The Motley Fool’s readers have spoken, and I have heeded their cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first, and are generally deserving of praise from investors. For reference, here’s my previous selection.
This week, I’ll turn your attention overseas to the largest producer of aluminum in the world, RUSAL, and highlight why smart strategic planning and a big heart make CEO Oleg Deripaska an incredible CEO.
Kudos to you, Mr. Deripaska
Many investors often wrongly assume that U.S.-based Alcoa Inc (NYSE:AA) is the largest aluminum producer in the world. In actuality, RUSAL is the largest aluminum producer by output, and it’s been investing quite heavily in new smelting capacity with the assumption that Russia, China, Brazil, and other emerging markets would have an insatiable demand for infrastructure improvements.
That plan hasn’t worked out as expected. Both Alcoa Inc (NYSE:AA) and RUSAL have had to aggressively cut back production in order to stave off weaker aluminum prices and a glut of supply that still hasn’t abated due to stockpiles of aluminum yet to be shipped.
Furthermore, weakness in China’s GDP figures is threatening the entire commodities industry. Coal producer and exporter Peabody Energy Corporation (NYSE:BTU) has had to cut back on production with tempered demand from Asia and weaker global coal prices cutting into its bottom line. Similarly, we’ve seen copper giant Southern Copper Corp (NYSE:SCCO) also cutting its production estimates for the full-year. Southern Copper Corp (NYSE:SCCO) has primarily blamed mining issues for the slowdown, but even copper demand has slowed from China. With less demand for some of the prime components needed to make steel and for use in heavy-duty infrastructure projects, it’s no wonder why aluminum producers like RUSAL and Alcoa Inc (NYSE:AA) have been scrambling for answers.
The good news is that Deripaska and RUSAL aren’t sitting idly by and flooding the market with aluminum production even though they are on the brink of opening another 300,000 metric tons of smelting capacity. To the contrary, RUSAL actually announced this week that it would cut production by 8.5% instead of the planned 7% despite global demand for aluminum inching higher. RUSAL understands that higher aluminum prices are needed to make extra smelting capacity viable and it’s willing to endure weak times now for a huge payoff in say two to three years.
A step above his peers
In addition to running a tight ship when it comes to production capacity and cost-cutting, RUSAL does a very, very good job of taking care of its employees as you’ll see below.