U.S. sanctions will cause extended damage to the business of Russia’s top aluminum producer Rusal, sending its shares down more than 7 percent despite the company reporting a 20 percent jump in first-quarter core profit, the company warned on Friday.
According to Reuters, Rusal said even though longer-term effects of the sanctions and the threat of additional future sanctions are difficult to determine, 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,” the company said.
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”.
The measures, which effectively isolated the world’s number two producer from global markets, caused an unprecedented turmoil, sending aluminum prices to a three-year-high, before the U.S. Treasury Department softened the sanctions, giving investors more time to disengage from Rusal.
Rusal’s Hong Kong-listed shares were down 7.4 percent by 0759 GMT, reducing its market capitalization to $4.2 billion, according to ThomsonReuters data. The company has lost about 60 percent of its value since the sanctions were announced on April 6.
Rusal had earlier reported that adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 20.4 percent year on year to $572 million in the three months to March 31 on revenue up 19.5 percent at $2.7 billion.
Meanwhile, London aluminum prices fell sharply for a second session on Friday as technical selling continued to affect the light metal despite plunging London Metal Exchange (LME) inventories.
