Norilsk Nickel Drops on Goldman Downgrade, Output Concern

OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, plunged the most in three weeks as Goldman Sachs Group Inc. downgraded the stock and investors bet the company won’t meet its output goal.

The shares dropped 5 percent to 6,307 rubles by the 6:45 p.m. close in Moscow, their sharpest decline since Oct. 4.

Nickel production in the third quarter exceeded 79,000 metric tons, 23 percent more than in the second quarter, the company said yesterday. The results were “unimpressive” and suggest the company must boost production to meet its full-year target, Troika Dialog analysts Mikhail Stiskin and Irina Lapshina said in an e-mailed note today.

Goldman cut the stock to “sell” from “neutral,” citing weak nickel outlook.

“It’s a triple whammy,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, said in e-mailed comments today.

The stock is falling because of the “dubious” production outlook, the Goldman downgrade and an increase in supply as retail shareholders sell their stock on the market after failing to meet the requirements of a share buyback, he said.

“I hear many retail investors’ tenders were rejected so there is a bunch of stock hitting the market.”

The company said Oct. 21 it is on course to complete the $4.5 billion share buyback by the end of this week.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net