WOOD Flash – Norilsk Nickel: 1H19 – in line with consensus on EBITDA, lower-than-expected capex & 6% interim dividend
Norilsk Nickel reported its 1H19 financial results today (20 August). The revenue and EBITDA were in line with the consensus and our estimates. However, the net income beat the consensus by 23%, due to a USD 548m FX gain, but this is a one-off, non-cash factor and is likely to be overlooked by investors, in our view. The FCF was down 8% hoh and 20% yoy, at USD 1.88bn, on our definition (USD 2.2bn on Norilsk’s), 5% below our forecast. This was due mainly to a USD 361m working capital build up and higher-than-expected tax, offset partly by lower-than-expected capex, at only USD 500m (vs. the annual guidance of USD 2.3bn). Net debt fell 24% hoh, to USD 5.36bn, 0.78x the LTM EBITDA, from 1.1x at the start of the year (although the USD 1.94bn dividend for 2H18 was paid in August so, adjusting for this, the ratio would be 1.06x). Norilsk also recommended a RUB 883.93/share interim dividend (USD 1.327/GDR), which equates to a 6% yield on the GDRs and USD 2.1bn in total. The market should treat these numbers as broadly neutral, in our view.
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