Rusal could exchange the shares for RusHydro's stake in the Rusal-RusHydro 50/50 JV Boguchansky Energy and Metals Complex, which could allow the company to consolidate BEMO's results (in 2021, RusHydro's 50% stake in the JV contributed R6bn to its bottom line) and increase its production of
159 RUSSIA Country Report September 2022 www.intellinews.com