OAO GMK Norilsk Nickel profit sank 64 percent in 2013 after prices fell and the largest nickel and palladium producer wrote down the value of some assets.
Net income slid to $774 million from $2.17 billion, Norilsk said today in a statement. Sales dropped 7.1 percent to $11.5 billion. Earnings before interest, depreciation and amortization declined 15 percent to $4.2 billion, beating the $4.15 billion average of nine analyst estimates compiled by Bloomberg.
Average nickel prices fell 14 percent as steelmakers, the main consumers of the metal, suffered from excess capacity. Prices have rebounded by 19 percent this year after Indonesia imposed a ban on exports of nickel-ore to China.
Norilsk last year posted $841 million of non-cash write-offs after reviewing the value of its assets, including operations on the Kola peninsula and stakes in energy companies. The market value of OAO Inter RAO (IRAO) utility holding, in which Norilsk holds a stake, collapsed by 60 percent last year.
Norilsk cut costs and investment, reducing its net working capital by $1.1 billion, according to the statement. That led to an almost fivefold increase in free cash flow generation to $2.4 billion, Chief Executive Officer Vladimir Potanin said in the statement.
The company sees nickel prices recovering in 2014 and 2015 as the metal may swing to a deficit in the third quarter, while it also sees deficits for platinum and palladium this year.
To contact the reporter on this story: Yuliya Fedorinova in Moscow at firstname.lastname@example.org