Nornickel Reports Surge in Results for H1 of 2021
Norilsk Nickel has reported that its consolidated revenue in H1 of 2021 increased 33% YoY to USD 8.9 billion owing to higher metal prices and increase of palladium sales volumes, which have more than offset production losses caused by the temporary suspension of Oktyabrsky and Taimyrsky mines due to their flooding and Norilsk concentrator, following an incident in February this year
After the water inflow to the underground mines was effectively stopped in late March, the Oktyabrsky mine resumed full production by the middle of May, while the Taimyrsky mine has been restored to 80% capacity and is expected to return to full capacity by the end of this November. Norilsk concentrator has reached 85% of its design capacity and is expected to return to full operations in early October this year
EBITDA increased three-fold YoY to USD 5.7 billion due to higher revenue and lower base effect of 1H2020, when USD 2.1 billion environmental provision related to the diesel fuel spill in Norilsk industrial area in May 2020 was recognized
CAPEX increased 80% YoY to almost USD 1 billion driven by stepped up investments in Sulfur project, South Cluster development as well as increased capital repairs and equipment upgrades investments aiming at the improvement of industrial safety and modernization of core assets;
Net working capital increased more than two-fold to USD 1.8 billion mostly driven by one-off and seasonal factors such as changes in income tax payable and amortization of advance payments by customers. The Company confirms its working capital target of approximately USD 1 billion by the end of 2021;
Free cash flow decreased 48% y-o-y to USD 1.4 billion driven by the reimbursement for the environmental damages in the amount of USD 2.0 billion and increased capital expenditures;
In July 2021, Nornickel got a lawsuit from the Federal Agency for Fishery for 58.7 billion rubles. Based on the preliminary analysis the Group believes that the amount of damages in monetary terms to aquatic bioresources resulting from the 2020 diesel fuel spill as stated in the lawsuit by Rosrybolovstvo is overstated. It exceeds by many times the results of investigations carried out by specialized scientific institutions and experts, which have assessed the impact of this incident on aquatic bioresources. After completion of the analysis of the lawsuit, management plans to defend position of the Company in court and provide it’s calculation of damages.