The board of Russian metals and mining giant Nornickel has recommended no dividend on its 2023 financial results, citing significant pressure from sanctions restrictions and geopolitical challenges faced by the company during the year.
This decision is likely to reignite the long-standing disagreements on dividends between Nornickel’s main owners – CEO and largest shareholder Vladimir Potanin, and aluminum producer Rusal, which owns a 26.4% stake in the company.
Nornickel, the world’s largest palladium producer and a major producer of high-grade nickel, failed to pay dividends on its 2022 results for the first time in 14 years, citing “negative geopolitics.” However, the company had resumed dividend payments for the first nine months of 2023, paying $1.5 billion to shareholders in January 2024.
The board considered a proposal from Rusal’s representative on the board, Elena Bezdenezhnykh, to pay a total dividend of $500 million, but the board rejected it after some discussion, according to a source close to the board.
Nornickel stated that in 2023, “sanctions restrictions and geopolitical challenges put significant pressure on Nornickel’s financial results.” The nine-month dividend payout exceeded the company’s adjusted free cash flow for 2023 of $1.3 billion, from which the company distributes dividends.
The company emphasized that “paying dividends by increasing the debt level is considered inappropriate,” pointing to its dividend policy, which requires the company to take metal prices into account and ensure it maintains a high level of creditworthiness.
Moscow-listed shares of Nornickel traded 0.3% lower on the day, slightly outperforming the wider market.