RUSAL 2011 net dives 92 percent on Norilsk valuation

HONG KONG (Reuters) - RUSAL, the world's top aluminum maker, posted a 92 percent drop in yearly net profit, hit by a write-down in the value of its stake in miner Norilsk Nickel as it grapples with a damaging row over its future between two Russian billionaires.

Despite the profit plunge, RUSAL <0486.HK> said its adjusted net profit, which it described as the major indicator of its core business, rose 25 percent to $987 million from $792 million in 2010 due to lower debt costs.

It forecast near-term pressure on aluminum prices, which fell sharply in late 2011, due to global volatility and excessive stock, but added that growth in developing countries would keep demand robust through 2012.

"The bottom line looks pretty low but its underlying performance is in line with market expectations," said Robin Tsui, an analyst at BOC International.

"As an aluminum producer, its 2011 results were pretty good when compared with those loss-making companies," he added.

RUSAL's shares added 2.5 percent in Hong Kong after tumbling 14 percent last week as its former chairman and Russian oligarch Viktor Vekselberg said the company was in "deep crisis".

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RUSAL results graphic: http://link.reuters.com/fep27s

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The company on Sunday threatened to sue Vekselberg, saying his comments had damaged its reputation and shareholder value, and named Hong Kong Mercantile Exchange chairman Barry Cheung as its new chairman.

Vekselberg, who with a partner holds a 15.8 percent stake in the firm, quit as chairman last week in a row over strategy with Oleg Deripaska, the main shareholder and another Russian billionaire.

The boardroom row has highlighted a bitter dispute over how to relieve the company of an $11 billion debt burden inherited from its $14 billion purchase of a quarter of Norilsk Nickel at the top of the market in 2008. Vekselberg wants to sell the stake back to Norilsk but has been consistently overruled by Deripaska.

However, RUSAL faces no significant principal debt repayments until 2016, and analysts believe Deripaska, who holds a 47.4 percent stake in the company, is unlikely to part with the Norilsk stake.

"We do not have any scheduled repayments in 2012," Deputy CEO Oleg Mukhamedshin said in a conference call after the company's results. "The company is comfortable with existing debt requirements."

The company's priority was to continue reducing debt, but it was not currently considering a refinancing, Mukhamedshin said.

RUSAL, also listed in Paris, posted a net profit of $237 million for 2011 against $2.87 billion a year earlier, lagging an average forecast of $1.91 billion from 22 analysts polled by Thomson Reuters I/B/E/S. The results included a share of profit in Norilsk Nickel, the re-evaluation of its energy supply contracts and other non-cash items.

Fourth quarter earnings before interest, tax, depreciation and amortization fell 46 percent to $382 million from $708 million.

Its aluminum output edged up one percent to 4.12 million metric tonnes (4.54 million tons) in 2011 and output of alumina, the key material for the production of the lightweight metal, rose 4 percent to 8.15 million metric tonnes.

RUSAL's shares, correlated to the aluminum price, are trading around half their 2010 Hong Kong IPO price of HK$10.80. The Hang Seng Index <.HSI> was up 1.1 percent in the same period.

Many high cost producers suffered losses in the last quarter of 2011 as increasing uncertainties in the global economy depressed demand while production continued to be in surplus.

RUSAL's competitor in China, Aluminum Corp of China Ltd (Chalco) <2600.HK> <601600.SS>, on Friday posted a bigger-than-expected quarterly net loss of 729.6 million yuan ($115 million)and warned of losses in the first quarter of 2012.

However, RUSAL has forecast 6-8 percent of global capacity will be shut in the first half of 2012 and that could help to make the market be more balanced this year, it said.

Global consumption of aluminum, widely used in aerospace, construction, auto, packaging and other industries, would rise 7 percent this year with the largest growth from China and India while Europe is likely to be flat, RUSAL said.

(Reporting by Alison Leung; Editing by Richard Pullin)