The core shareholders of the Russian metals giant Norilsk Nickel are not discussing changes of its dividend policy as the market is favorable enough for the fulfillment of all liabilities, CFO Sergei Malyshev announced.
The company amended its dividend policy in 2016 to pay dividends twice a year in an amount depending on the ratio of net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA).
“On our side, we adhere to the dividend formula that tied dividend payments to the free cash flow, not to the EBITDA indicator. At the same time, if condition of the commodity markets persists, we see no problem in maintaining our financial stability under the existing dividend formula,” Malyshev said.
The management of the company has already submitted a suggestion to tie dividend payments to a free cash flow, but the core owners have not approved it.
“Our information shows that the shareholders are not negotiating any changes of the dividend formula,” he said.
The company is studying various options for raising money, but it is mostly interested in ruble bonds than in Eurobonds, he said.
“Our short-term debt is almost at zero today, and we have no dire need in raising money for refinancing now. At the moment, our goals are to raise duration and reduce the cost of debt,” he said, adding that panda bonds or green bonds were the least interesting instruments for the company.
Norilsk Nickel also expects the Global Palladium Fund, established by the company in 2016, to improve demand for the metal and reduce market volatility, to amount to less than 100,000 ounces at the end of 2019.
“We still buy palladium for the fund. This year we plan to buy 300,000–500,000 ounces. It is some sort of a safety net, an insurance mechanism for consumers from the point of view of covering their demand for the metal. Due to an increase in our own production of the platinum group metals, we expect the purchases to be smaller this year than last year,” he said. “The expected reserves as of the end of this year are forecast to stand at less than 100,000 ounces. So, we plan to sell the bulk of what we buy.” (Prime/Ukrainian metal)