NORILSK, Russia, Jan 23 (Reuters) – Falling metal prices are being more than offset by the rouble slide, allowing Russia’s Norilsk Nickel to maintain margins despite lower foreign currency earnings, its chief executive said.
CEO and co-owner Vladimir Potanin, Russia’s eighth richest man with a $12.6 billion fortune from the world’s largest nickel and palladium miner, said if metal prices remained at current levels, Norilsk’s 2015 foreign currency revenues would decline from a year earlier to $10 billion.
But he said lower metal prices would not affect the company’s earnings before interest, tax and depreciation (EBITDA) margin, which would exceed 40 percent this year. He did not provide data for 2014.
Many Russian companies have been hit by a downturn in the economy, suffering from weak oil prices and Western sanctions over the Ukraine crisis, but exporters are enjoying the 50 percent drop in the rouble since the beginning of last year.
Potanin said more important for his core business, based 300 km (186 miles) inside the Arctic Circle where it is dark for more than a month in winter, were prices for the company’s main metal products.
Nickel, which makes up the bulk of Norilsk’s sales, has fallen more than 40 percent since May to $14,700 a tonne, while copper prices hit a 5-1/2 year low of $5,548 a tonne last week.
“The decline in nickel and copper is causing a revenue decline,” Potanin told a briefing in Norilsk city late on Thursday, where prisoners of Josef Stalin’s labour camps built the first smelter in the 1930s.
“However, rouble depreciation is significantly compensating the price decline.”
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