The Board of Directors has recommended not to pay dividends for FY 2022 owing to a number of reasons:
- Growing geopolitical risks have already had a negative impact on the Company’s financial performance, having posed new challenges for operations, sales and completion of a number of strategic projects. In 2022, the Company faced a combination of falling revenues and rising costs. Traditional logistics routes degraded, whereas investment projects had to be substantially revised. As result, in 2022, Nornickel generated USD 437 mln in free cash flow, posting a ten-fold reduction y-o-y.
- The Company is passing the peak of its capital expenditure cycle in 2022-2023 with USD 4.3 bn spent in 2022 and USD 4.7 bn earmarked for 2023, respectively. Nornickel’s capital expenditure programme includes a number of strategic projects, including the flagship environmental project Sulphur Programme 2.0, aiming to drastically cut sulphur dioxide emissions and reduce environmental impact.
- The previous year dividends (for FY 2021) were funded by debt. Delivery on its commitment on shareholder returns led to the Company’s net debt position doubling from USD 4.9 bn as of year-end 2021 to USD 9.8 bn by the end of 2022, with net debt / EBITDA ratio also doubling to 1.1x.
- The tax burden and debt servicing costs are expected to increase this year.
- Other potential risks faced by Nornickel include possible further increase in the sanctions’ pressure as well as weakening commodity prices due to the slowdown of the global economy.
The Company emphasizes that its Regulations on Dividend Policy prescribe that a “cyclical nature of the markets for metals produced by the Company and a need for preserving its creditworthiness at a high level” should be taken into account, when calculating the amount of dividends.
In the current highly uncertain environment, the management believes that maintaining financial stability and high level of creditworthiness should be unconditional priorities for the Company, which will enable meeting the obligations to all of its stakeholders such as the government, the employees, the local communities, and the shareholders.
The management is looking with caution into 2023. Should the Company generate a positive cash flow, while maintaining a comfortable level of debt, measured as a net debt / EBITDA ratio, the Board of Directors may be offered to consider paying an interim dividend.
The Board of Directors has set the AGM date on June 6, 2023, and the AGM record date on May 12, 2023.
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.
The group's products are supplied to 37 countries in Europe, the Asia-Pacific region, and America. It is acquired by more than 400 partner companies. Sales offices operate in Switzerland, China and the USA.
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.
