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Norilsk Nickel net income tumbles 41%

Keywords: Tags  Norilsk Nickel, Sergey Malyshev, nickel, copper, palladium, Claire Hack


LONDON — MMC Norilsk Nickel’s full-year net income fell 41 percent to $2.1 billion last year, with $976 million in noncash write-offs.

Overall sales revenue of $12.1 billion was down 15 percent from the previous year due to "unfavorable pricing trends" among the metals produced by Norilsk. Metal sales revenue dropped 17 percent to $11.1 billion last year even though physical volumes were more or less unchanged.

The average sale price of nickel fell the most markedly during 2012, sliding 23 percent to $17,719 per tonne.

"Taking into account the unfavorable macroeconomic environment in 2012, we consider the financial results of the company to be decent," chief financial officer Sergey Malyshev said in a statement. "Norilsk Nickel continued to generate stable cash flow from its operations, which provides for a stable level of investments in its core businesses."

The company’s earnings before interest, taxes, depreciation and amortization (Ebitda) totaled $4.9 billion, down 32 percent from 2011. Cash operating costs were 2-percent higher at $4.7 billion, the company said.

"Management’s efforts to control costs resulted in a modest increase in operating expenses," Malyshev said. "At the same time, we see additional opportunities for cost optimization. As the capital markets currently offer attractive terms, we’re considering the rebalancing of the capital structure of the company."

Norilsk has already reduced its share capital by nearly 9.7 percent via the cancellation of 18.5 million treasury shares.

Revenue from nickel accounted for nearly half of the company’s metal sales in 2012. However, total revenue from nickel sales fell 22 percent from the previous year to $5.2 billion as a result of negative price dynamics.

Revenue from copper accounted for 26 percent of Norilsk’s total metal sales in 2012, declining 12 percent from the previous year to $2.9 billion. The average selling price for copper fell 10 percent to $8,015 per tonne last year, the company said.

Revenue from palladium sales was down 13 percent to $1.7 billion, and platinum sales revenue fell 10 percent to $1 billion.

The Moscow-based company’s impairment charges included $279 million on plant, property and equipment; $102 million on investments in associates; and $595 million on financial assets.

A version of this article was first published by AMM sister publication Metal Bulletin.


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