Yuzhuralnickel’s net income surged 37% in Q1 2007

Yuzhnouralsky Nickel Plant, which is part of Mechel Group, boosted net income to $83.8 mn in Q1 2007, up 37% against $61 mn in Q4 2006, the company said in its press release devoted to this important release. The main drivers behind this strong improvement in net income were the company’s robust operating performance in Q1 2007 and rising nickel prices on global commodity markets. It is noteworthy that Yuzhuralnickel produces high-quality iron nickel with nickel content of over 85%. That said, it’s necessary  to highlight the following positive trends:

Average nickel price jumped 25.5% q-o-q in Q1 2007 (from $31,700 to $39,800).

Yuzhuralnickel lifted ferronickel output 6% q-o-q in Q1 2007 (from 3.87 tn to 4.1 tn, respectively)

It should also be noted that nickel prices reached an all-time high of $50,000 per tn at the end of the reporting period and, in that event nickel prices remain at this level going forward, Yuzhuralnickel’s net profit will climb to $340 mn in 2007, which is double the amount of Antanta Capital’s projections. However, since the company’s market capitalization is currently $500 mn, its P/E 2007 multiple could come in below 1.5, i.e. three times less than the figure expected at global peers and 3.5 times less than that of NorNickel.