DJ MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR 2018 AUDITED CONSOLIDATED IFRS FINANCIAL RESULTS
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MMC Norilsk Nickel (MNOD)
MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR 2018 AUDITED CONSOLIDATED
IFRS FINANCIAL RESULTS
26-Feb-2019 / 12:30 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
PRESS RELEASE
February 26, 2019
Public Joint Stock Company «Mining and Metallurgical Company «NORILSK
NICKEL»
(PJSC «MMC «NORILSK NICKEL», «Nornickel», the «Company», the «Group»)
NORNICKEL REPORTS FULL YEAR 2018 AUDITED CONSOLIDATED IFRS FINANCIAL RESULTS
Moscow - PJSC MMC Norilsk Nickel, the largest refined nickel and palladium
producer in the world, reports today IFRS financial results for the full
year ended December 31, 2018.
2018 HIGHLIGHTS
· Consolidated revenue increased 28% y-o-y to USD 11.7 billion on the back
of improved metal prices, higher copper output and sale of palladium from
earlier accumulated stocks;
· EBITDA expanded 56% y-o-y to USD 6.2 billion owing to higher metal
revenue, ramp-up of the Bystrinsky project and lower operating expenses
driven by efficiency gains;
· EBITDA margin reached 53%, a leading level among the global diversified
metals and mining majors;
· CAPEX decreased 22% y-o-y to USD 1.6 billion driven by completion of
Bystrinsky project and downstream reconfiguration as well as optimization
of investment schedules;
· Net working capital decreased by almost USD 1.3 billion to USD 0.9
billion as a result of palladium destocking and optimization of capital
structure;
· Free cash flow increased to USD 4.9 billion;
· Net debt/EBITDA ratio returned to 1 .1x as of the end of 2018;
· Cash interest paid decreased 14% to USD 551 million owing to
optimization of debt portfolio despite rising market interest rates;
· In October 2018, the Company paid interim dividend for 1H2018 in the
amount of RUB 776 (approximately USD 11.65) per ordinary share for the
total amount of approximately USD 1.8 billion;
· In January 2018, Moody's rating agency raised Nornickel credit rating to
the investment grade level, "Baa3", and changed the outlook from "Stable"
to "Positive". As result, Nornickel got assigned investment grade credit
ratings by all three major international rating agencies, including Fitch
and S&P Global.
RECENT DEVELOPMENTS
· On February 12, 2019, Moody's upgraded the Company's credit rating to
"Baa2" with a "Stable" outlook in the wake of raising Russia's sovereign
ceiling for foreign currency debt to "Baa2" and upgrade of Russia's
sovereign rating to investment grade level of "Baa3" with "Stable"
outlook.
KEY CORPORATE HIGHLIGHTS
USD million (unless stated otherwise) 2018 2017 Change,%
Revenue 11,670 9,146 28%
EBITDA¹ 6,231 3,995 56%
EBITDA margin 53% 44% 9 p.p.
Net profit 3,059 2,123 44%
Capital expenditures 1,553 2,002 (22%)
Free cash flow² 4,931 (173) n.a.
Net working capital² 867 2,149 (60%)
Net debt² 7,051 8,201 (14%)
Net debt, normalized for the purpose of 5,160 7,495 (31%)
dividend calculation4
Net debt/12M EBITDA 1.1x 2.1x (1.0x)
Net debt/12M EBITDA for dividends 0.8x 1.9x (1.1x)
calculation
Dividends paid per share (USD)³ 21.3 18.8 13%
1) A non-IFRS measure, for the calculation see the notes below.
2) A non-IFRS measure, for the calculation see an analytical review document
("Data book") available in conjunction with Consolidated IFRS Financial
Results on the Company's web site.
3) Paid during the current period
4) Normalized on interim dividends and deposits with maturity of more than
90 days
MANAGEMENT DISCUSSION AND ANALYSIS
The President of Nornickel, Vladimir Potanin, commented on the results,
«The year 2018 was marked for us by favourable developments in macro
environment and strong operating performance. The markets of pretty much all
our core commodities except for platinum, posted strong gains, inflation
pressure on our cost base was subdued as the domestic inflation in Russia
was running at low levels. We increased copper and palladium sales volumes
by approximately 20% and got first tangible results in the form of operating
cash cost savings from our long-term efficiency program, including
digitalization projects, and generated almost USD 100 million from
Bystrinskoye copper project.
As result, in 2018, our topline expanded 28% y-o-y to USD 11.7 billion,
while EBITDA increased 56% to USD 6.2 billion, reaching the highest level
since 2011. With EBITDA margin of 53%, Nornickel became one of the most
profitable global diversified mining majors in 2018.
As promised to our shareholders, we reduced net working capital to less than
USD 900 million by the year-end. We consider USD 1 billion as a sustainable
level of working capital in the medium-term.
Capital expenditures reduced to USD 1.6 billion as a number of large
capital-intensive projects such as downstream reconfiguration in the Polar
division and construction of Bystrinsky copper project were completed in
2017.
The year 2018 was also a record year for our free cash flow, which reached
almost USD 5 billion. The Company's leverage returned to mid-cycle average,
with Net debt/EBITDA ratio falling to 1.1x. After the rating upgrade from
Moody's in January 2018, Nornickel was assigned investment grade credit
ratings by all three major rating agencies.
Solid financial performance in 2018 and robust commodity markets improve our
financial strength and provide a good platform to support the management'
strategy to further advance Nornickel on the path of sustainable growth. We
have started the second phase of a very ambitious environmental program,
launched infrastructure and digitalization projects and initiated a number
of other initiatives supported by the Russian state as national priorities
in the medium term. The Company is also looking to make final investment
decisions on some of what we consider as potentially attractive growth
opportunities, while our productivity improvement program should yield
further positive results. Overall, we are expecting an increase of our
capital investments to USD 2.2 - 2.3 billion in 2019.
We anticipate that Nornickel will maintain a leading position in the global
metals and mining sector in terms of shareholders returns and reiterate our
focus on sustainable value creation for all shareholders by developing the
world's best Tier 1 assets".
HEALTH AND SAFETY
The lost time injury frequency rate (LTIFR) decreased 48% y-o-y in 2018 from
0.44 to 0.23, reaching historical lows and remaining below the global mining
industry average. At the same time number of lost time injuries dropped two
times y-o-y (from 60 to 32) and total recordable fatal accidents decreased
25% y-o-y (from 8 to 6) driven the by the roll out of cardinal basic safety
rules and improvement of management system. The management considers the
health and safety of its employees with a zero fatality rate as the key
strategic priority and continues to implement a wide range of initiatives
targeting further improvement of the health and safety records. In 2018,
selected initiatives included the following:
· 45 internal audits of Occupational safety and Health management systems
· 105 employees were fired for violation of cardinal safety rules.
METAL MARKETS
Nickel in 2018 - deficit expanded to 130 kt (approximately 6% of global
consumption) driven by resilient demand growth in stainless steel and
booming battery sector; by the year end exchange inventories were down 47%
(or -191 kt) to approximately 32 days of global consumption which was
already below historical average; average LME price was up 26% year-on-year
with some volatility in 4Q 2018 as bearish macroeconomic expectations and
fears of China-US trade war prevailed in the market sentiment.
Strong industrial demand, primarily from stainless steel and fast growing
battery sector, coupled with a steady drawdown of exchange stocks drove
nickel price up sharply in 1H2018. On June 7, 2018, the LME nickel cash
settlement price closed at $15,750 per tonne reaching the highest level
since 2014.
However, in 2H 2018, the sentiment turned bearish on the entire base metals
basket, where consumption growth is heavily reliant on Chinese demand as the
expectations were building that the US-China trade tensions might end in a
full-scale trade war. This negative sentiment was exacerbated by the news
from Tsingshan of its plans to build an HPAL (high-pressure acid leaching)
nickel plant in Indonesia in a joint venture with GEM, BRUNP, and Indonesia
Morowali industrial Park with target capacity of 50 kt at an unprecedentedly
low capital cost of USD 14,000 per tonne. As the reported capital cost was
remarkably lower than any other similar HPAL projects realized globally so
far, this implied a material downside risk to the long-held market consensus
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DJ MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR -2-
view on long-term incentive price. We hold a cautious view on the project as
the announced project parameters and construction timeline (also
unprecedented for this type of project of 2 years) are yet to be proven.
Nonetheless, the weak sentiment dragged the LME price below $12,000 per
tonne in 4Q2018.
The LME nickel price averaged USD 13,122 per tonne in 2018, up 26% y-o-y.
In 2018, global nickel consumption increased 7% y-o-y (or 112 kt) primarily
on the back of strong stainless production growth in Indonesia. Stainless
demand elsewhere was by and large unchanged, with China's consumption down
1% and the rest of Asia being flat, where a drop in stainless output in
Taiwan was offset by marginal growth in Japan, Korea and India. Primary
nickel demand in the European stainless sector was slightly down y-o-y and
the US was flat.
Nickel demand from the battery sector increased by 40% y-o-y, with the
demand from Li-ion batteries alone exceeding 100 kt in 2018. As the
production of nickel sulphates (an intermediate product used in the
production of battery cathodes) was lagging behind the demand, the consumers
were tapping into nickel inventories. We estimate that 56 kt of briquettes
were withdrawn from LME warehouses for the ultimate consumption in the
battery sector. The battery demand growth was driven not just by the rising
EV production volumes, but also by the technological shift of battery
cathodes' chemistry towards more nickel-intensive formulations. Thus, if in
2016 the most popular technology was NCM 1:1:1 (with a share of nickel in
the cathode material of 21%), in 2018, NCM 5:3:2 and NCM 6:2:2 became the
prevailing cathode chemistries, with nickel share of cathode materials of
32% and 38%, respectively.
Nickel consumption in other sectors such as alloys, specialty steels and
plating increased modestly by approximately 2% y-o-y.
Similar to demand, Indonesia was also the main driver of global nickel
supply, which increased 7% y-o-y (or +150 kt). In 2018, the country exported
18 million tonnes of ore to China helping the recovery of Chinese NPI output
to the 2014 levels of approximately 470 kt of nickel contained. In addition,
Indonesia itself produced more than 250 kt of nickel in NPI as domestic NPI
projects continued to ramp up and new projects were launched. Overall,
global output of low-grade nickel increased 16% y-o-y (or by 170 kt) in
2018.
In a contrast to NPI, production of high-grade nickel decreased 2% y-o-y (or
by 22 kt) in 2018 driven primarily by lower output in Canada. As we have
been pointing out over the past couple of years, many conventional nickel
mines were heavily underinvested, with CAPEX underspent inevitably to take
its toll.
By the year-end 2018, the combined nickel inventories at LME and Shanghai
Futures Exchange (SHFE) reduced almost by half to 219 kt from 410 kt owing
to strong physical demand. We estimate that the bulk of stocks withdrawn
from the exchange warehouses were consumed, as the apparent market deficit
reached 130 kt. We believe that approximately 30% of all stocks withdrawn
from the exchanges were relocated to off-exchange warehouses for strategic
stockpiling by financial players and consumers anticipating consumption
growth.
Nickel outlook - neutral; we expect persisting, yet narrowing deficits in
2019-2021 as Indonesia and China continue to increase NPI output; the demand
from stainless sector is expected to be robust; EV story continues to be the
key demand growth driver in the medium- and long-term as the xEV penetration
grows and the share of nickel-intensive cathode materials keeps growing
alongside.
In 2019, we expect the apparent nickel deficit to decrease to approximately
50 kt from 130 kt in 2018 as the ramp-up of NPI capacities in Indonesia and
their recovery in China will outpace the growth of demand. We see however a
risk to supply outlook, as the majority of holders of the export quota for
laterite nickel ore have not been fulfilling their obligations to build
local processing facilities. The market has already seen some friction in
quota policy from the Indonesian authorities and we expect that it will
continue to become more stringent, potentially capping the ore supply and
hence, the NPI output in China.
We will be watching out for further announcements on large-scale HPAL
projects in Indonesia as well as the status updates on the Tsinghan's 50
ktpa project. While we believe that laterite leaching could become one of
the prospective alternatives to provide new battery grade nickel material,
we consider it by no means being of low capital intensity and technological
simplicity. HPAL projects have been notorious not only for their high CAPEX,
which historically was in the range of USD 50,000 - 100,000 per tonne of
capacity, but also for significant budget overruns and major ramp-up delays.
In our opinion, the economics of laterite leaching projects drastically
deteriorated recently as the by-product credit for cobalt (often contained
in laterite ores) has reduced alongside falling payable cobalt price. We do
not expect a recovery in cobalt price in the medium term due to a looming
oversupply of cobalt intermediates.
In 2019, we expect a 4% global nickel demand growth in stainless steel
driven mainly by Indonesia. Nickel consumption in specialty steels and
alloys should increase by approximately 3% driven largely by aerospace,
petrochemical and chemical processing industries.
In our view, nickel consumption in battery sector will increase by
approximately 20% in 2019, which would be below 2018 growth rate as the
shift to the NCM 8:1:1 formulation (nickel share in cathode material of 48%)
will unfold gradually and could take a few years. Overall, we believe that
EV penetration growth will remain the key driver for high-grade nickel
demand in the next 5-7 years.
We also do not expect that potential trade war between China and the US
could have a material negative impact on nickel demand as even if all
nickel-bearing goods imported from China were completely displaced from the
US market (20kt Ni pa), manufacturers from other regions would fill the
niche. The trade war could, nevertheless, possess a greater risk at the
macro level impacting the income levels and echoing at the local nickel
end-use in China.
Copper in 2018 - strong demand pushed the market into a small deficit; price
was volatile as concerns over the demand implications from the US-China
trade conflict and global economic slowdown offset robust industry
fundamentals; double-digit growth of copper imports to China alleviated
concerns over weak industrial consumption in the country; the supply
disruption rate was abnormally low, while scrap market remained constrained.
Copper price was on a rollercoaster in 2018. In 1H2018, expectations of
potential labour-related supply disruptions at copper mines in Chile and
Peru supported by the low level of exchange inventories and EV-related
positive market sentiment pushed the copper price to a 4-year high of USD
7,300 per tonne. An escalation of the US-China trade tensions, successful
negotiations between miners and trade unions in Latin America and rising
investors' pessimism on the expectations of global economic slowdown brought
copper price down to USD 5,800 per tonne in August 2018. In 4Q18, the price
stabilized in the range of USD 5,950 and USD 6,300 per tonne.
In 2018, the average LME copper price increased 6% y-o-y to USD 6,523 per
tonne.
In 2018, we estimate that global copper demand increased 3% y-o-y to 23.7
mln tonnes driven mostly by grid development in China, which was supported
by a moderate industrial consumption growth in Europe and the US. Weathering
out the market concerns over sustainability of copper demand growth in
China, the country recorded a very robust increase of refined copper (+13%
y-o-y) and copper concentrate (+14% y-o-y) imports. We estimate that the
market shifted into a small deficit of 120 kt deficit in 2018, while the
exchange stocks dropped 35% by the year end to 351 kt, which indicated a
very tight inventories level of 5 days of global consumption.
Copper outlook - neutral; Chinese demand growth of approximately 2% in 2019
is expected to be sufficient enough to keep the market in a small deficit,
which we forecast at approximately 320 kt; some major uncertainties remain.
In 2019, we expect that the Chinese copper demand (especially in
concentrates) will remain robust driven by the government stimulus measures
launched in 2018, which aimed at infrastructure expansion and support of
consumer demand. At the same time, we forecast that the supply will lag
behind the demand as new production from the ramping up greenfield projects
in Panama and Ecuador will be offset by output reduction in Chile and
Indonesia. Overall, in our view, the market will remain in apparent deficit
of approximately 320 kt or 1.3% of the global demand, which we do not
consider material and thus not suggesting any significant upside risks to
spot copper price.
The main risks to our copper market balance forecast include the Chinese
stimulus being not sufficient to support the demand, the US-China trade
tensions not getting resolved and global supply disruption ratio remaining
at the abnormally low level of 2018.
Palladium in 2018 - price rallied to almost USD 1,300 per ounce in late
December 2018 as the demand reached the all-time high of 10.7 mln ounces and
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DJ MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR -3-
structural deficit extended; premium to platinum expanded to USD 400 per
ounce with no signs of reverse substitution by the industrial users;
physical market was tight despite sales from ETFs and other above-ground
stocks.
After a short-term downward price correction in 1H 2018, palladium resumed
its rally heading to all-time high of USD 1,440 per ounce in January 2019.
In 2018, the market was in a structural deficit (ex. ETFs or other stock
movements) for the ninth consecutive year in a row. Nonetheless, only in the
last two years the apparent market deficit started to translate into real
physical tightness on the spot market as price sensitive stocks had been
depleted and metal lease rates increased five-fold as the forward curve went
into backwardation.
In 2018, the average LBMA palladium price increased 18% y-o-y to USD 1,029
per troy ounce.
In 2018, gross palladium demand reached an all-time high of 10.7 mln ounces
(+2% y-o-y) mostly driven by automotive sector, which increased metal
consumption 3% y-o-y to 8.6 mln ounces. Within the automotive sector the
following developments were supportive of palladium demand:
· Higher palladium offtake by the value chain in anticipation of tighter
environmental regulations rolled over in Europe, China, US, coupled with
the launch of technically challenging Real Driving Emission (RDE) testing;
· Powertrain shift to gasoline hybrids, SUVs and light trucks.
In 2018, gross supply was flat y-o-y. Mine production decreased 2% y-o-y
driven by mine closures and smelting bottlenecks in South Africa, while the
recycled volumes were up 11% y-o-y fully offsetting the primary supply
decline.
Spot palladium market practically dried out. Elevated lease rates at the end
of the summer and early autumn of 2018 indicated that the market was very
tight as the metal available for spot purchases was in shortage. Release of
stocks from palladium ETFs, which reduced below 1 mln ounces for the first
time since 2009, and supply of the extra metal by Nornickel's Palladium Fund
eased the market tightness to some extent.
Palladium outlook -positive; market deficit expected to amount to 0.8 mln
ounces in 2019 driven by strong demand on the back of tighter emission
regulations in all major markets; no reverse substitution into platinum is
anticipated due to technical challenges; palladium remains the metal of
choice for gasoline catalytic converters.
In 2019, we expect the palladium consumption to grow 500 koz to 11.2 mln
ounces owing to strong demand from autocatalyst producers. In spite of
slowing auto sales in China, we believe that the launch of China's 6
emission standard by July 2020 will provide additional demand for PGMs
already in 2019, as the industry will have to restock these metals across
the entire fabrication value chain. Moreover, the introduction of real
driving emission tests coupled with rising hybridization of the light
vehicles will put additional requirements on the car emission systems
implying additional demand for palladium.
In 2018 and year-to-date 2019, there has been no indications from the
industry of the substitution of palladium with platinum in gasoline vehicles
despite a substantial price difference. Contrary to a common market
misbelief, platinum and palladium are not fully interchangeable and
typically, more than one PGM is needed for a catalyst. Palladium has better
thermal durability and better NOx reduction properties than platinum, and
therefore, it is more efficient in contemporary gasoline vehicles.
In 2019, we expect primary supply to increase 280koz to 7.1 mln ounces on
the back of ramp-up of Stillwater's Blitz project and increase of production
in South Africa as a result of processing of the previously accumulated
stocks in the pipeline. Recycled volumes are forecasted to grow by 80koz to
3.3 mln ounces. Increase of gross supply, in our opinion, will not be able
to match rising demand and thus we are forecasting that the structural
deficit will persist in 2019 and will reach approximately 0.8 mln ounces.
Platinum in 2018 - pressure from lower automotive and jewelry demand
combined with the stable supply drove the price to 10-year lows.
In 2018, platinum price continued its downward trend, which started in 2017.
Soft demand from automotive and jewelry sectors as well as overall strong
anti-diesel sentiment pushed the price to its multi-year lows of
approximately USD 800 per ounce by the year-end. Improvement of the PGM
basket prices (supported by palladium and minor PGMs) had a positive effect
on the financial performance of South African miners, as a result of which,
in our view, they will likely to delay the restructuring of their
operations.
In 2018, the average LBMA platinum price decreased 7% y-o-y to USD 880 per
troy ounce.
Platinum outlook - cautiously positive; automotive and jewelry demand to
stabilize in 2019; no incentive to make investments into new mining projects
at current price levels; potential supply rationalization still feasible.
In 2019, we expect the automotive demand for platinum to be flat as the
anti-diesel story is gradually fading away. In our opinion, the concerns
over diesels are grossly overblown as the technology is critical to ensure
the EU fleet's compliance with the CO2 targets in 2021-2025 (especially for
heavy-duty engines). We also expect the stabilization of jewelry demand
together with increase in platinum consumption in electronics and other
industrial applications.
We forecast that supply in 2019 will increase 6% to 8.9 mln ounces driven
mostly by recycling and additional ounces coming from processing of stocks
accumulated in the producers' pipeline in South Africa. We have reasonable
expectations that industry rationalization could take place as, for
instance, subject to the completion of Sibanye's acquisition of Lonmin,
Rustenburg operations might face some curtailments.
In our view, most of negative news for platinum are already priced-in. We
believe that the risk-reward trade-off is now more skewed to upside as we
anticipate normalization of industrial consumption and rebound of investment
demand. For instance, platinum ETF holdings are 15% up 2019 to-date.
KEY SEGMENTAL HIGHLIGHTS1
USD million (unless stated otherwise) 2018 2017 Change,%
Revenue 11,670 9,146 28%
GMK Group 9,742 7,447 31%
KGMK Group 911 897 2%
NN Harjavalta 1,026 840 22%
GRK Bystrinskoye 8 15 (47%)
Other mining 108 128 (16%)
Other non-metallurgical 1,514 1,286 18%
Eliminations (1,639) (1,467) 12%
EBITDA 6,231 3,995 56%
GMK Group 6,602 4,559 45%
KGMK Group 190 182 4%
NN Harjavalta 71 61 16%
GRK Bystrinskoye 96 (65) n.a.
Other mining (6) (3) 100%
Other non-metallurgical 50 18 3x
Eliminations (13) (34) (62%)
Unallocated (759) (723) 5%
EBITDA margin 53% 44% 9 p.p.
GMK Group 68% 61% 7 p.p.
KGMK Group 21% 20% 1 p.p.
NN Harjavalta 7% 7% 0 p.p.
GRK Bystrinskoye n.a. n.a. n.a.
Other mining (6%) (2%) (4 p.p.)
Other non-metallurgical 3% 1% 2 p.p.
1) Segments are defined in the consolidated financial statements
In 2018, revenue of Group GMK segment increased 31% to USD 9,742 million.
This was primarily driven by higher realized metal prices, sales of
palladium stock accumulated in 2017 and higher copper production volumes.
The revenue of Group KGMK segment increased 2% to USD 911 million. The main
growth driver was higher realized metal prices, which was partly offset by
lower revenue from tolling operations of Polar Division's feed due to
depreciation of Russian rouble.
Revenue of NN Harjavalta increased 22% to USD 1,026 million mainly due to
higher realized metal prices.
Revenue of GRK Bystrinskoye generated during the hot commissioning phase is
included into other operating income and expenses.
Revenue of Other mining segment decreased 16% to USD 108 million mostly
driven by lower Nkomati production volumes that was partly offset by higher
realized metal prices.
Revenue of Other non-metallurgical segment increased 18% to USD 1,514
million owing to higher turnover of Palladium Fund.
In 2018, EBITDA of GMK Group segment increased 45% to USD 6,602 million
owing primarily to higher revenue and depreciation of Russian rouble.
EBITDA of Group KGMK segment increased 4% to USD 190 million primarily owing
to the increased revenue and lower cash costs due to depreciation of Russian
rouble.
EBITDA of NN Harjavalta increased by USD 10 million to USD 71 million owing
primarily to increased revenue.
EBITDA of GRK Bystrinskoye segment amounted to USD 96 million due to the
revenue generated during the hot commissioning stage.
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EBITDA of Other non-metallurgical segment increased by USD 32 million to USD
50 million.
EBITDA of Unallocated segment decreased 5% to a negative USD 759 million.
Higher selling, general and administrative expenses were partly offset by
lower one-off social expenses.
SALES VOLUME AND REVENUE 2018 2017 Change,%
Metal sales
Group
Nickel, thousand tons¹ 217 216 0%
from own Russian feed 208 206 1%
from 3d parties feed 2 9 (78%)
in semi-products³ 7 1 7x
Copper, thousand tons¹,² 455 386 18%
from own Russian feed 431 365 18%
from 3d parties feed - 3 (100%)
in semi-products³ 24 18 33%
Palladium, koz¹ 2,974 2,450 21%
from own Russian feed 2,913 2,353 24%
from 3d parties feed - 52 (100%)
in semi-products³ 61 45 36%
Platinum, koz¹ 668 667 0%
from own Russian feed 657 639 3%
from 3d parties feed - 18 (100%)
in semi-products³ 11 10 10%
Average realized prices of refined metals produced by the
Group
Metal
Nickel (USD per tonne) 13,531 10,704 26%
Copper (USD per tonne) 6,566 6,202 6%
Palladium (USD per oz) 1,025 858 19%
Platinum (USD per oz) 877 949 (8%)
Revenue, USD million4
Nickel 3,013 2,416 25%
including semi-products 175 113 55%
Copper 2,977 2,422 23%
including semi-products 144 141 2%
Palladium 3,674 2,434 51%
including semi-products 98 87 13%
Platinum 596 654 (9%)
including semi-products 20 31 (35%)
Other metals 702 489 44%
including semi-products 55 52 6%
Revenue from metal sales 10,962 8,415 30%
Revenue from other sales 708 731 (3%)
Total revenue 11,670 9,146 28%
1) All information is reported on the 100% basis, excluding sales of metals
and semi-products purchased from third parties and Nkomati
2) Excludes finish goods, produced by GRK "Bystynskoe"
3) Metal volumes represent metals contained in semi-products
4) Includes metals and semi-products purchased from third parties and
Nkomati
Nickel
Nickel sales contributed 27% to the Group's total metal revenue in 2018 (vs
29% in 2017). The decrease by 2 p.p. was driven by an increase of copper and
palladium sales volumes, which were partly offset by nickel price
outperforming other metals' prices.
In 2018, nickel revenue increased 25% y-o-y (or by +USD 597 million) to USD
3,013 million primarily due to higher realized metal price.
The average realized price of refined nickel produced from own feed
increased 26% to USD 13,531 per tonne in 2018 (vs USD 10,704 per tonne in
2017).
Sales volume of refined nickel produced from own Russian feed, increased by
1% (or +2 thousand tonnes) to 208 thousand tons.
Sales volume of nickel produced from third-party feed decreased 78% y-o-y to
2 thousand tonnes as Harjavalta reduced the processing volumes of
third-party feed.
In 2018, sales of nickel in semi-products increased 55% y-o-y to USD 175
million primarily owing to higher sales volume of semi-products.
Copper
In 2018, copper sales accounted for 27% of the Group's total metal sales,
increasing 23% (or +USD 555 million) y-o-y to USD 2,977 million primarily
owing to higher sales volume (+USD 435 million) as well as higher realized
price (+USD 120 million).
The average realized price of refined copper increased 6% from USD 6,202 per
tonne in 2017 to USD 6,566 per tonne in 2018.
Physical volume of refined copper sales from the Company's own Russian feed
increased 18% (or +66 thousand tons) to 431 thousand tons (excluding copper
in concentrates, produced by GRK "Bystrinskoe") owing to higher copper
production from concentrate purchased from Rostec.
Sales of refined copper, produced from third-party feed were completely
ceased (reduction by 3 thousand tons).
Revenue from copper in semi-products in 2018 slightly increased 2% to USD
144 million.
Palladium
In 2018, palladium remained the largest contributor to the Group's total
revenue, accounting for 34% (+ 5 p.p. y-o-y). Palladium revenue increased
51% (or +USD 1,240 million) to USD 3,674 million. The positive impact of
higher sales volume (+USD 526 million) was amplified by increased realized
price (+USD 406 million).
The average realized price of refined palladium produced from own feed
increased 19% from USD 858 per troy ounce in 2017 to USD 1,025 per troy
ounce in 2018.
Physical volume of refined palladium sales from the Company's own Russian
feed in 2018 increased 24% (or +560 thousand troy ounces) to 2,913 thousand
troy ounces. The increase in sales volume was driven by the sale of own
metals from stock accumulated in the Company's Palladium Fund in 2017.
Refined palladium sales from third-party feed were completely ceased as
processing of low-margin third-party feed was terminated in 2018.
Revenue of palladium in semi-products in 2018 increased by 13% to USD 98
million.
Additional USD 593 million to palladium revenue in 2018 was contributed by
the resale of metal purchased from third parties (vs USD 285 million in
2017).
Platinum
In 2018, platinum sales (5% of the Group's total metal revenue) decreased 9%
(or -USD 58 million) to USD 596 million following the decline of realized
platinum price (-USD 51 million), which was exacerbated by lower sales
volume (-USD 7 million).
Physical volume of refined platinum sales from the Company's own Russian
feed in 2018 increased by 3% (or +18 thousand troy ounces) to 657 thousand
troy ounces.
Revenue of platinum in semi-products in 2018 decreased 35% to USD 20 million
primarily due to decrease of sales volume of platinum in purchased
semi-products.
Other metals
In 2018, revenue from other metals increased 44% (+USD 213 million) to USD
702 million, primarily owing to higher revenue from cobalt (up 91%), rhodium
(up 84%) and gold (up 11%).
Other sales
In 2018, other sales decreased 3% to USD 708 million, primarily owing to
Russian rouble depreciation (-USD 47 million). Revenue increase in real
terms was primarily driven by increase in fuel and gas prices and higher
revenue from services provided by transport subsidiaries of the Group to
third parties.
COST OF METAL SALES
Cost of metal sales
In 2018, the cost of metal sales increased 14% (or +USD 568 million) to USD
4,536 million. Main factors contributing to it were:
· Decrease in cash operating costs by 2% (or -USD 81 million);
· Increase in depreciation charges by 4% (or +USD 23 million);
· Change in metal inventories y-o-y primarily due to sales of palladium
accumulated in 2017 (cost of metal sales increase by +USD 626 million).
Cash operating costs
In 2018, total cash operating costs decreased by 2% (or -USD 81 million) to
USD 3,774 million.
The positive effect of Russian rouble depreciation (-USD 200 million) was
partly offset by inflationary growth of cash operating costs by +USD 104
million.
Cost increase driven by the processing of Rostec concentrate (+USD 193
million) was partly offset by lower volumes of refined metals purchased for
resale (-USD 100 million) and headcount reduction (-USD 58 million) as part
of the 2018-2020 efficiency and cost optimization programme.
USD million 2018 2017 Change,
%
Labour 1,311 1,392 (6%)
Materials and supplies 727 732 (1%)
Purchases of raw materials and 436 297 47%
semi-products
Purchases of refined metals for resale 430 530 (19%)
Mineral extraction tax and other levies 212 221 (4%)
Third-party services 200 242 (17%)
Electricity and heat energy 143 143 0%
Fuel 87 81 7%
Transportation expenses 70 65 8%
Sundry costs 158 152 4%
Total cash operating costs 3,774 3,855 (2%)
Depreciation and amortisation 653 630 4%
Decrease/(increase) in metal inventories 109 (517) n.a.
Total cost of metal sales 4,536 3,968 14%
Labour
In 2018, labour costs decreased by 6% (or -USD 81 million) to USD 1,311
million amounting to 35% of the Group's total cash operating costs driven by
the following:
(MORE TO FOLLOW) Dow Jones Newswires
February 26, 2019 04:32 ET (09:32 GMT)
DJ MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR -5-
· -USD 89 million - cost decrease owing to the Russian rouble depreciation
against US Dollar;
· -USD 58 million - cost decrease following the headcount reduction as
part of 2018-2020 efficiency and cost optimization programme;
· +USD 66 million - increase in real terms primarily driven by the
indexation of RUB-denominated salaries and wages in line with collective
bargaining agreement.
Purchases of raw materials and semi-products
In 2018, purchases of raw materials and semi-products increased 47% (or USD
139 million) to USD 436 million driven by the following:
· +USD 193 million - cost increase owing to the processing of copper
concentrate purchased from Rostec;
· -USD 24 million - cost decrease owing to lower volumes of semi-products
purchased from Nkomati;
· -USD 23 million - cost reduction owing to lower volumes of purchased
semi-products from third parties for processing at NN Harjavalta.
Purchases of metals for resale
In 2018, expenses related to purchase of metals for resale decreased 19% (or
USD 100 million) to USD 430 million owing to lower metal volumes acquired by
the Company's Palladium Fund.
Materials and supplies
In 2018, materials and supplies expenses decreased by 1% (or USD 5 million)
to USD 727 million driven by the following factors:
· -USD 48 million - positive effect of the Russian rouble depreciation;
· +USD 32 million - inflationary growth in materials and supplies
expenses;
· +USD 14 million - increase in consumption of process materials that was
partly offset by a reduction in repairs.
Third-party services
In 2018, cost of third party services decreased by 17% (or USD 42 million)
to USD 200 million mainly driven by:
· -USD 15 million - positive effect of the Russian rouble depreciation;
· -USD 27 million - costs decrease primarily due to lower repairs and
outsourced concentrates recovery.
Mineral extraction tax and other levies
In 2018, mineral extraction tax and other levies decreased 4% (or by -USD 9
million) to USD 212 million driven by the depreciation of Russian rouble.
Electricity and heat energy
In 2018, electricity and heat energy expenses were flat year on year and
amounted to USD 143 million. Positive effect of Russian rouble depreciation
was partly offset by energy price inflation.
Fuel
In 2018, fuel expenses increased by 7% (or +USD 6 million) to USD 87 million
driven by the following:
· -USD 5 million - positive effect of the Russian rouble depreciation;
· +USD 11 million - higher oil prices.
Transportation expenses
In 2018, transportation expenses increased by 8% (or +USD 5 million) to
USD 70 million driven by the following:
· -USD 4 million - positive effect of the Russian rouble depreciation;
· +USD 7 million - costs increase driven by outsourcing of Kola MMC
transportation activities and increase in metal production volumes.
Sundry costs
In 2018, sundry costs increased by 4% (or +USD 6 million) to USD 158
million.
Depreciation and amortisation
In 2018, depreciation and amortisation expenses increased by 4% (or +USD 23
million) to USD 653 million.
Positive effect of Russian rouble depreciation amounted to -USD 37 million.
Depreciation charges increased by +USD 60 million mainly due to transfers
from construction in progress to production assets at the Company's
operating subsidiaries in Russia and completion of downstream
reconfiguration in 2H2017.
Decrease/(increase) in metal inventories
In 2018, comparative effect of change in metal inventory amounted to USD 626
million resulting in an increase of cost of metal sales, driven by the
following:
· +USD 510 million - comparative effect of change in finished goods
inventories owing primarily to the sale of palladium stock accumulated in
2017;
· +USD 116 million - comparative effect of slower growth of
work-in-progress inventory relative to the prior year that resulted in
cost increase.
COST OF OTHER SALES
In 2018, cost of other sales decreased by -USD 10 million to USD 622
million.
Russian rouble depreciation contributed to the reduction of the cost of
other sales by
-USD 41 million.
Cost of other sales increased in real terms by +USD 31 million primarily due
to inflation, higher volumes of services provided by the Group's
transportation subsidiaries, indexation of RUB-denominated salaries and
wages, and growth of other services.
SELLING AND DISTRIBUTION EXPENSES
USD million 2018 2017 Change,%
Transportation expenses 39 38 3%
Marketing expenses 31 14 2x
Staff costs 14 13 8%
Other 8 10 (20%)
Total 92 75 23%
In 2018, selling and distribution expenses increased 23% (or +USD 17
million) to USD 92 million primarily due to increase of marketing expenses
(+USD 17 million), including sponsorship of various sport activities.
GENERAL AND ADMINISTRATIVE EXPENSES
USD million 2018 2017 Change,%
Staff costs 541 478 13%
Taxes other than mineral extraction tax and 103 79 30%
income tax
Third party services 93 97 (4%)
Depreciation and amortisation 38 32 19%
Rent expenses 23 25 (8%)
Transportation expenses 9 8 13%
Other 52 40 30%
Total 859 759 13%
In 2018, general and administrative expenses increased 13% (or +USD 100
million) to USD 859 million. Positive effect of Russian rouble depreciation
amounted to -USD 50 million. General and administrative expenses increased
in real terms primarily due to the following:
· +USD 95 million - increase in staff costs mainly due to one-off payments
related to bonuses paid for the completion of key projects, changes in the
Management Board as well as salary indexation;
· +USD 29 million - higher property tax owing to changes in tax
legislation in 2018 and additions of property, plant and equipment on the
books of Polar division and GRK "Bystrinskoye".
OTHER OPERATING INCOME AND EXPENSES
USD million 2018 2017 Change,%
Social expenses 207 303 (32%)
Change in allowance for obsolete and 15 11 36%
slow-moving inventory
Change in allowance for expected credit 6 19 (68%)
losses
Net income earned during the (106) - (100%)
pre-commissioning stage
Other, net (27) 29 n.a.
Total 95 362 (74%)
In 2018, other net operating expenses decreased -USD 267 million to USD 95
million driven by the following factors:
· Decrease of social expenses by -USD 96 million primarily owing to the
completion of large-scale one-off social projects;
· Net income earned by GRK "Bystrinskoye" from products sale during the
hot commissioning stage (-USD 106 million).
FINANCE COSTS
USD million 2018 2017 Change,%
Interest expense on borrowings net of amounts 384 386 (1%)
capitalized
Unwinding of discount on provisions and 100 133 (25%)
payables
Changes in fair value of cross-currency 51 - 100%
interest rate swap
Changes in fair value of non-current 46 - 100%
liabilities
Other, net (1) 16 n.a.
Total 580 535 8%
Increase in finance costs by 8% y-o-y to USD 580 million was mainly driven
by changes in fair value of derivative contracts, namely cross-currency
interest rate swaps, and non-current liabilities. Interest expense on
borrowings (net of amounts capitalized) marginally decreased.
The Company managed to maintain the average cost of debt at the prior-year
level, despite an increase of base interest rates (LIBOR) in the reporting
period, as the result of a number of debt optimization initiatives,
including:
· Refinancing some relatively expensive bilateral credit lines with the
proceeds of 5-year USD 2.5 billion syndicated term loan, secured by the
Company at the end of 2017 at interest rate of Libor 1M+1.50% per annum;
· Decrease in the effective interest rate on a number of existing credit
lines totaling USD 755 million; and
· Early termination of relatively expensive GRK "Bystrinskoe" Project
Finance Loan in August 2018.
INCOME TAX EXPENSE
In 2018, income tax expense increased by 17% to USD 843 million driven
mostly by the increase of taxable profit, partly offset by Russian rouble
depreciation against US Dollar in 2018.
The effective income tax rate in 2018 of 21.6% was above the Russian
statutory tax rate of 20%, which was primarily driven by non-deductible
social expenses.
USD million 2018 2017 Change,%
Current income tax expense 812 686 18%
Deferred tax expense 31 35 (11%)
Total 843 721 17%
The breakdown of the current income tax expense by tax
jurisdictions:
USD million 2018 2017 Change,%
(MORE TO FOLLOW) Dow Jones Newswires
February 26, 2019 04:32 ET (09:32 GMT)
DJ MMC Norilsk Nickel: NORNICKEL REPORTS FULL YEAR -6-
Russian Federation 789 672 17%
Finland 11 8 38%
Other countries 12 6 100%
Total 812 686 18%
EBITDA
USD million 2018 2017 Change,%
Operating profit 5,416 3,123 73%
Depreciation and amortisation 765 645 19%
Impairment of non-financial assets 50 227 (78%)
EBITDA 6,231 3,995 56%
EBITDA margin 53% 44% 9 p.p.
In 2018, EBITD? increased by 56% (or +USD 2,236 million) to USD 6,231
million with the EBITDA margin amounting to 53% (up from 44% in 2017) owing
to higher metal revenue, decrease of one-off social expenses and Russian
rouble depreciation.
NET PROFIT BEFORE NON-CASH WRITE-OFFS AND FOREIGN EXCHANGE DIFFERENCES
USD million 2018 2017 Change,%
Net profit 3,059 2,123 44%
Impairment of non-financial assets 50 227 (78%)
Foreign exchange loss/(gain), net 1,029 (159) n.a.
Gain from disposal of subsidiaries - (20) 100%
Net profit before non-cash write offs and 4,138 2,171 91%
foreign exchange differences
STATEMENT OF CASH FLOWS
USD million 2018 2017 Change,%
Cash generated from operations before 6,339 4,103 54%
changes in working capital and income
tax
Movements in working capital 941 (1,670) n.a.
Income tax paid (787) (670) 17%
Net cash generated from operating 6,493 1,763 4x
activities
Capital expenditure (1,553) (2,002) (22%)
Other investing activities (9) 66 n.a.
Net cash used in investing activities (1,562) (1,936) (19%)
Free cash flow 4,931 (173) n.a.
Interest paid (551) (642) (14%)
Other financing activities (3,753) (1,595) 2x
Net cash used in financing activities (4,304) (2,237) 92%
Effects of foreign exchange differences (91) (63) 44%
on balances of cash and cash
equivalents
Net increase/(decrease) in cash and 536 (2,473) n.a.
cash equivalents
In 2018, free cash flow increased to USD 4.9 billion primarily due to higher
cash generated from operating activities and lower CAPEX.
In 2018, net cash generated from operating activities increased 4-fold to
USD 6.5 billion primarily driven by the increase in EBITDA and decrease of
working capital in 2018 (versus increase in 2017).
Interest paid reduced by 14% to USD 551 million as a result of the
optimization of debt portfolio.
Reconciliation of the net working capital changes between the balance sheet
and cash flow statement is presented below.
USD million 2018 2017
Change of the net working capital in the balance 1,282 (1,694)
sheet
Foreign exchange differences (277) 115
Change in income tax payable (5) (7)
Other changes including reserves (59) (84)
Change of working capital per cash flow 941 (1,670)
Capital investments breakdown by project is presented below:
USD million 2018 2017 Change,%
Polar Division, including: 696 860 (19%)
Skalisty mine 218 216 1%
Taymirsky mine 71 93 (24%)
Komsomolsky mine 44 18 2x
Oktyabrsky mine 40 69 (42%)
Talnakh Concentrator 29 89 (67%)
Sulphur project 36 37 (3%)
Other Polar Division projects 258 338 (24%)
Kola MMC 292 228 28%
Chita (Bystrinsky) project 168 449 (63%)
Other production projects 386 453 (15%)
Other non-production assets 11 12 (8%)
Total 1,553 2,002 (22%)
In 2018, CAPEX decreased by 22% to USD 1.6 billion primarily due to the
completion of Talnakh Concentrator modernization and the construction of
Chita project as well as the projects related to the development of
Pelyatkinskoye gas condensate field.
DEBT AND LIQUIDITY MANAGEMENT
USD million As of 31 As of 31 Change, Change,
December December %
2018 2017
USD million
Long-term 8,224 8,236 (12) 0%
Short-term 215 817 (602) (74%)
Total debt 8,439 9,053 (614) (7%)
Cash and cash 1,388 852 536 63%
equivalents
Net debt 7,051 8,201 (1,150) (14%)
Net debt /12M 1.1x 2.1x (1.0x)
EBITDA
As of December 31, 2018, the Company's total debt decreased by 7% (or -USD
614 million) from December 31, 2017 and amounted to USD 8,439 million. The
Company's debt portfolio remained predominantly long-term at the end of 2018
with the share of long-term debt of 97% (or USD 8,224 million) as compared
to 91% (or USD 8,236 million) as of December 31, 2017.
Net debt/12M EBITDA ratio reduced to 1.1x as of December 31, 2018 from 2.1x
as of December 31, 2017. The reduction of leverage resulted both from the
decline of net debt by 14% to USD 7,051 million through the increase in cash
and cash equivalents by 63% to USD 1,388 million and decrease in the
Company's total debt and from increase of EBITDA by 56% (or +USD 2,236
million). Substantial growth of cash and cash equivalents was driven, inter
alia, by the increase in advances received from customers in the amount of
USD 900 million during 2018 at cost on par or lower of the cost of bank
financing available for the Company. In 2018, the Company continued to build
up and diversify its liquidity position, increasing committed credit lines
to USD 4,290 million by December 31, 2018, and having registered in Q4 2018
the 30-year bond programme for a total amount of RUB 300 billion or the
equivalent in other currencies.
In 2018, Nornickel continued to optimize its debt portfolio aiming at the
extension of debt maturity and a reduction of foreign exchange risks of its
financial liabilities, which allowed to maintain short-term debt refinancing
risk as well as the share of RUB-denominated debt in the debt portfolio at a
low level.
On January 29, 2018, Moody's upgraded the Company's credit rating to
investment grade level of "Baa3" with "Positive" outlook in the wake of
change of Russia's sovereign ceiling for foreign currency debt to "Baa3"
from "Ba1" and change of Russia's sovereign outlook to "Positive" from
"Stable". In Q4 2018, S&P Global and Fitch affirmed the Company's credit
ratings at investment grade level of "BBB-" with "Stable" outlook. On
November 30, 2018, Russian rating agency "Expert RA" assigned Nornickel its
highest Russian credit rating "ruAAA" with "Stable" outlook. Therefore, as
of December 31, 2018, Nornickel had investment grade credit ratings assigned
from all three international rating agencies Fitch, Moody's and S&P Global,
and Russian credit agency "Expert RA".
Attachment A
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2018
US Dollars million
For the year For the year
ended 31 ended 31
December 2018 December 2017
Revenue
Metal sales 10,962 8,415
Other sales 708 731
Total revenue 11,670 9,146
Cost of metal sales (4,536) (3,968)
Cost of other sales (622) (632)
Gross profit 6,512 4,546
General and administrative (859) (759)
expenses
Selling and distribution (92) (75)
expenses
Impairment of (50) (227)
non-financial assets
Other operating income and (95) (362)
expenses
Operating profit 5,416 3,123
Foreign exchange (1,029) 159
(loss)/gain, net
Finance costs (580) (535)
Gain from disposal of - 20
subsidiaries
Income from investments 95 77
Profit before tax 3,902 2,844
Income tax expense (843) (721)
Profit for the year 3,059 2,123
Attributable to:
Shareholders of the parent 3,085 2,129
company
Non-controlling interests (26) (6)
3,059 2,123
EARNINGS PER SHARE
Basic and diluted earnings
per share attributable to
shareholders of
the parent company (US 19.5 13.5
Dollars per share)
Attachment B
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2018
US Dollars million
At 31 December At 31 December
2018 2017
ASSETS
Non-current assets
(MORE TO FOLLOW) Dow Jones Newswires
February 26, 2019 04:32 ET (09:32 GMT)
Property, plant and 9,934 10,960
equipment
Intangible assets 163 148
Other financial assets 141 192
Deferred tax assets 73 77
Other non-current assets 386 732
10,697 12,109
Current assets
Inventories 2,280 2,689
Trade and other receivables 204 327
Advances paid and prepaid 75 71
expenses
Other financial assets 147 99
Income tax receivable 92 82
Other taxes receivable 271 296
Cash and cash equivalents 1,388 852
Other current assets 97 110
4,554 4,526
TOTAL ASSETS 15,251 16,635
EQUITY AND LIABILITIES
Capital and reserves
Share capital 6 6
Share premium 1,254 1,254
Translation reserve (5,343) (4,490)
Retained earnings 7,306 7,557
Equity attributable to 3,223 4,327
shareholders of the parent
company
Non-controlling interests 250 331
3,473 4,658
Non-current liabilities
Loans and borrowings 8,224 8,236
Provisions 365 464
Trade and other long-term 200 402
payables
Derivative financial 61 -
instruments
Deferred tax liabilities 385 407
Other long-term liabilities 185 116
9,420 9,625
Current liabilities
Loans and borrowings 215 817
Trade and other payables 1,551 783
Dividends payable 6 6
Employee benefit 307 377
obligations
Provisions 77 189
Derivative financial 5 24
instruments
Income tax payable 35 9
Other taxes payable 162 147
2,358 2,352
TOTAL LIABILITIES 11,778 11,977
TOTAL EQUITY AND 15,251 16,635
LIABILITIES
Attachment C
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
US Dollars million
For the year ended For the year ended
31 December 2018 31 December 2017
OPERATING ACTIVITIES
Profit before tax 3,902 2,844
Adjustments for:
Depreciation and 765 645
amortisation
Impairment of 50 227
non-financial assets
Loss on disposal of 1 9
property, plant and
equipment
Gain from disposal of - (20)
subsidiaries
Change in provisions and 61 41
allowances
Finance costs and income 485 458
from investments, net
Foreign exchange 1,029 (159)
loss/(gain), net
Other 46 58
6,339 4,103
Movements in working
capital:
Inventories 297 (346)
Trade and other 102 (174)
receivables
Advances paid and prepaid (5) 10
expenses
Other taxes receivable (15) (5)
Employee benefit 11 9
obligations
Trade and other payables 676 (1,118)
Provisions (28) (48)
Other taxes payable (97) 2
Cash generated from 7,280 2,433
operations
Income tax paid (787) (670)
Net cash generated from 6,493 1,763
operating activities
INVESTING ACTIVITIES
Purchase of property, (1,480) (1,940)
plant and equipment
Purchase of intangible (73) (62)
assets
Purchase of other (104) (88)
non-current assets
Loans issued (7) (18)
Proceeds from repayment 13 48
of loans issued
Net change in deposits 5 (80)
placed
Proceeds from sale of - 9
other financial assets
Proceeds from disposal of 3 29
property, plant and
equipment
Proceeds from disposal of - 99
subsidiaries
Interest and other 81 67
investment income
received
Net cash used in (1,562) (1,936)
investing activities
Attachment C
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018 (CONTINUED)
US Dollars million
For the year ended For the year ended
31 December 2018 31 December 2017
FINANCING ACTIVITIES
Proceeds from loans and 2,173 4,233
borrowings
Repayments of loans and (2,547) (3,140)
borrowings
Financial lease payments (9) (10)
Dividends paid (3,369) (2,971)
Dividends paid to (1) (1)
non-controlling interest
Interest paid (551) (642)
Proceeds from sale of a - 294
non-controlling interest
in a subsidiary
Net cash used in (4,304) (2,237)
financing activities
Net increase/(decrease) 627 (2,410)
in cash and cash
equivalents
Cash and cash 852 3,325
equivalents at the
beginning of the year
Effects of foreign (91) (63)
exchange differences on
balances of cash and
cash equivalents
Cash and cash 1,388 852
equivalents at the end
of the year
Attachment D
NET WORKING CAPITAL
USD million 31/12/2018 31/12/2017 Change incl.
effects of
foreign
exchange
differences
Finished goods 526 655 (129) (81)
Work-in-process 1,134 1,329 (195) (234)
Other inventories 620 705 (85) (126)
Trade and other 204 327 (123) (15)
receivables
Advances paid and 75 71 4 (17)
prepaid expenses
Taxes receivable 363 378 (15) (61)
Employee benefit (307) (377) 70 64
obligations
Trade and other (1,551) (783) (768) 165
payables
Taxes payable (197) (156) (41) 28
Total working capital 867 2,149 (1,282 (277)
)
This announcement contains inside information in accordance with Article 7
of EU Regulation 596/2014 of 16 April 2014.
Full name and position of person making the announcement - Vladimir Zhukov,
Vice - president, Investor Relations
ABOUT THE COMPANY
PJSC MMC NORILSK NICKEL is a diversified mining and metallurgical company,
the world's largest producer of refined nickel and palladium and a leading
producer of platinum, cobalt, copper and rhodium. The company also produces
gold, silver, iridium, selenium, ruthenium and tellurium.
The production units of NORILSK NICKEL Group include the Polar Division,
located at the Norilsk Industrial District on Taimyr Peninsula, Kola Mining
and Metallurgical Company located on the Kola Peninsula and Bystrinski GOK
in the Zabaikalsky region in Russia as well as Harjavalta nickel refinery in
Finland.
PJSC MMC NORILSK NICKEL shares are listed on the Moscow and on the
Saint-Petersburg Stock Exchanges. PJSC MMC NORILSK NICKEL ADRs trade over
the counter in the US and on the London and Berlin Stock Exchanges.
Media Relations: Investor Relations::
Phone: +7 (495) 785 58 00 Phone: +7 (495) 786 83 20
Email: pr@nornik.ru Email: ir@nornik.ru
ISIN: US55315J1025
Category Code: MSCH
TIDM: MNOD
Sequence No.: 7619
EQS News ID: 781063
End of Announcement EQS News Service
(END) Dow Jones Newswires
February 26, 2019 04:32 ET (09:32 GMT)
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