MMC Norilsk Nickel reports first half 2013 unaudited interim consolidated IFRS financial
Moscow, August 29, 2013 - OJSC MMC Norilsk Nickel ('MMC Norilsk Nickel', the 'Company' or the 'Group'), the largest nickel and palladium producer in the world, today reports unaudited financial results for the six months ended June 30, 2013. 1H 2013 HIGHLIGHTS
- Robust financial results despite turbulent macro environment and weakening commodity prices.
- Revenue amounted to USD 5.6 billion, down 6.1% y-o-y owing to weak metal prices and lower sales volumes of nickel and platinum.
- EBITDA decreased 7.8% y-o-y to USD 2.3 billion driven by lower metals revenue, which was partially off-set by improved sales and distribution performance and a substantial decrease in SG&A.
- EBITDA margin demonstrated resilience reaching 41% (vs 42% in 1H 2012) due to effective cost controls.
- Net profit of USD 545 million was down 63% y-o-y owing to USD 636 million of non-cash write-offs; net profit, excluding non-cash write-offs, amounted to USD1.2 billion and was down 21%.
- Despite substantial revenue contraction net cash flow from operating activities of USD 1.6 billion was practically unchanged y-o-y owing to better management of working capital.
- CAPEX decreased by 21% y-o-y to USD 0.9 billion as the management adopted more stringent capital allocation discipline, with expected mandatory CAPEX savings of at least USD 300 million for the full year 2013.
- Annual dividends for 2012 were paid in the amount of RUB 400.8 (approximately USD 12.9) per ordinary share underlying the Company's commitment to shareholder returns.
- The restructuring of the corporate head office was launched aiming to bring management practices in line with global industry standards and a new management team was appointed.
- Strategic review on non-core businesses and selected international assets was launched.
RECENT DEVELOPMENTS
- On August13, 2013 the Company reduced its share capital by 8.08% through cancellation of 13,911,346 treasury shares, thus fully completing the redemption of treasury stock announced in December 2012.
KEY HIGHLIGHTS
| USD million unless stated otherwise | 1H2013 | 1H2012 | Change y-o-y |
| Revenue | 5,565 | 5,929 | (6.1%) |
| Gross profit | 2,432 | 2,875 | (15.4%) |
| EBITDA | 2,299 | 2,494 | (7.8%) |
| EBITDA Margin | 41% | 42% | (1 p.p.) |
| Net profit | 545 | 1,481 | (63.2%) |
| Net profit adjusted for impairment of financial and non-financial assets | 1,181 | 1,497 | (21.1%) |
| Net cash from operating activities | 1,615 | 1,658 | (2.6%) |
| Net debt | 5,065 | 3,986 | 27.1% |
| Net debt/EBITDA | 1.1x | 0.8x | n/a |
| Capital expenditures | 884 | 1,115 | (20.7%) |
OUTLOOK
We expect the global macro uncertainty to persist in 2H13, but note a stabilization of the economic growth in China and some early signs of the economic recovery in the developed world. We believe that nickel price is bottoming out, but a price recovery to be capped by market surplus. We expect platinum and palladium to remain in deficit owing to supply issues of mined material and a low volume of metal coming from inventory, with the discount of palladium to platinum reducing further. The company is currently running a comprehensive strategy review, the results of which we plan to reveal to the public in 4Q 2013.
Commenting on the results Chief Executive Officer of the Company Vladimir Potanin said, 'These are the first results of the new management team and while these are the early signs, I am pleased to see that the Company delivered a strong a resilient performance against the backdrop of unfavourable market conditions. By implementing a range of optimization and fixed costs reduction measures we achieved a six-month EBITDA of USD2.3 billion - thus recording the industry-leading margin of 41%, almost at the same level as in a prior year, despite a material decline in our revenue base.
The focus for us for the coming months will be on finalizing our new strategy, which will be presented to the investment community in the fourth quarter this year. The new strategy of Norilsk will be built around unleashing the full commercial potential of our unique resource base in Taimyr and taking the Company's capital discipline and return-based investment governance to and beyond the level of the global peer group. We are pleased to see that our new initiatives on capital allocation have already allowed the Company to reduce its like-for-like capital expenditures in the first half of 2013 by c. USD 200-300 million without sacrificing the scope or the commercial results of our investment projects.
Although our current performance is strong, we remain wary of the continued macroeconomic uncertainty and downward price pressure on our core metals. In these challenging conditions, we believe that this is utmostly important to reiterate our commitment to shareholder value, strict capital discipline and continued optimization of our cost structure.'
Full version: http://www.nornik.ru/_upload/editor_files/file2209.pdf
For further information, please, contact:
Media Relations: Phone: +7 (495) 797 82 94 Email: pr@nornik.ru
Investor Relations: Phone: +7 (495) 786 83 20 Email: ir@nornik.ru
ABOUT MMC NORILSK NICKEL:
MMC Norilsk Nickel, a company incorporated under the laws of the Russian Federation, is the largest diversified mining and metals company in Russia, the world's largest producer of nickel and palladium and one of the world's largest producers of platinum, rhodium, copper and cobalt. In addition to this, MMC Norilsk Nickel produces a large number of other by-products, including gold, silver, tellurium, selenium, iridium and ruthenium.
The key production units of the Company's group in Russia are at the Polar and Kola Peninsulas. MMC Norilsk Nickel international assets include operations in Finland, Australia, Botswana and South Africa.
MMC Norilsk Nickel's shares are traded on the Moscow Exchange. ADR's on the Company's shares are traded on the other the counter market in the US and on the London and Berlin stock exchanges.
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