* Norilsk says is "cautiously positive" on 2014 prospects
* Concerned with deteriorating emerging market risk appetite
* 2013 net profit down 64 percent to $765 million
(Reledes on price outlook, adds comments by chief executive)
MOSCOW, April 7 Norilsk Nickel, the
world's biggest producer of nickel and palladium, sees nickel
prices recovering this year, it said on Monday after reporting a
64 percent drop in net profits due to write-offs.
The Russian firm, part owned by Chief Executive Vladimir
Potanin and aluminium giant Rusal, had to trim
spending last year and focus on its lucrative Soviet-era
operations in Russia's far north to cope with weak prices for
its key metals.
"Last year was a challenging and volatile year in commodity
markets with prices for the majority of metals in the Norilsk
Nickel portfolio declining that had a clear impact on our
top-line performance," Potanin said in a statement.
The management is cautiously positive on 2014 with improving
commodity prices in the beginning of the year but is also
concerned over a deteriorating emerging market risk appetite in
the global investment community, he added.
Norilsk has not been hit by the political tension over
Ukraine so far, but all Russian companies would suffer should
the situation escalate, its deputy chief executive, Andrei
Bougrov, said last week.
Norilsk said on Monday it expected the nickel price to
continue to recover in 2014 and 2015 as an export ban on cheap
nickel ore by top producer Indonesia takes hold.
"There are increasing indications that the ban on the export
of nickel ore from Indonesia will be sustained, which leads us
to expect the nickel market to be balanced in 2014, but
developing a sizeable deficit in 2015," the company added.
Norilsk's view contradicts an estimate from the Lisbon-based
International Nickel Study Group (INSG), which expects the
global nickel surplus to shrink to about 50,000 tonnes this year
from last year's 170,000 tonnes on stronger demand and the
export ban in Indonesia.
WRITE-OFFS SLASH PROFIT
The Russian firm said its net profit dropped to $765 million
last year, although before the write-offs it would have been
down just 15 percent at $2.6 billion, beating the average
forecast of $2.3 billion given in a Reuters poll of analysts.
The company wrote off $841 million from property, plant and
equipment, including a $307 million impairment on upstream
operations in the Kola peninsula, and has taken an additional
$728 million revaluation loss related to financial assets,
including its stakes in Russian energy companies.
Revenue was down 7 percent at $11.5 billion due to lower
nickel, copper and platinum prices offset by resilient palladium
The company's earnings before interest, taxation,
depreciation and amortisation (EBITDA) fell 15 percent to $4.2
billion in 2013, matching analysts' forecasts. Its net debt
amounted to $4.6 billion at the end of 2013.
The firm has a dividend policy, approved by its shareholders
last year, which states that its dividend target for 2013-14
should be not less than $2 billion per year. The firm had
previously returned to shareholders $1.1 billion in dividends
for the first nine months of 2013.
Norilsk's dividend payments support all shareholders,
especially loss-making and indebted aluminium firm Rusal, which
is in talks with lenders to amend the terms of syndicated
facilities covering $3.7 billion of debt.
Norilsk's shares were flat in Moscow on Monday with broader
metals and mining index down 0.3 percent.
(Reporting by Polina Devitt; Editing by Elizabeth Piper, Greg