Norilsk Nickel Announces 1H 2014 Results

OJSC MMC Norilsk Nickel, the largest producer of nickel and palladium, announced interim financial results for the first half of this year.Free cash flow continued to grow in the first half of 2014, increasing ROIC to 20 percent.

Consolidated revenues were flat YoY at $ 5.7 billion, driven by the recovery in the nickel market and strong palladium prices, which offset the decline in copper and platinum prices during the period. EBITDA rose to $ 2.5 billion, up 9 percent. The EBITDA margin also increased to 44 percent. This was facilitated by a favorable trend in the foreign exchange market and a reduction in production costs at enterprises.

Free cash flow in the first half of the year almost tripled to $ 2.4 billion, which was ensured by a reduction in capital expenditures and working capital. In July 2014, the Fitch rating agency raised the credit rating of Norilsk Nickel to BBB-.

In May 2014, a program was presented to modernize and expand enrichment, smelting and refining capacities against the backdrop of the closure of the outdated Nickel Plant in Norilsk. This will help to raise the technological level of all metallurgical capacities, as well as to change their configuration.

In addition, the company continues to get rid of non-core assets. Agreements have already been reached to sell gold and nickel mines in Australia, including North Eastern Goldfields, Avalon and Cawse, as well as Black Swan and Silver Swan.