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UPDATE 1-Russia's Norilsk H1 profit hit by write-off, margin flat
August 29, 2013 / 11:28 AM / 4 years ago

UPDATE 1-Russia's Norilsk H1 profit hit by write-off, margin flat

* H1 profit hit by $636 million of write-off

* Profit before write-off $1.2 bln, in line with f‘cast

* Keeps EBITDA margin flat at 41 percent in H1

* Says nickel price recovery to be capped by surplus in H2 (Adds details, quotes, context)

MOSCOW, Aug 29 (Reuters) - Russia’s Norilsk Nickel , the world’s top nickel and palladium miner, recorded a 63 percent year-on-year decrease of first half net profit due to non-cash write-offs, the company said on Thursday.

Norilsk, part owned by Russian tycoon Vladimir Potanin and aluminium giant Rusal, remained profitable despite almost 20-percent fall of nickel prices this year, the weakest of the products traded on the London Metals Exchange.

“By implementing a range of optimization and fixed costs reduction measures we achieved a six-month EBITDA of $2.3 billion - thus recording the industry leading margin of 41 percent, almost at the same level as in a prior year,” Potanin, also Norilsk chief executive, said in a statement.

Norilsk continues to make money while between a quarter and a half of the global nickel sector could be running at a loss, according to industry estimates, hit by weak demand from China, the world’s top market for stainless steel.

Norilsk added that nickel prices were bottoming out, but a recovery was likely to be capped by surplus on the global market. Nickel is a key component of stainless steel.

Its six-month earnings fell to $545 million, hurt by $636 million of non-cash write-offs mainly related to its investment in Russia’s energy group InterRao.

Profit excluding the write-offs amounted to $1.2 billion, in line with analyst forecasts, while revenue fell 6 percent to $5.6 billion.

Norilsk was the only publicly listed company in Russia’s metals and mining sector to announce a first-half net profit so far. Gold miners, steel producers and aluminium major Rusal had net losses due to write-offs and price declines.

Norilsk has already paid $1.9 billion of dividends for 2012 and is expected to declare at least $3 billion for 2013 and the same amount for 2014. These payments were agreed by its shareholders peace deal in late 2012 following a five-year battle.

Its cash and cash equivalents amounted to $1.8 billion as of June 30.

Norilsk’s Moscow-listed shares were up 0.5 percent by 1120 GMT, roughly in line with the Metals and Mining index which was up 0.4 percent. (Reporting by Polina Devitt, Alessandra Prentice; Editing by Maria Kiselyova/Douglas Busvine)

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