2018 Highlights

2018

• Consolidated revenue increased 28% y-o-y to USD 11.7 billion on the back of improved metal prices, higher copper output and sale of palladium from earlier accumulated stocks.
• EBITDA expanded 56% y-o-y to USD 6.2 billion owing to higher metal revenue, ramp-up of the Bystrinsky project and lower operating expenses driven by efficiency gains.
• EBITDA margin reached 53%, a leading level among the global diversified metals and mining majors.
• CAPEX decreased 22% y-o-y to USD 1.6 billion driven by completion of Bystrinsky project and downstream reconfiguration as well as optimization of investment schedules.
• Net working capital decreased by almost USD 1.3 billion to USD 0.9 billion as a result of palladium destocking and optimization of capital structure.
• Free cash flow increased to USD 4.9 billion.
• Net debt/EBITDA ratio returned to 1.1x as of the end of 2018.
• Cash interest paid decreased 14% to USD 551 million owing to optimization of debt portfolio despite rising market interest rates.
• In October 2018, the Company paid interim dividend for 1H2018 in the amount of RUB 776 (approximately USD 11.65) per ordinary share for the total amount of approximately USD 1.8 billion.
• In January 2018, Moody’s rating agency raised Nornickel credit rating to the investment grade level, “Baa3”, and changed the outlook from “Stable” to “Positive”. As result, Nornickel got assigned investment grade credit ratings by all three major international rating agencies, including Fitch and S&P Global.

Recent developments

• On February 12, 2019, Moody’s upgraded the Company’s credit rating to “Baa2” with a “Stable” outlook in the wake of raising Russia's sovereign ceiling for foreign currency debt to “Baa2” and upgrade of Russia’s sovereign rating to investment grade level of “Baa3” with “Stable” outlook.

In 2018, revenue of Group GMK segment increased 31% to USD 9,742 million. This was primarily driven by higher realized metal prices, sales of palladium stock accumulated in 2017 and higher copper production volumes.

The revenue of Group KGMK segment increased 2% to USD 911 million. The main growth driver was higher realized metal prices, which was partly offset by lower revenue from tolling operations of Polar Division’s feed due to depreciation of Russian rouble.

Revenue of NN Harjavalta increased 22% to USD 1,026 million mainly due to higher realized metal prices.

Revenue of GRK Bystrinskoye generated during the hot commissioning phase is included into other operating income and expenses.

Revenue of Other mining segment decreased 16% to USD 108 million mostly driven by lower Nkomati production volumes that was partly offset by higher realized metal prices.

Revenue of Other non-metallurgical segment increased 18% to USD 1,514 million owing to higher turnover of Palladium Fund.

In 2018, EBITDA of GMK Group segment increased 45% to USD 6,602 million owing primarily to higher revenue and depreciation of Russian rouble.

EBITDA of Group KGMK segment increased 4% to USD 190 million primarily owing to the increased revenue and lower cash costs due to depreciation of Russian rouble.

EBITDA of NN Harjavalta increased by USD 10 million to USD 71 million owing primarily to increased revenue.

EBITDA of GRK Bystrinskoye segment amounted to USD 96 million due to the revenue generated during the hot commissioning stage. In 2018, EBITDA of GRK Bystrinskoye segment also includes financial result from intersegment sales of concentrates.

EBITDA of Other non-metallurgical segment increased by USD 32 million to USD million.

EBITDA of Unallocated segment decreased 5% to a negative USD 759 million. Higher selling, general and administrative expenses were partly offset by lower one-off social expenses.