DJ NORNICKEL REPORTS FULL YEAR 2020 AUDITED CONSOLIDATED IFRS FINANCIAL RESULTS
MMC Norilsk Nickel (MNOD)
NORNICKEL REPORTS FULL YEAR 2020 AUDITED CONSOLIDATED IFRS FINANCIAL RESULTS
16-Feb-2021 / 14:30 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.
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PRESS RELEASE
Public Joint Stock Company «Mining and Metallurgical Company «NORILSK NICKEL» (PJSC «MMC «NORILSK NICKEL», «Nornickel»,
the «Company», the «Group»)
NORNICKEL REPORTS FULL YEAR 2020 AUDITED CONSOLIDATED IFRS FINANCIAL RESULTS
Moscow, February 16, 2021 - Nornickel the world's largest producer of palladium and high-grade nickel and a major
producer of platinum and copper, reports audited consolidated IFRS financial results for the full year ended December
31, 2020.
FY2020 HIGHLIGHTS
- Consolidated revenue increased 15% y-o-y to USD 15.5 billion owing to higher prices of palladium and rhodium as
well as the scheduled ramp-up of Bystrinsky project;
- EBITDA decreased 3% y-o-y to USD 7.7 billion due to the USD 2 billion environmental provision related to the
reimbursement of environmental damages caused by the fuel spill at the Polar Division, expenses related to
containment of COVID-19 spread and increase of inventory of saleable metals;
- CAPEX increased 33% y-o-y to USD 1.8 billion owing to the execution of mining projects at Talnakh deposit,
development of South Cluster, increased capital repairs of energy infrastructure, investments into improvement of
industrial safety as well as the launch of an active construction phase of the Sulfur project;
- Net working capital decreased 28% to USD 0.7 billion mainly driven by the depreciation of the Russian rouble and
changes in income tax payable, which was partly compensated by increase of inventory of saleable metals;
- Free cash flow increased 36% y-o-y to USD 6.6 billion driven by higher revenue and scheduled ramp-up of Bystrinsky
project;
- Net debt was down 33% y-o-y to USD 4.7 billion. Net debt/EBITDA ratio decreased to 0.6x as of December 31, 2020.
The Company's financial stability was confirmed by investment grade credit ratings from all three major rating
agencies;
- On May 29, 2020, diesel fuel leaked from the emergency fuel tank at the heat and power plant ?3 (HPP-3) due to
sudden sinking of support posts based in permafrost. By now, the main phase of the clean-up operations has been
completed;
- On September 10, 2020, the Federal Service for Supervision of Natural Resources ("Rosprirodnadzor") filed a claim
with the Arbitration Court of the Krasnoyarsk region seeking compensation from the Company of damages caused to the
environment in the amount of RUR 147.78 billion (or approximately USD 2 billion);
- In September 2020, the Company successfully placed a 5-year USD 500 mln eurobond offering with a record low annual
coupon rate of 2.55%;
- In December 2020, in line with its complex environmental programme the Company shut down a smelter at Nickel town
(Kola GMK), which resulted in the complete elimination of sulphur dioxide emissions in the cross-border area with
Norway and alongside other environmental initiatives should enable a reduction of sulphur dioxide emissions in the
Murmansk region by 85% by the end of 2021.
- In response to coronavirus, the Company provided a comprehensive support to safeguard the health and safety of its
employees and regional communities s. In total, the Group spent USD 157 million net of VAT to prevent and combat
spread of COVID-19;
- Starting from 2021, Mineral Extraction Tax has been increased 3.5x for certain minerals, including ores mined by
Norilsk Nickel.
RECENT DEVELOPMENTS
- In January 2021, investment tokens backed by physical metal were issued using EU-registered financial vehicle
listed on Deutsche Börse and London Stock Exchange;
- On February 5, 2021, Arbitration Court of Krasnoyarsk Kray announced that it decided to award diesel spill damages
claimed by Rosprirodnadzor in the amount of RUB 146.2 bn (USD 1 979 million at the exchange rate as of December 31,
2020). The Company has set up a provision that fully covers both the damages and the expenses related to
liquidation of incident consequences and rehabilitation of disturbed area;
- On February 12, 2021, the Company made an early repayment of exchange-traded bonds in the amount of RUB 15 billion
(USD 203 million at the exchange rate as of 31 December 2020).
KEY CORPORATE HIGHLIGHTS
USD million (unless stated otherwise) 2020 2019 Change,%
Revenue 15,545 13,563 15%
EBITDA¹ 7,651 7,923 (3%)
EBITDA margin 49% 58% (9 p.p.)
Net profit 3,634 5,966 (39%)
Capital expenditures 1,760 1,324 33%
Free cash flow² 6,640 4,889 36%
Normalized net working capital2,5 712 985 (28%)
Net debt² 4,705 7,060 (33%)
Net debt, normalized for the purpose of dividend calculation? 3,469 4,952 (30%)
Net debt/12M EBITDA 0.6x 0.9x (0.3x)
Net debt/12M EBITDA for dividends calculation 0.5x 0.6x (0.1x)
Dividends paid per share (USD)³ 26.3 26.3 0%
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 (at the rate of the Board of Directors meeting date) and deposits with maturity of more than 90 days
5) Normalized on receivables from the registrar on transfer of dividends to shareholders
MANAGEMENT DISCUSSION AND ANALYSIS
The President of Nornickel, Vladimir Potanin, commented on the results,
"In 2020, our Company faced a number of major challenges that required a maximum effort from all employees, and I want to emphasize that we have managed to overcome them. The coronavirus pandemic has not only led to an unprecedented global economic recession and, therefore, a substantial drop in demand for our metals, but also affected our operating model, our personnel, their families and other stakeholders. However, the timely support that we have provided to regional governments, regional healthcare systems and socially vulnerable communities as well as safeguarding measures, which have been introduced for our employees, allowed us to pass the peak of the pandemic without any material impact on our operations.
In the end of May 2020, we experienced a major environmental incident related to the leak of diesel fuel in Norilsk industrial area. The Company immediately started a comprehensive clean-up operation, with the main phase of which being completed by the end of 2020. We are currently developing the most effective approach for the rehabilitation of the damaged ecosystem in close cooperation with all stakeholders and taking into consideration the recommendations of the Great Norilsk Expedition organized by the Russian Academy of Sciences with a support from Nornickel.
The Company has drawn an important lesson from this incident and dramatically reviewed its approach to environmental risk management, water stewardship, biodiversity restoration and climate change, having set specific targets in each of these areas.
The Company intends to increase its investments into industrial safety and an upgrade of energy infrastructure, gradually substituting the use of diesel fuel with natural gas that has a lower carbon footprint. We also confirm our commitment to reach the targets set in our Sulfur programme and dramatically reduce our adverse impact on the environment. As part of this programme, we shut down a Kola MMC's smelter at Nickel town that along with other initiatives should enable a reduction of sulfur dioxide emissions at Kola peninsula by 85% by the end of 2021.
We delivered strong financial results in 2020. Our revenue increased 15% to USD 15.5 billion driven by higher prices of palladium and rhodium and the ramp up of Bystrinsky project. EBITDA was down 3% to USD 7.7 billion due to a large environmental provision related to the damages caused by the fuel spill, COVID-related expenses and temporary build-up of metal inventory. Capital expenditures in rouble terms increased more than 50%, while in dollar terms they were up 33% to USD 1.8 billion.
Our net debt decreased more than 30% with net debt/EBITDA ratio falling to 0.6x. Financial stability of the Company was confirmed by investment grade credit ratings from all three major global rating agencies"
HEALTH AND SAFETY
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