Boliden Ab · OMXSTO:BOL
Boliden Ab — Q3 2018 Earnings Presentation
39 slides from Boliden Ab's earnings presentation, Oct 24, 2018
Slide 1: Q3 Interim report 2018
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Q3 Interim report 2018 Mikael Staffas President & CEO Håkan Gabrielsson CFO
Slide 2: Q3 Interim report 2018 – Strong quarter with high production
Q3 Interim report 2018 – Strong quarter with high production • Revenues 12,510 (11,628) MSEK MSEK R4Q, MSEK 3 400 10 200 • EBIT ex PIR* 2,020 (1,744) MSEK 3 200 3 000 9 600 9 000 2 800 8 400 2 600 7 800 • Lower metal prices compared to Q2 2 400 2 200 7 200 6 600 2 000 6 000 1 800 5 400 1 600 4 800 •
Slide 3: Market Q3 2018
Market Q3 2018 Macro • Trade barriers • Strong industrial output Base metals • Healthy growth in metals demand ‒ Especially Ni • Metal prices lower, USD stronger Concentrate markets • More Zn, Cu spot concentrate compared to Q2 • Zn, Cu spot TCs up Copper cathodes from Rönnskär Boliden Group Q3 2018
Slide 4: Base metal prices
Base metal prices Copper price, USD/tonne Copper KTonnes Zinc price, USD/tonne Zinc KTonnes 12 000 2 400 4 000 2 000 10 000 2 000 1 600 3 000 8 000 1 600 1 200 6 000 1 200 2 000 800 4 000 800 1 000 400 2 000 400 0 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012
Slide 5: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/tonne 5 000 Lead 1 800 4 500 1 600 4 000 1 400 3 500 1 200 3 000 1 000 2 500 800 2 000 600 1 500 400 1 000 200 500 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 6: Zn, Cu and Ni prices relative to cash cost
Zn, Cu and Ni prices relative to cash cost Zinc Copper Nickel USD/tonne USD/tonne USD/tonne 5 000 5 000 11 000 11 000 35 000 35 000 4 500 4 500 10 000 10 000 30 000 30 000 4 000 4 000 9 000 9 000 3 500 3 500 8 000 8 000 25 000 25 000 7 000 7 000 3 000 3 000 20 000 20 000 6 000 6 000 2 500 2 500 5 00
Slide 7: Boliden market term index
Boliden market term index • Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Note: Index 100 = 1 January 2013 Boliden Group Q3 2018 7 2018-10-24
Slide 8: Mines
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Mines Aerial photo of Aitik Boliden Group Q3 2018 8 2018-10-24
Slide 9: Q3 2018 Mines
Q3 2018 Mines • EBIT 1,091 (1,421) MSEK MSEK R4Q, MSEK ‒ 2,044 MSEK in Q2 2018 2 600 7 800 2 400 7 200 2 200 6 600 • Metal prices lower, USD stronger 2 000 6 000 ‒ Definitive pricing adjustment, -200 MSEK 1 800 1 600 5 400 4 800 1 400 4 200 • Aitik 1 200 1 000 3 600 3 000 ‒ 10.8 Mtonnes throughput 8
Slide 10: Mines – Production
Mines – Production Milled ore, Metal content, Milled ore, Metal content, Mtonnes Copper Ktonnes Mtonnes Zinc Ktonnes 16 48 2,0 100 14 42 1,6 80 12 36 10 30 1,2 60 8 24 6 18 0,8 40 4 12 0,4 20 2 6 0 0 0,0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 11: Smelters
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Smelters New sulphuric acid plant at Harjavalta Boliden Group Q3 2018 11 2018-10-24
Slide 12: Q3 2018 Smelters
Q3 2018 Smelters • EBIT ex PIR* 589 (568) MSEK R4Q, MSEK MSEK 1 300 3 900 ‒ 630 MSEK in Q2 2018 1 100 3 300 • Lower metal prices and TC´s, 900 2 700 stronger USD 700 2 100 • Increased production despite 500 1 500 some production issues 300 900 100 300 • Maintenance shutdowns in Q3 1 2 3 4 1 2 3 4 1
Slide 13: Smelters – Production
Smelters – Production Copper Metal Total feed, production, Ktonnes Ktonnes • Cu production 88.7 (87.4) Ktonnes 400 120 350 105 ‒ Increased production in both smelters, 300 90 despite start up of Acid plant in Harjavalta 250 75 200 60 • Zn production 120.8 (115.0) Ktonnes 150 45 100 30 ‒ Increased st
Slide 14: Financials
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level Financials ‒ Fifth level 4.0 tonnes gold produced in Q3 2018 Boliden Group Q3 2018 14 2018-10-24
Slide 15: 2018 Q3 – Earnings
2018 Q3 – Earnings MSEK Q3 2018 Q3 2017 Q2 2018 Revenues 12,510 11,628 14,071 EBITDA 2,988 2,987 3,691 EBIT 1,771 1,860 2,468 EBIT ex PIR 2,020 1,744 2,329 Investments 1,457 1,240 1,561 Free cash flow 822 1,715 1,718 Earnings per share, SEK 4.69 5.40 7.45 Net debt / equity ratio 10 19 13 Definitive
Slide 16: EBIT ex. PIR by segment
EBIT ex. PIR by segment MSEK Q3 2018 Q3 2017 Q2 2018 Mines 1,091 1,421 2,044 Smelters 589 568 630 Other / eliminations 340 -245 -346 The Group 2,020 1,744 2,329 Boliden Group Q3 2018 16 2018-10-24
Slide 17: 2018 Q3 vs. 2017 Q3
2018 Q3 vs. 2017 Q3 Group EBIT excl. PIR MSEK Q3 2018 2,020 Q3 2017 1,744 Deviation 276 Higher production in both Mines Specification of deviation and Smelters Volumes 464 Stronger USD and by-products Prices and Terms (incl. hedges) 71 Lower metal prices Whereof currency 445 Higher volumes Costs -20
Slide 18: 2018 Q3 vs. 2018 Q2
2018 Q3 vs. 2018 Q2 Group EBIT excl. PIR MSEK Q3 2018 2,020 Q2 2018 2,329 Deviation -308 Specification of deviation Lower volumes in Tara and Boliden Area Volumes -53 Prices and Terms -621 Lower metal prices Whereof currency 300 Partly compensated by positive FX Costs 371 Depreciation 11 Lower maint
Slide 19: Cash flow
Cash flow MSEK Q3 2018 Q3 2017 Q2 2018 EBITDA excluding PIR 3,237 2,871 3,552 Cash flow from working capital 203 404 171 Inventories -335 241 322 Operating receivables 650 -39 -31 Operating liabilities -112 209 -118 Other 0 -6 -2 Cash flow from investments -1,456 -1,240 -1,554 Financial items -64 -7
Slide 20: Balance sheet
Balance sheet BSEK 30 Sep 30 Sep 31 Dec MSEK % 2018 2017 2017 12 000 45 Total Assets 57.0 53.1 55.9 40 10 000 Capital employed 44.4 42.3 42.9 35 8 000 30 Equity 37.3 32.5 35.1 25 6 000 Net debt 3.8 6.0 3.8 20 4 000 15 Net debt / equity ratio 10 19 11 10 2 000 Loan duration, years 3.8 2.6 2.4 5 0 0 Q
Slide 21: New haul trucks to Kevitsa and Aitik
New haul trucks to Kevitsa and Aitik 900 MSEK investment • Why? • Expansion • Insourcing • Deeper pits • Replacement • All trucks are prepared for electrification and automation • Enables optimized pit designs and cost reductions New Komatsu 830E-5 intended for Kevitsa and Komatsu 930E-5 intended fo
Slide 22: New Aitik Electric Trolley
New Aitik Electric Trolley New Aitik Trolley Lane commissioned in September Most promising technology to lower the diesel consumption in Aitik and Kevitsa Conversion of four trucks DC substation 10 MW capability The lane is ~700 meters and is expected to save ~830 m3 diesel per year New Trolley Lane
Slide 23: Going forward
Going forward • Q3 production above reserve grade • Aitik ‒ Remainder of 2018 and 2019: Cu 0.25% ‒ 2020: 45 Mtonnes milled volume • Garpenberg ‒ Remainder of 2018 and 2019: Zn 4.0% ‒ 2020: 3 Mtonnes milled volume • Kevitsa ‒ 2020: 9.5 Mtonnes milled volume pace World-class productivity in undergroun
Slide 24: Conclusion
Conclusion • Well positioned in the metal market ‒ Mines and Smelters ‒ Base metals and precious metals ‒ High productivity / stable production ‒ High corporate responsibility ‒ Long life of key mines ‒ Stable jurisdictions • Strong balance sheet • Several growth opportunities ‒ Smelters well positi
Slide 25: 2019 Capital Markets Day
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level 2019 Capital Markets Day • Stockholm 13 March • Aitik site visit 14 March • More information to be available on www.boliden.com KID 2, the new crusher at Aitik Boliden Group Q3 2018 25 2018-10-24
Slide 26: Disclaimer
Disclaimer • This presentation has been prepared by Boliden for information purposes only and as per the indicated date. Boliden does not undertake any obligation to correct or update the information or any statements made therein. Certain statements in this presentation are forward-looking and are
Slide 27: Appendix
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Appendix Zinc slabs Boliden Group Q3 2018 27 2018-10-24
Slide 28: Zinc price
Zinc price Zinc price, USD/tonne KTonnes USD/tonne 3 900 Q3 Q4 Q1 Q2 Q3 4 000 2 000 3 400 1 600 2 900 3 000 2 400 1 200 1 900 2 000 1 400 800 jul-17 okt-17 jan-18 apr-18 jul-18 okt-18 1 000 400 Average price in Q3 vs. period Q2-18 Q1-18 Q4-17 Q3-17 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 29: Copper price
Copper price Copper price, USD/tonne KTonnes USD/tonne Q3 Q4 Q1 Q2 Q3 7 500 12 000 2 400 7 000 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 4 500 6 000 1 200 4 000 jul-17 okt-17 jan-18 apr-18 jul-18 okt-18 4 000 800 2 000 400 Average price in Q3 vs. period Q2-18 Q1-18 Q4-17 Q3-17 0 0 2008 2009 2
Slide 30: Nickel price
Nickel price Nickel price, USD/tonne KTonnes 35 000 600 USD/tonne Q3 Q4 Q1 Q2 Q3 18 000 30 000 16 000 500 14 000 25 000 400 12 000 20 000 10 000 300 8 000 15 000 6 000 jul-17 okt-17 jan-18 apr-18 jul-18 okt-18 200 10 000 100 Average price in Q3 vs. period 5 000 Q2-18 Q1-18 Q4-17 Q3-17 0 0 2008 2009
Slide 31: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/tonne 5 000 Lead 1 800 4 500 1 600 4 000 1 400 3 500 1 200 3 000 1 000 2 500 800 2 000 600 1 500 400 1 000 200 500 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 32: Zinc TC and premia
Zinc TC and premia US$/t US$/t metal Metal premia concentrate Treatment charges 250 300 200 250 200 150 150 100 100 50 50 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Ex-Works Premia Europe Realized TC - European contract" China spot TC Delivered Premia US Midwest Premia Far East - Western
Slide 33: Copper TC and premia
Copper TC and premia US$/t concentrate Treatment charges US$/t metal Metal spot premia 120 160 100 140 120 80 100 60 80 40 60 40 20 20 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Contract TC - annual and mid-year benchmark CIF Average European premia Standard grade spot TC Contract benchma
Slide 34: Economic development
Economic development Industrial production, year on year % 10 8 6 4 2 0 -2 -4 J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND 2015 2016 2017 2018 EU28 USA China World Source: Reuters Datastream, world data calculated by Boliden Boliden Group Q3 2018 34 2018-10-24
Slide 35: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 20 15 10 5 0 -5 J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D 2014 2015 2016 2017 2018 EU USA China China: year on year based on cumulative investments at each point. USA:
Slide 36: Automotive
Automotive Production of light vehicles, year on year, quarterly data 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 Europe North America China World Source: LMC Automotive Boliden Group Q3 2018 36 2018-10-24
Slide 37: Market balance – Zinc and Copper
Market balance – Zinc and Copper Zinc – global market Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Metals demand, kt 3 442 3 455 3 569 3 508 3 496 3 497 3 596 3 534 Year on year change 2,7% 1,9% 3,4% 2,7% 1,6% 1,2% 0,8% 0,7% Smelter production, kt 3 554 3 303 3 297 3 280 3 547 3 333 3 367 3 336 Year on y
Slide 38: Market balance – Nickel and Lead
Market balance – Nickel and Lead Nickel - global market Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Metals demand, kt 525 515 508 552 576 570 576 576 Year on year change 13,5% 6,8% -1,7% 11,8% 9,8% 10,7% 13,4% 4,3% Smelter production, kt 512 488 485 529 545 527 538 549 Year on year change 3,8% 4,4% -4,2
Slide 39: • Click to edit Master text styles
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Boliden Group Q3 2018 39 2018-10-24