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Falling aluminium prices hit Rusal earnings
by Staff Writers
Hong Kong (AFP) Nov 12, 2012

Russian aluminium giant Rusal posted a third-quarter loss of $118 million on Monday, blaming Europe's economic turmoil and China's slowdown for sinking global demand for the metal.

"The growth in the global demand for aluminium moderated in the third quarter of 2012 due to slower economic activity in China and the persistent impact of the financial crisis in Europe, as well as seasonality factors," the company said.

The world's largest aluminium producer said its net loss for the three months to September 30 was $118 million compared with a net profit of $432 million a year earlier. Revenue fell 19 percent to $2.56 billion from $3.16 billion.

An "outbreak of unrest in China" over a territorial dispute with Japan had "brought about a partial retreat by Japanese carmakers" from the huge Chinese market, contributing to weaker demand.

Meanwhile new European passenger car registrations fell for a 12th straight month in September, with demand for new cars dropping 7.6 percent this year compared to the same period last year.

Chinese government subsidies were encouraging Chinese smelters to boost production despite slowing global demand for the metal, contributing to oversupply, Rusal said.

"The operating profitability and underlying results of the company in the third quarter of 2012 were seriously hit" by falling prices for the metal used in everything from cans to cars, chief executive Oleg Deripaska said in a statement.

The company told the Hong Kong stock exchange the outlook was uncertain but aluminium consumption should improve in the fourth quarter with an uptick in Chinese growth and rising demand from US carmakers.

Rusal shares closed up 0.68 percent at HK$4.47, as the benchmark Hang Seng Index rose 0.21 percent.

Rusal last month appointed Matthias Warnig, Russian President Vladimir Putin's old KGB friend and a former member of East Germany's Stasi security service, as its chairman.

Warnig replaces interim chief Barry Chung, who took over after the shock resignation of powerful chair Viktor Vekselberg.

Vekselberg at the time said Rusal was in "deep crisis" amid internal conflict over how to handle more than $10 billion of debt incurred in the 2008-2009 financial crisis.

The appointment of Warnig should make it easier for Rusal to maintain close terms with the Kremlin at a point when it is trying to stave off disintegration.

Warnig has long been reputed to have special personal ties to Putin despite his refusal to go into the subject in any great detail.

Rusal, which listed in Hong Kong in January 2010, in August posted a net interim profit of $37 million, from $779 million a year earlier.


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