18 May 2010 14:58

Norilsk Nickel posts $2.65 bln profit for 2009, sales down 27%

MOSCOW. May 18 (Interfax) - MMC Norilsk Nickel closed 2009 with net profit of $2.651 billion to International Financial Reporting Standards (IFRS), compared with losses of $555 million in 2008, the Arctic mining and smelting giant said in an earnings report.

This was better than the $2.208 billion that analysts predicted in a consensus forecast for Interfax.

Sales revenue fell 27% to $10.155 billion, which was also above the forecast of $9.844 billion.

Group operating profit totaled $3.776 billion, compared to operating loss of $199 million in 2008.

Adjusted EBITDA declined by 24% to $4.416 billion in 2009 compared to $5.807 billion in 2008.

The EBITDA margin increased from 42% in 2008 to 43.5% in 2009 due to the implementation of cost reduction program and the effect of devaluation of the ruble against the US dollar during 2009.

Cash operating costs of the attributable to metal sales decreased by 30% from $5.534 billion in 2008 to $3.897 billion in 2009 (before netting revenue from by-products) due to full scale cost cutting initiatives undertaken by the management of the Group as well as the effect of translation to presentation currency.

Revenue from metal sales amounted to $8.441 billion in 2009, which represents a 28% decline compared to 2008. The fall in revenue from metal sales is explained by a decrease in average selling prices of main metals produced by the Group and by a certain decline in sales of semi-products.

Revenue from other sales decreased from $2.181 billion in 2008 to $1.714 billion in 2009, mostly due to the foreign exchange rate effect.

The Group sold 283,000 tonnes of nickel in 2009 as compared to 287,000 tonnes in 2008.

Copper sales amounted to 415,000 tonnes in 2009 as compared to 397,000 tonnes in 2008, representing a 5% growth due to deliveries in 2009 from metal inventories.

In 2009, platinum sales by the Group decreased by 9% to 810,000 ounces. At the same time, Russian divisions of the Group and Norilsk Nickel International increased sales of platinum to 644,000 ounces. The subsidiary of the Group - Stillwater Mining Company - sold 166,000 troy ounces of platinum in 2009 compared to 246,000 ounces in 2008.

In 2009, physical volumes of palladium sales by the Group declined by 8% to 3,188,000 ounces. Russian divisions of the Group and Norilsk Nickel International decreased sales of palladium by 6% from 2,900,000 ounces in 2008 to 2,730,000 ounces in 2009. Stillwater Mining Company, a subsidiary of the Group, sold 458,000 troy ounces of palladium in 2009 as compared to 567,000 ounces in 2008.

In 2009, revenue of the Group from nickel sales amounted to $4.212 billion. Europe remained the main destination for nickel sales, where the Group sold nickel for $2.212 billion (or 53% of all nickel sales). The Group managed to significantly increase the share of Asian region up to 30% of all nickel sales. Other markets contributed additional $729 million of revenue from nickel sales.

Group revenue from copper sales totaled $2.192 billion, including $1.654 billion (or 75% of copper sales) of revenue originating from Europe.

In 2009, revenue of the Group from platinum sales amounted to $982 million, including $322 million from Asian buyers (or 33% of all platinum sales) and $303 million from North American buyers (or 31%). The rest of revenue from platinum sales was originated at European and Russian markets.

Revenue from palladium sales totaled $912 million, including $408 million from American buyers (or 45% of all palladium sales) and $306 million from European buyers (or 34%). The rest of palladium was sold at Asian and Russian markets.

As at December 31, 2009, cash and cash equivalents amounted to $3.632 billion. The change in balances of cash and cash equivalents is mostly due to growth of short-term bank deposits and increase in current accounts denominated in foreign currencies.

The outstanding balance of long- and short-term loans amounted to $5.317 billion, of which 44% represented long-term borrowings and 56% - short-term borrowings.

The Group is required to retire $2.972 billion of loans and borrowings during the course of 2010.

Dmitry Kostoyev, the head of Norilsk Nickel's financial and economic division, said at a meeting with investors on Tuesday that the company was thinking of issuing financial instruments this year. "We'll decide on the feasibility of replacing existing debt depending how the markets situation shapes up," he said.

Company chief Vladimir Strzhalkovsky has said payments would peak at approximately $1.87 billion at the end of H1 2010.