Metalloinvest 2011 Net Rose 19% Even With Norilsk Investment

OAO Metalloinvest, Russia’s largest iron-ore producer, increased profit 19 percent last year on higher output even as the value of its investment in OAO GMK Norilsk Nickel declined.

Net income rose to $1.43 billion, the mining company controlled by billionaire Alisher Usmanov said today in its 2011 financial statement. Metalloinvest recognized an impairment loss of $706 million on its Norilsk stake, according to the report.

“Dividends paid by Norilsk and proceeds from shares sold during the nickel producer’s buyback couldn’t compensate for the decline in the stake’s value,” Dmitry Smolin, an analyst at UralSib Capital, said by phone.

Metalloinvest’s stake in Norilsk declined to 3.6 percent after the buyback, according to a presentation on the company’s website today. Usmanov said in an interview on state television last week that he is adding Norilsk shares now as he seeks diversification.

Metalloinvest bought 4 percent of Norilsk in May and June from Usmanov and his partners for $2.2 billion, according to the company’s Eurobond prospectus in 2011. The value of the investment fell to $1.04 billion by the end of 2011, according to its annual report.

United Co. Rusal, the world’s biggest aluminum producer, said in March that a revaluation of its 25 percent stake in Norilsk led to a fourth-quarter loss of $974 million.

Metalloinvest said it received $44 million in Norilsk dividends last year and $255 million from selling shares in Norilsk’s buyback, which ended in November.

Metalloinvest’s sales climbed 39 percent to $9.92 billion as iron-ore output advanced 9 percent last year to 40.1 million metric tons, according to the statement.

Earnings before interest, taxes, depreciation and amortization increased 50 percent to $3.87 billion, Metalloinvest said. The impairment loss didn’t affect Ebitda, Smolin said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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