Page 136 - RusRPTFeb21

higher than expected taxes and 10% below consensus. FCF not adjusted for excess CapEx reached $212mn – down 45% q/q and up 110% y/y. The figure came in 14% ahead of our estimate of $186mn, partially due to lower than expected CapEx estimated, while dividend payment (FCF for dividends) reached c$400mn (at current spot) vs $286mn we’ve expected. Severstal BoD recommended dividends of RUB36.27/share, which is equivalent to c2.8% and is strongly ahead of our estimate of cRUB26/share. The recommended record date for the dividend payment is 1 June 2021. The beat on dividends comes both from the beat in non-adjusted FCF and higher than expected adjustment for excess CapEx. Severstal anticipates that positive momentum in steel and raw material prices observed in November and December 2020 will positively impact 1Q21 results. The company expects Russian steel demand to recover by 3-4% y/y, driven by an improved construction activity and O&G sector recovery.
● Other
Norilsk Nickel​ reported 4Q20 production results that were very strong across all key metals, ​with 2020 nickel and copper output within the company's guided range and PGM output exceeding the midpoint of the range by 4.3% in palladium equivalent.
Our view: At the core assets (Polar, Kola and Harjavalta), nickel production in 4Q20 was up 12% q/q to 67 kt (the highest since 4Q15), putting 2020 output at 233 kt, close to the high end of the guidance range (225-235 kt). Copper production was up 8% q/q to 111 kt, bringing 2020 output to 424 kt, within the guided range. PGM production was slightly down q/q in 4Q20, though full-year production exceeded the upper bound of guidance by 1.5% for palladium (at 2.82 moz) and 2.8% for platinum (at 694 moz).
At Bystrinsky, copper production was up 9% q/q to 17 kt in 4Q20, while gold production was up 5% q/q to 65 koz. The asset finally reached full capacity for all metals in the quarter. Full-year copper output of 63 kt was close to the higher bound of the guidance range (55-65 kt), while gold production (241 koz) slightly exceeded guidance (220-240 koz).
Taking the production results into account, we raise our 2H20 EBITDA estimate 3% to $5.9bn. Assuming 2020 capex of $1.8bn and a $0.4bn working capital release in 2H20, we estimate 2H20 FCF at $3.7bn, for a 7% yield. Net debt/EBITDA should be around 0.6 at end-2020, which would call for paying out 60% of EBITDA for the 2020 dividend. We estimate the final remaining
136 ​RUSSIA Country Report​ February 2021 www.intellinews.com