Daily analyst comments
Norilsk Nickel General Director describes current business conditions
08.06.09 10:37
The first-half profit targeted by the company’s management is due to the revival of nonferrous metal markets and the conservation of loss-making foreign plants, which should send a positive message to company shareholders.
On June 5, Vladimir Strzhalkovsky disclosed the company’s short-term plans. The general director specifically stated that the company expected to regain profitability in 1H 2009. NorNickel does not expect large write-downs on non-operating activities in 2009. Having a competitive advantage in production costs, the steelmaker has incorporated conservative forecasts for metal prices into its budget, which have exceeded expectations since the start of the year. The conservation of Australian-based assets has also contributed to profitable operations. According to the general director, the company’s Australian assets are unprofitable with current prices for nonferrous metals and the company does not plan to put these assets into operation at present. Strzhalkovsky also noted that the company’s African assets were operating in the black.
The director expressed his belief that the company would cut its debts and successfully fulfill debt obligations in 2009. The company does not plan any new share buybacks or ruble bond issues. The management targets revenue in 2009 in the range of USD 7.5 billion to USD 8 billion and EBITDA at between USD 1.8 billion to USD 2 billion. The sale of OGK-3 has been removed from the current agenda until shareholders and the state come to an agreement, according to the director.
This is all positive information for company shareholders. We currently have no official rating for Norilsk Nickel shares.