PJSC Mining and Metallurgical Company Norilsk Nickel

Consolidated revenue increased 15% year over year to almost $17 billion, helped by higher metal prices and sales from stock. EBITDA increased 37% to $10.5 billion, and EBITDA margin improved to 59%. Free cash flow decreased 35% to $4.4 billion. Capital expenditures increased 37% to almost $3 billion. Net debt/EBITDA was 0.5x at December 31, and liquidity was $9 billion, including $5.5 billion of cash and $3.5 billion of committed credit lines and overdrafts. For 2022, management raised working capital guidance to $2 billion and said cash costs should increase by 25% in ruble terms, while social expenses are expected at the 2021 level excluding the one-off Norilsk renovation provision.

The lead executives framed the company’s strategy around restoring reliable operations, rebuilding assets, and materially cutting environmental impact. They said the sulfur program should solve the SO2 problem in Norilsk by the end of 2025, with major emission reductions already expected by mid-2023, and reiterated that the broader growth plan includes mine expansion, concentrator rebuilds, smelting upgrades, and energy infrastructure modernization. Their tone was pragmatic and execution-focused, with repeated emphasis on stage-gate discipline and recovering operating stability after 2021 incidents.

The CFO highlighted that the 2021 performance was driven by stronger metal prices, though volumes were hurt by industrial incidents and lower nickel/copper production. He cited EBITDA of $10.5 billion, margin of 59%, net debt of $4.9 billion, net debt/EBITDA of 0.5x, and liquidity of $9 billion; he also noted that free cash flow fell to $4.4 billion due to $2 billion of environmental reimbursement payments, higher capex, and taxes. Looking ahead, he said 2022 working capital guidance rises to $2 billion, cash costs should increase 25% in ruble terms, and capex is expected to grow over 40% in 2022, with the 2023-2025 capex cycle peaking at up to $4.5 billion annually.

Analysts pressed management on rhodium, nickel demand, working capital, taxes, dividend policy, low-carbon premiums, and refinancing. Management said rhodium is too small and volatile for a reliable forecast, nickel demand from stainless should still grow but battery-grade and stainless-grade markets are increasingly distinct, and the $2 billion working capital level may stay elevated for a couple of years because of maintenance, taxes, and ecological spending. On dividends, management said the final 2021 dividend would follow the current policy of 60% of EBITDA less interim dividends, while future policy remains under shareholder negotiation. On financing, management said it would prioritize refinancing maturities through a mix of bond placements and bank debt, while keeping maturities extended and funding costs low.