PJSC MMC Norilsk Nickel the world’s largest palladium and high-grade nickel and a major producer of platinum and copper, reports interim consolidated IFRS financial results for the six months ended June 30, 2022.
1H2022 HIGHLIGHTS
Consolidated revenue was flat year-on-year amounting to USD 9 billion. Higher base metal prices and recovery of production volumes after temporary suspension of operations caused by the incidents at Oktyabrsky and Taimyrsky mines and Norilsk concentrator in 1H2021, were negatively offset by lower realized palladium price and lower overall metal sales volume owing to logistical disruptions as well as a higher base effect due to the sale of metal from previously accumulated stock in 1H2021;
EBITDA decreased 16% y-o-y to USD 4.8 billion owing to higher operating cash costs driven mainly by increase in labour expenses and mineral extraction tax. EBITDA margin amounted to 53%;
Net income increased 18% y-o-y to USD 5.1 billion mostly driven by stronger rouble exchange rate as of the end the reported period resulting in revaluation of foreign currency debt;
CAPEX increased 83% y-o-y to USD 1.8 billion driven by the scheduled growth of investments into key environmental, mining and metallurgical projects as well as intensified capital repairs aimed at improvement of industrial safety and mitigation of physical risks;
Net working capital amounted to USD 3.8 billion driven mostly by strengthening of Russian rouble, increase in metal, materials and spare parts inventories as well as amortization of advance payments form customers and decline in factoring services;
Free cash flow decreased 25% y-o-y to USD 1.1 billion driven mostly by EBITDA decrease as well as increased net working capital and capital expenditures, which was partly offset by reimbursement for the environmental damages in 1H2021;
Net debt doubled to USD 10.2 billion as a result of the decrease of free cash flow and payment of dividends for 2021 totaling USD 6.2 billion. Net debt/EBITDA ratio as of June 30, 2022 was at 1.1x. The Company continues to duly service all its debt liabilities;
Various economic restrictions imposed on Russia by a number of countries have created risks for operating, commercial and investment activities of the Company. To mitigate these risks Nornickel has developed a set of responses and has launched a new procurement strategy aiming at the substitution of some imported goods and services with alternative suppliers.
RECENT DEVELOPMENTS
On July 5, 2022, the Board of Directors of Nornickel decided to hold Extraordinary General Meeting of Shareholders on August 11, 2022 to reduce the authorized capital of the Company by RUB 791,227 to RUB 152,863,397 by cancelling 791,227 repurchased ordinary shares with par value of RUB 1.
ABOUT THE COMPANY
MMC Norilsk Nickel is a diversified mining and metallurgical company, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper. The company also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and other products.
The production units of Norilsk Nickel Group are located at the Norilsk Industrial District, on the Kola Peninsula and Zabaykalsky Krai in Russia as well as in Finland.
MMC Norilsk Nickel shares are listed on the Moscow and on the Saint-Petersburg Stock Exchanges, ADRs are accepted for trading on the Saint-Petersburg Stock Exchange.
Norilsk Nickel fully supports the 2030 Agenda for Sustainable Development and the UN Sustainable Development Goals. The Company considers social responsibility and commitment to the principles of sustainable development as one of the pillars of operational efficiency and business development. Nornickel seeks to continuously improve its activities in the areas of environmental protection, human rights, health and safety, environmental impact assessment, and biodiversity preservation. The company spent RUB 221.5 billion on SDG-linked projects in 2021.
Vladimir Malakhov, Rough&Polished
