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OJSC MMC Norilsk Nickel, the world’s largest nickel and palladium producer, has published its audited IFRS financial results for the year ended December 31, 2014.
FY 2014 highlights include:
· Consolidated revenue increased 3% y-o-y to USD 11.9 billion on the back of stronger nickel and palladium prices and growth in precious metals production volumes.
· EBITDA grew 35% y-o-y to USD 5.7 billion driven by a substantial reduction of cash operating costs on the back of cash cost optimisation, strong LME prices and rouble devaluation as well as top-line growth.
· EBITDA margin expanded to 48%, a leading position in the global metals and mining industry. · Net profit almost tripled to USD 2 billion while net profit adjusted for non-cash items reached USD 4 billion.
· All key investment projects planned for financial year 2014 have been successfully completed on time and on budget, with CAPEX decrease by 35% y-o-y to USD 1.3 billion resulting from RUB depreciation, improved payment terms with contractors and successful roll-out of capital allocation discipline.
· Working capital declined by approximately USD 2 billion y-o-y to USD 1.1 billion by the year-end 2014, contributing to the four-fold reduction of net working capital cumulatively over the last two years.
· Free cash flow increased 81% y-o-y to USD 4.7 billion driven by the expansion in EBITDA, lower CAPEX and sharp reduction of the working capital.
· Leverage remained conservative with Net Debt/ EBITDA ratio decreasing from 1.1x as of December 31, 2013 to 0.6x as of December 31, 2014, leaving the Company with the strongest balance sheet among global metals and mining majors.
· The Company retained investment grade credit rating (BBB-) from S&P despite the latter's downgrade of the Russian sovereign rating to BB+ in January 2015.
· Dividends distributed to shareholders in 2014 increased 10% y-o-y to USD 20.7 per share.
· In May 2014, Norilsk Nickel signed an agreement with Russian federal and regional authorities to shut down the outdated and inefficient Nickel Plant in the city of Norilsk in 2016.
· Exit from non-Tier 1 assets progressed well: the Company closed the deals for disposal of Australian (North Eastern Goldfields, Avalon, Cawse, Lake Johnston, Black Swan and Silver Swan) and signed an agreement to sell African assets (Tati Nickel and an equity stake in Nkomati mine).
· In March 2015, the Russian government issued an exploration and mining license for Maslovskoye PGM, nickel and copper deposit to Norilsk Nickel.
· The company plans to buy back up to USD 500 million of shares in 2015. The shares will be purchased through open market operations and are expected to be cancelled afterwards.
"I am pleased to report to our shareholders that Norilsk Nickel generated strong financial performance in 2014. Implementation of the new corporate strategy focused on enhancing Norilsk Nickel's position as the global industry leader in terms of free cash flow generation and return on invested capital was well on track,” CEO Vladimir Potanin was quoted as saying.
“Although the high volatility on the commodity markets was challenging for the global mining industry, overall we consider 2014 as a favorable year for our business. Growth in realized prices of our strategic metals, nickel and palladium alongside an increase in precious metals sales volumes, led to the revenue growth by 3% y-o-y to almost USD 12 billion. Management focus on financial efficiency backed by a favourable foreign exchange rates movement resulted in a strong EBITDA growth to USD 5.7 billion, expansion of EBITDA margin to the global industry leading 48% and a three-fold increase in net income,” he added.
Sources: http://www.nornik.ru
Author: Mikhail Vesely
