(Minews) - French mining and metallurgical group Eramet has posted a net loss after impairments of €370 million ($508 million) in 2013, following a tough year for its nickel business.
This result compared with net income of €9 million in 2012, the company said in its results release for 2013.
The loss in 2013 was linked to the postponement of the Weda Bay nickel project in Indonesia, as well as the company’s recycling and high speed steels businesses.
Eramet also recorded a 43% drop in earnings before interest, taxation, depreciation and amortisation (Ebitda) in 2013, as the nickel business was hit by low prices.
The company reported Ebitda of €231 million for the year ended December 31, 2013, compared with €407 million in 2012. Overall revenue came to €3.16 billion in 2013, down 8% year-on-year.
Impairments came to a total of €296 million for the year, including a €224 million writedown as a result of the Weda Bay postponement.
Eramet Nickel posted a loss of €222 million, furthermore, marking a considerably greater loss than 2012’s loss of €38 million.
According to some analysts, at the end of last year, nearly 60% of the world’s nickel production came in at a loss, the company said.
Eramet’s nickel unit’s turnover was also down 22%, at €704 million, although production was only slightly down, at 53,000 tons (48,080 tonnes).
“Despite a 5% increase in global stainless steel production, the nickel market was affected by a fall in prices to very low levels, especially towards the end of the year,” the company said.
“[London Metal Exchange] prices fell 14% on average to $6.80 per lb in 2013, compared with $8 per lb in 2012. They continued their slide in the second half of 2013, averaging $6.30 per lb.”
It added, however, that it believes the implementation of the ban on the export of unrefined ores from Indonesia is good news and will eventually be supportive for nickel prices.
Meanwhile, profit improved at the company’s alloys business, with operating income of €4 million for the year, compared with a loss of €5 million in 2012.
The company added, however, that the European economic situation remains “highly unfavourable” for some of its alloys activities, and “continues to weigh on its profitability”.
“In a difficult economic environment, particularly in Europe, the Eramet group proved its resilience in 2013 and showed responsiveness,” Patrick Buffet, Eramet group chairman and ceo, said in a statement.
“Eramet Manganese’s results remained firm with current operating income of €218 million – ie current operating margin of 14% – thanks in particular to a historical record for manganese ore and sinter production.”
In 2014, the company plans to enhance the priority given to “crisis adaptation measures” and to keeping up a solid financial situation, with measures aimed at cost and working capital reduction.
Furthermore, capital expenditure will be brought down to less than €400 million, or 40% below the average for 2012 and 2013.
Eramet achieved savings of €85 million in 2013.
The company ended 2013 with “moderate debt”, at €218 million, or the equivalent of 7% of shareholders’ equity and one year’s Ebitda.
Capital expenditure was reduced to €587 million for the year, compared with €641 million in 2012.
This was the final year of major capex for the Moanda metallurgical complex in Gabon and the Tizir mineral sands operations in Senegal, Eramet said.
Eramet Manganese’s results were also “very sound” in 2013, with stable turnover at €1.56 billion, and operating income was firm at €218 million, although down slightly from €240 million in 2012.
The division continued its policy of “renewing and extending capacities at its existing units” and “consolidating its position on high value-added products”.
“New production records were achieved in Eramet Manganese’s two main areas of leadership: high-grade manganese ore and refined manganese alloys,” the company said.
“Ore and sinter production totalled 3.7 million tons, up 22%, in Gabon, while external ore shipments rose 29%.”
Manganese alloy production was up nearly 2% to 746,000 tons, although prices were affected by surplus capacity in China.
In Gabon, research and development work on the Mabounié niobium, rare earths, tantalum and uranium project made progress in 2013, the company added.
In 2014, furthermore, the Moanda metallurgical complex will produce silico-manganese and manganese metal for the first time in Gabon.
The company’s shares were trading at €71 each on the NYSE Euronext Paris exchange, up 1.11% on Friday’s closing price, as of 12:45 CET on Monday February 24.
