Nornickel board recommends no dividend for first time in 14 years

Increased geopolitical risks have impacted the company’s financial results and created new challenges for its operational and sales activities, as well as for the successful implementation of strategic projects, Nornickel said, without directly referring to the Ukraine conflict.

An expected increase in the tax burden and the cost of servicing the company’s debt portfolio were also factors the board took into account, Nornickel said.

It mentioned the “possible increase in sanctions pressure and a drop in prices for a basket of metals due to a global economic slowdown” as other potential risks.

However, it said it may propose the board consider an interim dividend if the company generates positive cash flow and maintains comfortable debt leverage.

“This was a difficult decision, which was driven by extraordinary circumstances,” said chief financial officer and senior vice-president Sergey Malyshev. “The external environment has not only led to a worsening of the company’s financial condition, but has also put Nornickel into conditions of a high degree of uncertainty.”

A source close to Nornickel said maintaining financial stability was the main priority.

“There is no huge cushion in the form of cash and the ability to refinance, so maintaining a conservative policy is better,” the source said.

Nornickel dividends are a sensitive subject. Disagreements over dividends have been the main reason for on-and-off rows between its powerful rival shareholders for years.

A decade-old shareholder agreement protecting Nornickel’s dividend payouts expired at the end of 2022, sparking a dispute between Nornickel’s chief executive and largest shareholder Vladimir Potanin and aluminum producer Rusal, Nornickel’s second-largest shareholder.

Rusal said it saw no economic reasons for the decision.

“It will not affect Rusal’s operations,” the company said. “However, its impact on the terms of realizing future investment projects requires additional analysis and reflection.”