Mining group Eramet plans more savings as nickel stays weak
PARIS Oct 21 (Reuters) - Eramet on Monday said it would step up cost saving measures to counter the effects of a depressed nickel market, which contributed to a five percent fall in the mining group's third quarter sales.
Benchmark prices of nickel, mainly used in stainless steel, sank to a four-year low in July due to poor industrial demand and rising stocks, leaving a swathe of global production operating at a loss.
Eramet reported a 5 percent year-on-year fall in third-quarter sales to 754 million euros ($1.03 billion), which included a 23 percent decrease for its nickel division.
"The Group is stepping up its measures to decrease its costs and capital expenditure, adjust its productions to its markets and reduce its working capital requirements," Eramet said in a statement, without giving details.
The company reiterated that current operating profit in the second half would be "significantly lower" than in the first half, when Eramet reported a 9 million euro loss.
When Eramet published first-half results at the end of July, the group revised down investments planned for this year and said it expected to scale these back further in 2014-2015.
In the third quarter, its metallurgical nickel production in New Caledonia, where the group's nickel mines are based, fell 3 percent year-on-year, putting output down 6 percent over the first nine months of 2013, Eramet said.
The decline in nickel activity in third quarter was partly offset by a 6 percent rise in manganese sales, supported by higher ore prices and record quarterly output for the company in manganese ore and sinter, it said.
Eramet also said that its consolidated net cash was "slightly negative" as of Sept. 30, compared to a positive 127 million euros at the end of June, citing dividend payments to minority shareholders and previous investments. ($1 = 0.7302 euros) (Reporting by Gus Trompiz. Editing by Jane Merriman)
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