Norilsk Nickel EBITDA drops 34% to $1.8 bln in H1, better than forecast
MOSCOW. Aug 29 (Interfax) - Norilsk Nickel saw earnings before taxes, depreciation and amortization (EBITDA) to International Financial Reporting Standards (IFRS) decline 34% to $1.795 billion in the first half of 2016, the metals giant reported.
Analysts told Interfax in a consensus forecast that they thought EBITDA would amount to $1.7 billion.
The EBITDA margin of 47% was the highest among global diversified mining majors as a result of control over cash operating costs inflation and the exit from international and non-core assets.
Consolidated revenue fell 22% to $3.8 billion and net profit was down 13% to $1.3 billion.
"We expect that subject to the exchange rates and metals prices sustaining at approximately spot levels, our 2016 annual margin will remain at the current level, while our financial leverage will stay conservative," Norilsk Nickel President Vladimir Potanin was quoted as saying.
"Overall, we believe that the metal markets have stabilized, while we are going cautiously optimistic on the current developments in the global nickel market, which for the first time in the past few years has entered into a deficit," he said.
Net debt as of the end of June totaled $4.723 billion, 12% more than at the end of June last year. The net debt/EBITDA ratio stood at 1.4x compared with 1x in H1 2015.
In July-August 2016, the Group amended terms of $570 million outstanding credit lines with a group of European banks resulting in a reduction of interest rates and extension of debt maturities to five years.
Free cash flow decreased to $600 million, owing to lower EBITDA, increased capital expenditures and slower rate of working capital release in H1 2016.
Capex was up nearly one-fourth to $706 million in H1 2016, as a result of the capacity expansion and modernization of Talnakh concentrator and advancement of other downstream reconfiguration investment projects as well as the Bystrinsky project being at an active construction phase. All major investment projects were carried out on time and on budget. Norilsk emphasized that it was maintaining its guidance for capex totaling $2 billion in 2016.
"In H1 2016, we continued to pay regular interim dividend distributing to shareholders $665 million or $4.2 per share," the company said.
Norilsk Nickel financial highlights in H1 2016 ($ mln):
| H1 2016 | H1 2016/H1 2015 | |
| Sales revenue | 3 843 | -22% |
| EBITDA | 1 795 | -34% |
| EBITDA margin, % | 47% | -8 pp |
| Net profit | 1 304 | -13% |
| Capex | 706 | 24% |
| Free cash flow | 619 | -72% |
| Net working capital | 951 | -8% |
| Net debt | 4 723 | 12% |
| Net debt/EBITDA | 1,4 | 0,4 pp |
