Norilsk Nickel Says 1st-Half Profits Double, Announces Share Buyback

Russian mining giant OAO Norilsk Nickel announced Friday that its net profits had more than doubled in the first half of the year and said it would reward shareholders with a nearly US$1 billion (euro800 million) share buyback.

The company, which is the world’s biggest nickel producer, said in a statement that its first-half net profits according to International Financial Reporting Standards came to US$2.37 billion (euro1.86 billion), up from US$979 million in the same period the year before.

The number was boosted by a US$993 million (euro781 million) gain from discontinued operations — particularly its gold mining assets, which were spun off into a separate entity in March 2006.

Analysts welcomed the buyback and accompanying US$2 per share dividend as a sign of solid corporate governance, but noted that the company was experiencing cost pressures at its core mining business.

Selling, general and administrative costs rose 26 percent on the year to US$472 million (euro371 million) and labor costs rose 17 percent to US$512 million (euro403 million).

Meanwhile, revenues of US$4.19 billion (euro3.29 billion) fell somewhat below analysts expectations of US$4.4 billion (euro3.5 billion), Dow Jones Newswires reported, though sales were expected to pick up in the second half on the continued strength of world metal prices as well as a seasonal uptick in production at the company’s Arctic mines.