Norilsk Nickel Reports 1Half 2016 Financial Results
1H 2016 HIGHLIGHTS
• Focus on Tier 1 assets, cost controls and investment discipline enabled Norilsk Nickel to deliver the industry leading profitability despite weak commodity markets. EBITDA margin of 47% was the highest among global diversified mining majors as a result of control over cash operating costs inflation and the exit from international and non-core assets.
• Consolidated revenue decreased by 22% y-o-y to USD 3.8 billion, mainly owing to lower realized metal prices and one-off decrease of metal production due to the downstream reconfiguration in the Polar division was in part positively offset by sales of metal from stock accumulated in 4Q2015.
• EBITDA was down by 34% y-o-y to USD 1.8 billion following a reduction of revenue, while net profit decreased only by 13% y-o-y to USD 1.3 billion, as one-off operations in 1H16 decreased relative to the prior period.
• CAPEX increased by 24% y-o-y to USD 0.7 billion as a result of the capacity expansion and modernization of Talnakh concentrator and advancement of other downstream reconfiguration investment projects as well as the Chita (Bystrinsky) project being at an active construction phase. All major investment projects were carried out on time and on budget.
• In line with the strategy of de-risking the greenfield Chita project, the Company arranged an 8-year USD 800 million project financing facility from Sberbank CIB .
• Net working capital was down by 8% y-o-y to less than USD 1 billion as a result of the decrease of saleable metal inventories.
• Free cash flow decreased to USD 0.6 billion, owing to lower EBITDA, increased capital expenditures and slower rate of working capital release in 1H16.