1H 2018 FINANCIAL RESULTS 1H 2018 Financial Results Presentation August 13, 2018 Moscow 1
Disclaimer The information contained herein has been prepared using information available to PJSC MMC Norilsk Nickel ( « Nornickel » or « NN » ) at the time of preparation of the presentation. External or other factors may have impacted on the business of Norilsk Nickel and the content of this presentation, since its preparation. In addition all relevant information about Norilsk Nickel may not be included in this presentation. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or reliability of the information. Any forward looking information herein has been prepared on the basis of a number of assumptions which may prove to be incorrect. Forward looking statements, by the nature, involve risk and uncertainty and Norilsk Nickel cautions that actual results may differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Report for a description of major risk factors. There may be other factors, both known and unknown to Norilsk Nickel, which may have an impact on its performance. This presentation should not be relied upon as a recommendation or forecast by Norilsk Nickel, which does not undertake an obligation to release any revision to these statements. Certain market share information and other statements in this presentation regarding the industry in which Norilsk Nickel operates and the position of Norilsk Nickel relative to its competitors are based upon information made publicly available by other metals and mining companies or obtained from trade and business organizations and associations. Such information and statements have not been verified by any independent sources, and measures of the financial or operating performance of Norilsk Nickel’s competitors used in evaluating comparative positions may have been calculated in a different manner to the corresponding measures employed by Norilsk Nickel. This presentation does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Norilsk Nickel, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. 2
1H 2018 Highlights CAPEX Consolidated Revenue CAPEX was lower as large investment projects including active phase of $0 . 5 bn $5 . 8 bn Realized metal prices (except for Pt) Bystrinsky (Chita), modernization of Talnakh Concentrator and a number of Output of PGMs and Cu energy infrastructure projects were Sales of Pd from stock down 25% vs 1H’17 up 37% vs 1H’17 completed in 2017 Pt price, Ni output EBITDA Net Debt/EBITDA ratio Net debt/EBITDA ratio back to mid- $3 . 1 bn Higher metal revenue 1 . 1 x cycle level. In January Moody’s rating agency has raised Nornickel credit Implementation of operational rating to the investment grade level efficiency programme Baa3 and changed the outlook from up 77% vs 1H’17 down from 2.1x « Stable » to « Positive » Net Working Capital $1 . 7 bn Sale of palladium stock Annual 2017 dividends accumulated in 2017 $1 . 5 bn Annual dividends in the amount of USD Optimization of capital structure down 20% vs Dec’31 9.63 per share were announced in June Free Cash Flow 2018 and paid in July-August $2 . 6 bn EBITDA increase Reduction of working capital Lower CAPEX up 5x vs 1H’17 3
Health & Safety: Improving Safety Records LTIFR: Improved to Record Low Levels Accident Statistics Improved employees LTIFR (1*10 -6 ) 4 5 6 48 0.75 1 31 1 0.47 29 0.39 0.36 21 0.27 15 1H 14 1H 15 1H 16 1H 17 1H 18 1H 14 1H 15 1H 16 1H 17 1H 18 Lost time injury Fatal Total recordable fatal accidents and lost time inquiries LTIFR remains below the global mining industry rates decreased 27% y-o-y average, down 25% y-o-y 22 internal audits of Occupational Safety and Health Company is committed to create a strong safety culture management system were conducted in 1H 2018 at all levels of the organization 37 employees violated cardinal health and safety rules The management considers the health and safety of (versus 55 in 1H 2017), of which 33 employees were employees as the key strategic priority and reiterates fired (versus 44 in 1H 2017) its commitment to reduce fatalities to zero 4
Commitment to Developing Sustainable Value Independent Recognition of Company’s ESG Efforts Signatory to UN Global Compact since 2016 Rating updated in June 2018 Upgraded to Average performer from Governance score 5/10 (2) Underperformer Environmental score 4/10 Score of 58/100 (up from 49 in 2016) Social score 2/10 Assigned «С - » rating in Upgraded to « B- » from « CCC » December 2017 in November 2017 Ranked #4/33 in the first environmental ranking of Russian mining companies Reiterated as an index constituent in July 2018 Score of 3.1/5 (1) (up from 2.3 in 2017) Note: 1. of which 5 – is the highest; 2. of which 1- is low, 10 – is high risk 5
Markets Overview
Metals Markets Outlook Ni Pd Pt Cu Metal kt moz moz kt -100 -1.4 -230 +0.6 Non-exchange Other elastic Non-exchange Stocks, days of Other consumption Other non-elastic 80 12 Exchange 9 42 Exchange ETF ETF 57 47 113 120 37 Jan-17 Dec-18 Jan-17 Dec-18 Jan-17 Dec-18 Jan-17 Dec-18 Jan-17 Jan-18 moz moz kt kt Deficit (1) Balanced (1) Balanced Deficit Market 80 Balance Forecast 0.3 0.3 0.3 (80) (0.6) (87) (0.8) (106) (180) (124) (1.5) 2017 2018E 2019E 2017 2018E 2019E 2017 2018E 2019E 2017 2018E 2019E Medium-term Fundamentals Long-term Fundamentals Source: Company data Note: 1. Excluding ETFs, investment demand and industry stocks movement. Numbers are rounded separately 7
Macro Fundamentals – Mixed Backdrop for Commodities Strong GDP Growth Rates Globally, while Inflation … and USD Strengthening, which is Normally is Picking Up… Inversely Correlated with Base Metal Prices GDP 2018 Q1, % y-o-y 6.8 98 4,050 96 2.8 2.5 3,550 94 92 3,050 USA Europe China 90 88 2.7 USA CPI, % y-o-y 2.5 2,550 2.2 2.1 2.0 86 1.9 1.8 84 1.1 1.1 2,050 1 0.5 82 0.1 0 -0.1 80 1,550 Jan-15 Nov-15 Sep-16 Jul-17 May-18 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 US trade-weighted value of USD against major currences LME index (rhs) Source: Thomson Reuters Datastream 8
Nickel Stocks Are Rapidly Falling … More than Halved from Peak Levels of Early Total Exchange Nickel Inventories: Down 33% or 136kt (1) YTD vs. 55kt in 2017 2016, but Still Twice Above Normal… kt Days of Consumption 92 486 43 37 45 410 15 15-25 (2) 44 12 3 197 276 20 Cu Ni Normal Ni Historical Nickel Spot Nickel High Spot Level Average 292 200 … and Not All Exchange Stocks Were Drawdown 228 for Consumption 71 56 kt Jan 2016 Dec 2017 end of July 2018 (84) (38) (12) 410 LME Full Plate LME Briquettes LME Other shapes FP SHFE 276 end of 2017 Consumed Relocated to Other end of July bonded financing 2018 Source: Company data, SMM Note: 1. As of July 31, 2018, 2. According to markets participants, customers 5 9
Historical Ni Price Correlations are Broken – Helped by the Battery Hype? Ni vs. Stainless Steel: …and a New Relationship Established: Break Up of Historical Relationship… Ni vs. Co price 200% 180% 170% 180% 160% 150% 160% 140% 140% 130% 120% 120% 110% 100% 100% 90% 80% 80% Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 LME Ni Cash Index LME Ni Cash Index LME Co Cash Index SMM 304 Flat AVG Index Source: LME, Metal Bulletin, SMM 10 10
Nickel Market Short-Term Outlook: Forecast Larger Deficit Ni Supply: Growth Driven by NPI Production in Nickel Market Balance: Indonesia and China, Class 1 - Down Sizeable Deficit to Extend in 2018 kt kt +9% Demand Demand Demand Supply Supply Supply 2018E 2019E 2016 2017 +9% 2,418 25 92 (10) (19) 2,218 85 (87) 2,035 138 (106) (124) 2017 Indonesia China NPI Fe-Ni Class I 2018E 2019E 42 NPI Deficit Deficit Deficit Deficit Ni Demand: Strong Growth in Stainless Steel in 200 Indonesia and China and the Battery Sector 163 202 184 kt +7% +9% 2,505 32 35 2,343 143 (4) 2,141 Deficit forecast for 2018E revised from -15kt (1) to -124kt: Faster-than-expected expansion of stainless output in Indonesia 2017 China Other Batteries Other 2018E 2019E and China Indonesia Asia NPI output curtailments due to environmental restrictions in China STS STS Source: Company data 11 Note: 1. Revised of in-house forecast from March 2018 1 1
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