Slide 1: Q2 Interim Report 2016
Q2 Interim Report 2016 Lennart Evrell President & CEO Håkan Gabrielsson CFO
Slide 2: High production by Mines
High production by Mines • Revenues 9,596 (10,373) MSEK MSEK R4Q, MSEK 1 800 7 200 • EBIT ex PIR* 901 (1,257) MSEK 1 600 6 400 ‒ EBIT 912 (1,090) MSEK 1 400 5 600 • Free Cash Flow -4,794 (1,557) 1 200 4 800 MSEK, 1 000 4 000 ‒ 1,148 MSEK excluding acquisition 800 3 200 600 2 400 • High production Mi
Slide 3: Special items
Special items MSEK Wind-up of defined benefit pensions in Tara 248 Acquisition-related costs, Kevitsa -39 Items affecting comparability 209 Increased provisions for reclamation of closed mines -87 Total Mines 122 Maintenance, Smelters -210 Kevitsa impact in Q2 is mainly on the Balance Sheet Boliden
Slide 4: Market – demand improved, divergence in supply
Market – demand improved, divergence in supply Macro • Low global industrial production growth Base metals markets • Metals demand growth in China higher • Few re-starts of closed mines • Zn mine production down, concentrate stocks down, spot TCs down • Copper mine production up, spot TCs turned upw
Slide 5: Zinc price
Zinc price Zinc price, USD/t KTonnes USD/t 2 600 Q2 Q3 Q4 Q1 Q2 5 000 2 000 2 400 2 200 4 000 1 600 2 000 1 800 3 000 1 200 1 600 1 400 2 000 800 apr-15 jul-15 okt-15 jan-16 apr-16 jul-16 1 000 400 Average price in Q2 vs. period Q1-16 Q4-15 Q3-15 Q2-15 0 0 2006 2007 2006 2007 2008 2008 20092009 2010
Slide 6: Copper price
Copper price Copper price, USD/t KTonnes 12 000 2 400 USD/t 7 000 Q2 Q3 Q4 Q1 Q2 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 6 000 1 200 4 500 4 000 apr-15 jul-15 okt-15 jan-16 apr-16 jul-16 4 000 800 2 000 400 Average price in Q2 vs. period Q1-16 Q4-15 Q3-15 Q2-15 0 0 20062006200720072008 2008
Slide 7: Nickel price
Nickel price Nickel price, USD/t KTonnes 60 000 600 USD/t Q2 Q3 Q4 Q1 Q2 15 000 14 000 50 000 500 13 000 12 000 11 000 40 000 400 10 000 9 000 30 000 300 8 000 7 000 6 000 apr-15 jul-15 okt-15 jan-16 apr-16 jul-16 20 000 200 10 000 100 Average price in Q2 vs. period Q1-16 Q4-15 Q3-15 Q2-15 0 0 20062
Slide 8: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/t 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 20062007 2006 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016
Slide 9: Zinc and copper prices
Zinc and copper prices Normal C1 – Zinc Normal C1 – Copper USD/ton USD/ton 5 000 5 000 11 000 11 000 4 500 4 500 10 000 10 000 4 000 4 000 9 000 9 000 8 000 8 000 3 500 3 500 7 000 7 000 3 000 3 000 6 000 6 000 2 500 2 500 5 000 5 000 2 000 2 000 4 000 4 000 1 500 1 500 3 000 3 000 1 000 1 000 2 000
Slide 10: Boliden market term index
Boliden market term index M etal price/ TC index (USD) Cur rency index W eighted Index 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Boliden Group Q2 2016 10 2016-07-19
Slide 11: Mines
Mines Boliden Group Q2 2016 11 2016-07-19
Slide 12: Mines – high production with variations
Mines – high production with variations R4Q, • EBIT 621 (657) MSEK MSEK 1 200 MSEK 4 800 ‒ 242 MSEK in Q1 2016 • Capex 572 (594) MSEK 3 600 800 • Kevitsa acquired June 1 2 400 • Metal prices higher than Q1, lower 400 than LY 1 200 • Pensions Tara 248 MSEK 0 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Slide 13: Mines – Production
Mines – Production Milled ore, Metal content, Milled ore, Metal content, mt Copper kt mt Zinc kt 12 30 2,0 100 10 25 1,6 80 8 20 1,2 60 6 15 0,8 40 4 10 2 5 0,4 20 0 0 0,0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 2016 2013 2014 2015 2016 Mi
Slide 14: Kevitsa
Kevitsa • Acquired June 1 • Integration started • June ‒ EBITDA 40 MSEK ‒ EBIT -12 MSEK • Acquisition related costs -39 MSEK • Consideration 5,979 MSEK • Bridge financing fees -39 MSEK Boliden Group Q2 2016 14 2016-07-19
Slide 15: Smelters
Smelters Boliden Group Q2 2016 15 2016-07-19
Slide 16: Smelters – good production considering shutdowns
Smelters – good production considering shutdowns R4Q, • EBIT ex PIR* 397 (604) MSEK MSEK 1 100 MSEK 3 300 ‒ 655 MSEK in Q1 2016 • Capex 384 (281) MSEK 900 2 700 700 2 100 • Maintenance shutdowns 210 (180) MSEK, 500 1 500 plan 165 MSEK • Lower TC, full impact Q2 300 900 • Higher metal prices than Q1
Slide 17: Smelters – Production
Smelters – Production Copper Metal Total feed, Metal kt production, Total feed, Zinc production, kt kt kt 400 120 250 150 350 105 200 120 300 90 250 75 150 90 200 60 150 45 100 60 100 30 50 30 50 15 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014
Slide 18: Financials
Financials Boliden Group Q2 2016 18 2016-07-19
Slide 19: Q2 2016 – High production by Mines
Q2 2016 – High production by Mines Financial development MSEK Q2 2016 Q2 2015 Q1 2016 Revenues 9 596 10 373 8 849 EBITDA 1 940 1 970 1 788 EBIT 912 1 090 888 Process inventory revaluation (PIR) 11 -167 119 EBIT ex PIR 901 1 257 769 Investments 956 877 799 Acquisitions 5 979 - - Free cash flow -4 794
Slide 20: Q2 vs. Q1, High production by Mines, special items
Q2 vs. Q1, High production by Mines, special items EBIT excl. PIR Q2 vs. Q1 MSEK Q1 2016 769 Higher production Mines Kevitsa 135 MSEK Specification of deviation Maintenance shutdowns Smelters Volumes 301 Higher metal prices and lower TC Prices and Terms (incl. hedges) 80 Kevitsa -88 MSEK Whereof cur
Slide 21: Q2 vs. Q2, Lower metal prices than last year
Q2 vs. Q2, Lower metal prices than last year EBIT excl. PIR Q2 2016 vs. Q2 2015 MSEK Q2 2015 1,257 Specification of deviation Higher production Mines Kevitsa 135 MSEK Volumes 418 Prices and Terms (incl. hedges) -586 Lower metal prices and TC Whereof currency effects 4 Kevitsa -88 MSEK Costs -228 Rec
Slide 22: Balance sheet
Balance sheet SEK bn 30 Jun 31 Mar (Unless otherwise stated) 2016 2016 MSEK Net debt Gearing % Total Assets 50.4 43.7 12 000 48 Capital employed 40.6 35.6 10 000 40 Shareholders' equity 26.2 26.5 8 000 32 Net debt 11.2 5.6 6 000 24 Gearing, % 43 21 4 000 16 Loan duration, years 3.6 2.2 2 000 8 Avera
Slide 23: Cash flow
Cash flow Free cash flow MSEK Q2 2016 Q2 2015 Q1 2016 EBITDA excluding PIR 1 929 2 138 1 669 Changes in working capital 837 396 -449 Inventories 368 678 -284 Payables 701 -165 -8 Receivables -233 -119 -155 Other 0 3 -2 Cash flow from investments -944 -875 -799 Cash flow from acquisitions -5 943 - -
Slide 24: Update external process inventories
Update external process inventories External Process Inventory New Former Copper, tonnes 28 000 28 500 Zinc, tonnes 13 000 15 000 Lead, tonnes 0 0 Gold, kg 2 200 2 200 Silver, kg 60 000 60 000 Palladium, kg 500 500 • Kevitsa acquisition reduces external copper • Revised zinc valuation • No nickel pr
Slide 25: Going forward
Going forward • Well positioned in the metal market • Metal prices - good momentum and low macro visibility • Mines ‒ Aitik: volatile production, Cu 0.21% (2016) ‒ Garpenberg: Zn 4.5%, Ag 120 g/ton (until FY 2017) ‒ Boliden Area: maintenance in Renström (Q3 2016), Maurliden ore replacing ‒ Kevitsa a
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: Boliden
themselves out of poverty. Metal = = — i lopment. Take copper for example. Wi ae oa | excellent electrical conductivity, copper is used in everything from lighting to computers. Riya has great potential, and so do our metals. Metals for modern life
Slide 28: Appendix
Appendix Boliden Group Q2 2016 28 2016-07-19
Slide 29: Market balance
Market balance Zinc – global market Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Metals demand, kt 3324 3324 3321 3357 3329 3344 3320 3415 Year on year change 1% 0% -1% -1% 0% 1% 0% 2% Smelter production, kt 3360 3531 3367 3515 3416 3469 3265 3360 Year on year change 4% 6% 7% 7% 2% -2% -3% -4% Mine produ
Slide 30: Economic development
Economic development Industrial production, year on year % 14 12 10 8 6 4 2 0 -2 -4 -6 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 2012 2013 2014 2015 2016 EU28 USA China World Source: Thomson Reuters Datastream, Boliden calculations for w
Slide 31: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 30 25 20 15 10 5 0 -5 -10 -15 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 2012 2013 2014 2015 2016 EU USA China China: year on year based on cumulative investments at ea
Slide 32: 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 2012 2013 2014 2015 2016 Europe USA China World Source: LMC Automotive Boliden Group Q2 2016 32 2016-07-19
Slide 33: China – metals demand and economic growth
China – metals demand and economic growth Year on year growth % 18 16 14 12 10 8 6 4 2 0 -2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 Zinc demand Copper demand GDP Industrial production Source: CRU Ltd, Thomson Reuters Datastream Boliden Group Q2 2016 33 20
Slide 34: Zinc TC and premiums
Zinc TC and premiums US$/t concentrate Treatment charges US$/t metal Metal premia 300 250 250 200 200 150 150 100 100 50 50 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Realized TC - European contract Delivered Premia US Midwest Ex-Works Premia Europe Spot TC, China imports Premia Far East
Slide 35: Copper TC and premiums
Copper TC and premiums US$/t concentrate Treatment charges US$/t metal Metal premia 140 160 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 CIF Average European spot premia Contract TC - annual and mid-year benchmark CIF European benchmark premia Sta
Slide 36: Boliden
themselves out of poverty. Metal = = — i lopment. Take copper for example. Wi ae oa | excellent electrical conductivity, copper is used in everything from lighting to computers. Riya has great potential, and so do our metals. Metals for modern life