Polymetal absorbs losses, increases debts and doesn’t plan dividend payouts

According to Polymetal International’s finance report, in 2022, the company absorbed $288 million in losses compared to $904 million in profit in 2021.

«In 2022, our adjusted net profit reached $440 million ($913 million in 2021). Due to lower EBITDA and non-cash depreciation costs ($653 million after accounting for tax effect), net losses of the group reached $288 million compared to $904 of profit last year,» the company said in a statement.

In 2022, Polymetal earnings shrunk by 3% to $2.8 billion, with Russian assets accounting for $1.9 billion (67% of profit) while Kazakhstani assets generated $933 million (33%). At the same time, the average price for gold and silver produced by the company dropped by 2% and 12%, respectively.

In 2022, Polymetal beefed up its production by 2% to 1.7 million ounces of gold equivalent, although its sales decreased by 1% to 1.4 million ounces of gold. In contrast, sales of silver soared by 6% to 18.5 million ounces.

According to the company, the gap between production and sales in the second and third quarters of 2022 was caused by a disruption in sales channels. In the Q4 of 2022, Polymetal managed to minimize this difference as much as possible. Moreover, the gold producer says that it will close this gap in the first half of 2023.

The net debt of the group increased from $1.6 billion at the end of 2021 to $2.4 billion in 2022. Low profitability, increased capital intensity and floating capital of Polymetal were among the key drivers of the net debt growth.

Given that the current ratio of Polymetal’s net debt to EBITDA is far beyond that of the target level (2.35x instead of 1.5х), the company’s board of directors has decided to restrain from making dividend payouts for 2022.

«In this unstable and tough situation, the company has managed to keep its strategic and operational flexibility. Western sanctions against Russia have driven inflation sky-high and disrupted supply and sales channels. As a result, our expenses and floating capital soared. In turn, this caused a sharp decrease in cash flow. Nevertheless, Polymetal entered 2023 in good shape. The rebounding of cash flow and decreasing of net debt are expected to happen this year,» said Vitaly Nesis, CEO of Polymetal.

In January 2023, Polymetal announced that it would change its jurisdiction from British Jersey to the International Financial Center Astana. In addition, Nesis has presented investors with a project for a hydrometallurgical plant in the Pavlodar region as the group is thinking about splitting its Russian and Kazakhstani businesses.