Sanctions impact casts shadow over Rusal profit jump

* Aluminium giant Rusal (HKSE: 0486-OL.HK - news) warns of adverse impact from sanctions

* Plans to overhaul board and management

* Core profit up 20 pct on rising aluminium prices

* Net (LSE: 0LN0.L - news) debt up slightly, cash flow slumps by 46 pct

* Share (LSE: SHRE.L - news) price down 7.4 pct (Adds detail, share price reaction, background)

By Melanie Burton and Katya Golubkova

MELBOURNE/MOSCOW, May 11 (Reuters) - Russian aluminium giant Rusal on Friday warned of expeccted harm to its business from U.S. sanctions, sending its shares down more than 7 percent despite the company reporting a 20 percent jump in first-quarter core profit.

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".

Though Rusal, the world's biggest aluminium producer, said longer-term effects of the sanctions and the threat of additional future sanctions are difficult to determine, the company said it warned that 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," it said.

Rusal's Hong Kong-listed shares were down 7.4 percent by 0759 GMT, reducing its market capitalisation to $4.2 billion, according to the ThomsonReuters data. The company has lost about 60 percent of its value since the sanctions were announced on April 6.

The company had earlier reported that adjusted earnings before interest, tax, depreciation and amortisation (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.

SLIDING CASH FLOW

Profit was bolstered by a 16.7 percent rise in the LME aluminium price over the period, while Rusal's aluminium output increased 2.3 percent year on year to 931,000 tonnes.

Net profit including returns from Rusal 28 percent share in Norilsk Nickel rose 22.4 percent to $531 million.

Rusal's net debt slightly rose to $7.89 billion at the end of March from $7.65 billion at the end of December and net cash flow dropped 46 percent year on year to $116 million.

The U.S. Treasury last month gave investors an additional month to divest or transfer their holdings in sanctions targets Rusal, En+ Group and GAZ.

The extension followed an earlier U.S. Treasury announcement that it would give American companies until Oct (Shenzhen: 000069.SZ - news) . 23 instead of June 5 to wind down business with Rusal.

The company plans to overhaul its board and management in an effort to persuade the United States to lift the sanctions, which have led customers to stop buying its aluminium, sources close to the company told Reuters last month.

Deripaska has agreed in principle to reduce his stake in En+ Group, which holds his 48 percent stake in Rusal, after the United States said it could remove Rusal from the sanctions list if he ceded control. (Additional reporting by Diana Asonova and Anastasia Lyrchikova in MOSCOW Editing by David Goodman)