Norilsk Nickel posted net income of $554 million for the first
half of 2013, down 63 percent from just over $1.5 billion in
the same period last year due to a "substantial revenue
contraction" and major non-cash write-offs, the company said
Excluding non-cash write-offs, earnings of $1.2 billion were
down 21 percent in the same comparison.
Revenue fell 6.1
percent to just under $5.57 billion from $5.93 billion a year
earlier because of weak metal prices and lower sales volumes of
nickel and platinum, Norilsk said.
Despite the declines,
the company described its performance during the period as
"robust" in the face of a "turbulent macro environment" and
falling commodity prices.
In the first half,
concerns surrounding the slowdown of economic growth in China,
the lack of firm recovery signs in the rest of the world and
the expectations of fiscal stimulus tapering off in the United
States all drove down the prices of most metals produced by
"We expect the global
macro uncertainty to persist in (the second half), but note a
stabilization of the economic growth in China and some early
signs of economic recovery in the developed world," the company
It added that it now
believes nickel prices are bottoming out, although a price
recovery will be capped by a market surplus.
"The focus for us for
the coming months will be on finalizing our new strategy, which
will be presented to the investment community in the fourth
quarter of this year," chief executive officer Vladimir Potanin
The new strategy at
Norilsk will be built around reaching the full commercial
potential of the companys resource base in Taimyr as well
as focusing on the companys capital discipline and
return-based investment governance, he said.
expenditures declined 21 percent year on year to $900 million
as Norilsk management implemented a stricter capital allocation
policy, with expected savings of at least $300 million for the
company also began restructuring its corporate head office with
the aim of bringing practices in line with global industry
standards, and took on a new management team.
A strategic review on
noncore businesses and certain international assets also has
been launched, Norilsk said.
A version of this article was first published by AMM sister
publication Metal Bulletin.