A devalued Russian ruble helped push PJSC Norilsk Nickel Co.'s first half profit 81% higher to just under US$3.00 billion, the company said Aug. 20.
The Arctic precious and base metal producer recorded a US$548 million foreign exchange gain, compared to a loss of US$453 million in 2018, as the latest round of U.S. sanctions against Moscow depressed the currency. It widened projections of a 2019 nickel supply deficit to 60,000 tonnes, from 50,000 tonnes previously forecast, while predicting a palladium supply deficit of 600,000 ounces, widening to 800,000 ounces in 2020.
A sharp drop in finance costs to US$89 million, from US$246 million in 2018, also buoyed profit. As a result, Norilsk's board recommended a 13.9% increase in interim dividend to 883.93 rubles per share, equivalent to about US$2.1 billion, up from 776 rubles per share for the first half of 2018.
Output growth across the company's four key metals and a higher palladium price lifted revenue 8% year over year to US$6.29 billion, while cost of sales declined 1% to US$2.18 billion. The price of palladium floated above US$1,500 per ounce again in mid-June before falling back at the start of August.
EBITDA grew 21% to US$3.72 billion, slightly over a forecast of US$3.70 billion by five analysts.
Net debt as of June 30 fell 24% from the end of 2018 to US$5.36 billion, reducing Norilsk's ratio of net debt to 12-month EBITDA to 0.8x from 1.1x over the period.
Capital expenditure decreased 7% to US$500 million as the company completed its Bystrinsky copper project in Zabaykalsky Krai in Russia's Far East. Full-year capex is expected to hit US$2.2 billion, according to a presentation on its results.
CEO and controlling shareholder Vladimir Potanin highlighted that the company will begin the "active construction phase" of two key growth projects in the second half: South Cluster and the third stage of the Talnakh concentrator upgrade. The company said in March that it would invest up to 90 billion rubles in the two initiatives.
As of Aug. 19, US$1 was equivalent to 66.82 Russian rubles.
