MOSCOW - Norilsk Nickel, the world's largest nickel and palladium miner, said on Monday lower metal prices pushed first-half profit down sharply, but the results beat analyst forecasts.

Net profit attributable to shareholders fell 84% year-on-year to $419-million, above an average Reuters poll estimate of $349-million.

Norilsk shares were up 2,1% at 10:10 GMT, having earlier been up 2,5%, outperforming a 1,2% increase on the MICEX index.

Mining companies around the world have struggled over the past year as falling industrial demand caused by the global economic recession sent metal prices tumbling.

BHP Billiton, the world's biggest miner, reported net profit for the year to end June down more than 60%, while world No. 2 Rio Tinto posted a 64% slide in first-half profit.

Norilsk was forced to cut back production in the first half - halting its entire Australian operation - in a bid to reign in costs during the downturn.

Steel-making ingredient nickel traded on the London Metal Exchange, has risen 61% since the start of 2009, hitting year highs in August, but is still well below levels seen the previous year. Some analysts have warned it could be heading for another fall due to rising inventories.

PLEASANT SURPRISE

Norilsk said adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased to $1,40-billion, also above the Reuters poll average of $1,13-billion.

"It was a pleasant surprise that the EBITDA indicator turned out to be higher than the consensus, as the analysts have not taken fully into account the cost-cutting programme," said Maksim Semyonovykh, an analyst with Alfa Bank.

"We expect equally good results in the second half of the year," he added.

Norilsk said first-half revenues fell 51% to $4,08-billion, in line with analysts' expectations of $4,11-billion.

"Revenue from metal sales declined by 54% due to the global commodity market prices being significantly below prior year levels," Norilsk said in a statement.

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