2017 FINANCIAL RESULTS March 6, 2018 Moscow 1
Disclaimer The information contained herein has been prepared using information available to PJSC MMC Norilsk Nickel (“Norilsk Nickel” 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
2017 Highlights Consolidated revenue increased 11% y-o-y to USD9.1 billion on the back of higher realized metal prices (metal basket was up 21% y-o-y) EBITDA was up 2% y-o-y to a robust USD4 billion , with EBITDA margin maintained at an industry-leading 44% CAPEX increased 17% y-o-y to USD2 billion as Bystrinsky project (Chita) was in its final construction stage and the Bystrinsky concentrator was launched into hot commissioning at the end of 2017, while the upgrade of nickel refining facilities in Kola entered into active construction Net working capital increased to USD2.15 billion driven by optimization of capital structure aiming at interest cost reduction, and some one-offs, including payment to Rostec for the purchased concentrate and build up of palladium stockpile to cover rising demand from key customers in 2018 Reported Net debt/EBITDA ratio increased from 1.2x to 2.1 х as of December 31, 2017 driven by payment of final 2016 and interim 2017 dividends and one-off increase in working capital Net debt/EBITDA ratio for the purposes of calculating final dividend for 2017 amounted to 1.88x, which translates into 54% EBITDA payout ratio Major refinancing activities were completed in 2017, with new funding raised at record low interest rates, enabling a reduction of interest cost by over USD150 million Interim 1H 2017 dividends in amount of USD607 million (or USD 3.8 per ADR) were approved by the extraordinary general meeting (EGM) of shareholders in September 2017 3 3
Health & Safety: Improving Safety Records LTIFR Remains Below the Global Mining Industry Assessment of Occupational Safety Culture Score Average Significantly Improved Since 2014 Bradley curve indicator, DuPont Assessment XX – total employees ХХ LTIFR (1*10 -6 ) 0.48 0.62 0.35 0.43 2.6 125 2.5 2.3 100 88 100 14 64 75 1.4 58 56 8 Fatal 7 50 50 13 74 Lost time 56 25 51 43 injury 0 0 2014 2015 2016 2017 March December November December 2014 2015 2016 2017 Improvements in safety culture are driven by the LTIFR increased from 0.35 to 0.43 in 2017, while the implementation of risk mitigation standards, a safety number of fatal injuries dropped 46% y-o-y communication campaign and dedicated risk mitigation programmes Company is committed to create a strong safety culture at all levels of the organization 38 internal audits of Occupational Safety and Health management system were conducted in 2017 The management considers the health and safety of employees as the key strategic priority and reiterates 152 employees were fired for violation of health and its commitment to reduce fatalities to zero safety regulations (vs. 148 in 2016), 132 employees used the right to refuse work assignment as it threatened their life and health (vs. 162 in 2016) 4
Gradual Improvement of Norilsk Nickel ESG Assessment Sustainalytics ESG score increased from 46 to 58 MSCI ESG rating raised from « CCC » to « B » points (out of 100) ХХ Global ranking #35 #56 #61 Average (1) B 58 CCC CCC 49 46 2016 2017 2018 2015 2016 2017 Assigned Norilsk «С - » rating in December 2017 (2) Government score (3) – 4, Environmental score (3) – 4, Social score (3) – 2 Note: 1. Average for the metals and mining industry according to Sustainalytics Research, 2. «С - » - average grade for the sector, 60% of 114 rated companies in the industry were rated «С - » or lower, 3. 1 - is Low risk, 10 - is High risk 5
Markets Update
Metals Markets Outlook Ni Pd Pt Cu Metal kt moz moz kt +0.3 +170 -2 -110 Non-exchange Other elastic Other Stocks, days of consumption Other Non-exchange 124 89 112 non-elastic 70 Exchange 9 ETF 112 124 Exchange 8 84 ETF 47 Jan-16 Dec-17 Jan-16 Dec-17 Jan-16 Dec-17 Jan-16 Dec-17 Deficit Deficit (1) Balanced (1) Balanced moz kt moz kt Market 220 Balance Forecast (10) (15) 0.3 0.2 (50) ( 0.8) 0 (105) (140) ( 1.2) ( 1.2) 2016 2017 2018E 2016 2017 2018E 2016 2017 2018E 2016 2017 2018E 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 Environment Supportive for Commodities Trade-Weighted US Dollar Index vs. Bloomberg Commodities Assets Under Management: Commodity Index: Negative Correlation Strong Inflows Continued in 2017 % bp USD bn 140 3.0 300 130 250 2.0 120 200 110 1.0 150 100 100 90 0.0 50 80 0 70 -1.0 2013 2014 2015 2016 2017 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 USA CPI (RHS) Precious metals Base Metals Energy Bloomberg Commodity Index (LHS) USTWBROA (LHS) Rising inflation and weakening USD are supportive for commodity prices Source: Company data, Bloomberg, Barclays Capital 5 8
Nickel Stocks Are Falling Chinese Ni Ore Inventories Drawing Down on Total Exchange Inventories Continue to Fall Stronger Demand from NPI kt mt kUSD/t 2017: - 55Kt 20 600 30 2018YTD: -21Kt 500 25 16 400 20 12 300 15 8 200 10 4 100 5 0 0 0 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Nickel Inventory SHFE Nickel Inventory LME Nickel Price Source: Company data 5 9
Nickel Market Short-Term Outlook Nickel Market: Deficit Expected to Reduce in 2018 Ni Supply: Increase Driven by NPI Production Due to Production Growth in Indonesia and the Growth in Indonesia and China Philippines kt kt +11% 6 7 2,265 24 2016 Demand Supply 2017E Demand Supply 2018E +2% 112 2,040 76 (10) 2,000 (15) Deficit Deficit 2016 2017 Indonesia China NPI Other 2018E Fe-Ni Refined Ni (135) NPI (105) Ni Demand: Strong Growth in Stainless Steel in 40 225 Deficit Indonesia and the Battery Sector in 2018 kt +6% (135) 12 2,280 +7% 34 96 2,145 (7) 2,010 2016 2017 Indonesia Other 2018E Asia Batteries Other STS China STS Source: Company data 10 1 0
Mixed 2017 in China: Stainless Steel Demand Was Robust, but Nickel Imports Reduced Nickel Demand in China’s Stainless: Volume Growth Imports of Nickel to China Declined in 2017 due to and Shift to Higher Nickel Grades (300 and 200 series) Destocking mln t kt, Ni units -11% +2% +8% +4% +25% -11% +8% +4% +5% 600 26.2 24.9 23.9 500 84 22.1 5.3 4.6 +15% 4.5 +2% 21 119 99 4.0 400 124 12.0 300 123 +4% 11.8 12.3 -2% 10.9 200 362 69 293 235 100 8.9 +5% 8.0 +11% 7.6 7.2 130 0 2015 2016 2017 2018E 2014 2015 2016 2017 Refined Ni Fe-Ni NPI Other (1) 200S 300S 400S Approximately 50% of Chinese stainless steel production is integrated into NPI Source: Company data, BGRIMM 11 Note: 1. Other include Ni Powder, Ni-Oxide, NiSO4 11
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