RUSAL, the world’s third largest aluminium producer, reported a sharper than expected drop in second-quarter profits after rising costs and a weaker US Dollar outweighed price rises and increased production at the company.
The Russia-based company, controlled by billionaire Oleg Deripaska (pictured), said its second-quarter net profit fell 70 per cent to $339m (£206.8m) from $1.12bn a year earlier.
Revenue was in line with analyst forecasts at $3.33bn, up 11 per cent on the year, mainly due to increased prices.
However, a stronger rouble, the Russian currency, has been pressuring Rusal’s margins and bottom line as most of its aluminium sales are in US dollars.
Rusal’s profits also fell after returns from its 25 per cent holding in Norilsk Nickel fell from $292m to $210m in the year to 30 June.
Russian miner Norilsk made an offer last week to buy back 15 per cent of its stock in the company for $8.75bn.
The company said in a statement it expects to see the demand for aluminium to remain strong throughout the rest of this year, largely due to demand from emerging markets like Brazil and China. Japanese consumption is expected to recover in the fourth quarter of 2011.
Shares in the Hong-Kong listed company rose 3.6 per cent to $8.29 yesterday recovering slightly from the 33 per cent drop in share value since the beginning of the year.