Rusal reports 92% drop in 2011 net income

The world’s biggest aluminum producer Rusal on Monday reported a 91.7 percent drop in net profit for 2011 as it wrestles with a management dispute among its Russian shareholders. The Moscow-based firm attributed the drop in profit to $237 million (189 million euros) to a write-down of its holding in the Norilsk Nickel miner and a steep drop in aluminum prices last year. The company posted a net loss of $974 million for the fourth quarter of 2011 compared with a net profit of US$1.45 billion the previous year. “In spite of the deterioration of the global economy during the second half of 2011, on-going cost pressures across the whole commodities sector and a particularly challenging fourth quarter in 2011, UC RUSAL delivered a solid financial performance during the year,” said chief executive Oleg Deripaska. “While the current global economic volatility, in conjunction with excessive stock levels, will continue to put pressure on aluminium prices in the near term, global aluminium demand remains well above 2009 recession levels and we anticipate that the rising influence of developing countries will ensure demand remains robust throughout 2012.” The disappointing results were largely expected and the company’s shares were up nearly four percent in late Hong Kong trading after dropping nearly 14 percent the previous week. The firm was rocked by last week’s sudden resignation of its board chairman Viktor Vekselberg and his subsequent threat to sue Rusal for alleging that he failed to perform his assigned duties on the board. Vekselberg warned in his resignation statement that Rusal was facing a “deep crisis” and subsequently criticised the company’s decision to appoint Hong Kong Mercantile Exchange head Barry Cheung as his replacement. He had earlier been pushing Deripaska to sell the Norilsk holding to help cover a Rusal debt that was estimated at $11 billion at the end of last year.