Boliden Ab · OMXSTO:BOL

Boliden Ab — FY2008 Earnings Presentation

43 slides from Boliden Ab's earnings presentation, Feb 13, 2009

  1. Slide 1: Full year Report January – December 2008

    Full year Report January – December 2008 Bildplatshållare Lennart Evrell President & CEO Johan Fant CFO 1 2009-02-13

  2. Slide 2: Fourth Quarter 2008: Market

    Fourth Quarter 2008 Market ƒ Lower demand for base metals – Negative growth in mature regions – Lower growth in developing countries ƒ Lower zinc and copper prices – Zn -55% and Cu -46% from Q4 2007 ƒ Stable gold price and pressure on silver ƒ Weak sulphuric acid market ƒ Stronger USD 2 2009-02-13

  3. Slide 3: Fourth Quarter 2008: Boliden

    Fourth Quarter 2008 Boliden ƒ Stable production ƒ Revenues 6,287 MSEK (7,290) – Positive impact from higher copper production and stronger USD – Reduction in zinc smelter production ƒ Operating profit -491 MSEK (590) – Re-valuation of process inventory –702 MSEK (-277) 3 2009-02-13

  4. Slide 4: Full year 2008: Market

    Full year 2008 Market ƒ Stable demand in 1H – accelerating weakening trend in 2H ƒ Metal prices fell – Zn across the year – Cu in Q4 ƒ Stable gold price, pressure on silver across the year ƒ Strong sulphuric acid demand ƒ USD average somewhat lower than in 2007 4 2009-02-13

  5. Slide 5: Full year 2008: Boliden

    Full year 2008 Boliden ƒ Lower mined production, higher smelter production ƒ Revenues 30,987 MSEK (33,204) ƒ Operating profit 1,004 MSEK (5,428) – Prices, terms and exchange rates -3,486 MSEK ƒ Operating margin 3% (16%) ƒ Aitik36 on time-plan ƒ Good cash flow generation considering Aitik project 5 2

  6. Slide 6: The Market

    The Market 6 2009-02-13

  7. Slide 7: End-user market fundamentals weaker

    End-user market fundamentals weaker Automotive ƒ U.S. and European automotive sales declining – Car and light vehicle production reduced early 2009 ƒ Asian automotive sales and production declined end 2008 Construction ƒ EU market weaker in the second half 2008 ƒ US market continued to weaken in 200

  8. Slide 8: Zinc price fell 33% from Q3

    Zinc price fell 33% from Q3 Tonnes USD/Tonnes 900 000 5 000 800 000 4 500 4 000 700 000 Zinc price (LME average) 3 500 600 000 USD/t Q4-08 vs. period 3 000 500 000 Q4 2007 2,646 - 55% 2 500 400 000 Q1 2008 2,426 - 51% 2 000 300 000 Q2 2008 2,115 - 44% 1 500 200 000 Q3 2008 1,773 - 33% 1 000 100 000

  9. Slide 9: Flat zinc price since November

    Flat zinc price since November USD/tonne 1 300 1 250 Zinc price (LME average) USD/t Q4-08 vs. period 1 200 Q4 2007 2,646 - 55% 1 150 Q1 2008 2,426 - 51% 1 100 Q2 2008 2,115 - 44% Q3 2008 1,773 - 33% 1 050 Q4 2008 1,189 ─ 1 000 nov-08 dec-08 jan-09 feb-09 9 2009-02-13

  10. Slide 10: Zinc price below 90th percentile cash cost

    Zinc price below 90th percentile cash cost Zinc price (LME average) USD/t Q4-08 vs. period Q4 2007 2,646 - 55% Q1 2008 2,426 - 51% Q2 2008 2,115 - 44% Q3 2008 1,773 - 33% Q4 2008 1,189 ─ 90th percentile industry cast cost Source: Macquarie Research 10 2009-02-13

  11. Slide 11: Zinc TC and spot premiums down in 2008

    Zinc TC and spot premiums down in 2008 USD per tonne of USD per tonne concentrate Treatment charge of metal Metal price premium 600 400 350 500 300 400 250 300 200 150 200 100 100 50 0 0 2006 2007 2008 2005 2006 2007 2008 Realised TC (incl.price participation) Spot TC - Asia US Midwest Delivered Eur

  12. Slide 12: Copper price fell steeply in Q4

    Copper price fell steeply in Q4 Tonnes USD/Tonne 1 000 000 10 000 900 000 9 000 800 000 8 000 Copper price (LME average) 700 000 7 000 USD/t Q4-08 vs. period 600 000 6 000 Q4 2007 7,239 - 46% 500 000 5 000 Q1 2008 7,763 - 49% 400 000 4 000 Q2 2008 8,448 - 53% 300 000 3 000 Q3 2008 7,693 - 49% 200 00

  13. Slide 13: Almost flat copper price since December

    Almost flat copper price since December USD/tonne 4 500 4 000 Copper price (LME average) 3 500 USD/t Q4-08 vs. period 3 000 Q4 2007 7,239 - 46% 2 500 Q1 2008 7,763 - 49% Q2 2008 8,448 - 53% 2 000 Q3 2008 7,693 - 49% 1 500 Q4 2008 3,940 ─ 1 000 nov-08 dec-08 jan-09 feb-09 13 2009-02-13

  14. Slide 14: Current copper price at the 90th percentile

    Current copper price at the 90th percentile Copper price (LME average) USD/t Q4-08 vs. period Q4 2007 7,239 - 46% Q1 2008 7,763 - 49% Q2 2008 8,448 - 53% Q3 2008 7,693 - 49% Q4 2008 3,940 ─ 90th percentile industry cast cost Source: Macquarie Research 14 2009-02-13

  15. Slide 15: Copper spot TC up in Q4, spot premiums down

    Copper spot TC up in Q4, spot premiums down USD per tonne of USD per tonne concentrate Treatment charge of metal Metal price premium 120 200 100 160 80 Indicative level 120 60 for 2009 80 40 40 20 0 0 2006 2007 2008 2009 2005 2006 2007 2008 2009 TC spot China buying terms TC benchmark Spot Copper pr

  16. Slide 16: USD strengthened in the second half

    USD strengthened in the second half USD/SEK EURO/SEK 12 11 USD/SEK 10 USD/SEK Q4-08 vs. period 9 Q4 2007 6.42 21% 8 Q1 2008 6.29 24% 7 Q2 2008 5.99 30% 6 Q3 2008 6.31 23% 5 Q4 2008 7.79 ─ 2003 2004 2005 2006 2007 2008 2009 EUR/SEK EURO/SEK average USD/SEK USD/SEK annual average 16 2009-02-13

  17. Slide 17: Lead price declined

    Lead price declined Tonnes USD/Tonne 200 000 4 500 180 000 4 000 160 000 3 500 Lead price (LME average) 140 000 3 000 USD/t Q4-08 vs. period 120 000 2 500 Q4 2007 3,262 - 62% 100 000 2 000 Q1 2008 2,891 - 57% 80 000 1 500 Q2 2008 2,316 - 46% 60 000 40 000 1 000 Q3 2008 1,912 - 35% 20 000 500 Q4 2008

  18. Slide 18: Gold price remained stable

    Gold price remained stable USD/oz 1 200 1 100 1 000 900 800 Gold price (LBMA) 700 USD/oz Q4-08 vs. period 600 Q4 2007 788 1% 500 Q1 2008 926 - 14% 400 300 Q2 2008 897 - 11% 200 Q3 2008 871 - 8% 100 Q4 2008 798 ─ 0 2003 2004 2005 2006 2007 2008 2009 18 2009-02-13

  19. Slide 19: Silver price down 32% in Q4

    Silver price down 32% in Q4 USD/oz 25 20 Silver price (LBMA) 15 USD/oz Q4-08 vs. period Q4 2007 14.21 - 28% 10 Q1 2008 17.59 - 42% Q2 2008 17.18 - 41% 5 Q3 2008 15.09 - 32% Q4 2008 10.21 ─ 0 2003 2004 2005 2006 2007 2008 2009 19 2009-02-13

  20. Slide 20: Sulphuric acid prices fell in Q4

    Sulphuric acid prices fell in Q4 Sulphuric acid, contract CFR NW Europe 1988- €/t Source: Fertilizer Market Bulletin 200 180 160 140 120 100 80 60 40 20 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2006 2007 2008 Data to February 5, 2009 Low High ƒ

  21. Slide 21: Segment Smelters

    Segment Smelters 21 2009-02-13

  22. Slide 22: Zinc smelters reduced production in December

    Zinc smelters reduced production in December Comments on Q4 2008 ƒ Odda Concentrate feed, tonnes Zinc metal prod, tonnes – Maintenance stop to mid October 250 000 120 000 – Production running well after stop 200 000 100 000 – Lower feed and cast production than 80 000 150 000 Q4 2007 and Q3 2008 60

  23. Slide 23: Zinc smelters' approximate revenue distribution

    Zinc smelters’ approximate revenue distribution Lower value of free metals FY 2008 FY 2007 By-products By-products 14% 9% Premiums 16% Premiums TC 14% 44% TC 51% Free metal Free metal 21% 31% 23 2009-02-13

  24. Slide 24: Copper Smelters increased production

    Copper Smelters increased production Comments on Q4 2008 ƒ Rönnskär Concentrate feed, tonnes Copper cathode prod, tonnes – Increased copper and precious 400 000 100 000 metals production 350 000 90 000 ƒ Harjavalta 300 000 80 000 70 000 250 000 – Higher feed and copper production 60 000 from Q3 2008

  25. Slide 25: Copper smelters' approx. revenue distribution

    Copper smelters’ approx. revenue distribution Decrease in TC/RC FY 2008 FY 2007 By-products By-products 17% 26% Premiums TC/RC 5% 44% TC/RC Premiums 54% 4% Free metal 24% Free metal 26% 25 2009-02-13

  26. Slide 26: Segment Mines

    Segment Mines ‘BOLIDEN E Ww 2009-02-13

  27. Slide 27: Mines' zinc production increased from Q3

    Mines’ zinc production increased from Q3 Comments on Q4 2008 ƒ Tara Milled ore, Zinc metal content, tonnes tonnes – Lower grades and lower production 1 600 000 100 000 than in Q3 2008 1 400 000 90 000 80 000 ƒ Garpenberg 1 200 000 1 000 000 70 000 60 000 – Higher grades and higher 800 000 50 000 pro

  28. Slide 28: Mines' copper production improved from Q3

    Mines’ copper production improved from Q3 Comments on Q4 2008 ƒ Aitik Milled ore, Copper metal content, – Increased production from Q3 Ktonnes tonnes 6 000 18 000 2008 16 000 5 000 – Higher grades, improved 14 000 grindability from Q3 2008 4 000 12 000 ƒ Boliden area 3 000 10 000 8 000 – Planned red

  29. Slide 29: Financials

    Financials BOLIDEN 29 2009-02-13

  30. Slide 30: Financial summary

    Financial summary SEK m Q4 08 Q4 07 2008 2007 Revenues 6,287 7,290 30,987 33,204 Operating profit (EBIT) -491 590 1,004 5,428 EBIT margin, % -8 8 3 16 Free cash flow (before financing -534 -418 837 1,212 activities) Earnings per share, SEK -1.65 1.33 3.42 13.37 Gearing 39% 43% 39% 43% 30 2009-02-13

  31. Slide 31: 2008 vs 2007 EBIT deviation analysis

    2008 vs 2007 QUARTERLY FULL YEAR Q4 2008 Q4 2007 FY 2008 FY 2007 EBIT YTD, (MSEK) -491 590 1 004 5 428 whereof: Iron stock revaluation -702 -277 -789 -192 Hedgeresult 174 -187 -350 -1 674 MAMA -171 -14 19 -190 EBIT excl Iron stock, Hedge, MAMA 208 1 068 2 124 7 484 DEVIATION -860 -5 360 Specificatio

  32. Slide 32: Q4 2008 vs Q3 2008

    Q4 2008 vs Q3 2008 QUARTERLY Q4 2008 Q3 2008 EBIT QTD, (MSEK) -491 -142 whereof: Iron stock revaluation -702 -267 Hedgeresult 174 -141 MAMA -171 -9 EBIT excl Iron stock, Hedge, MAMA 208 275 DEVIATION -67 Specification of deviations: Currency 302 Prices & Terms -414 Metal prices and terms -322 TC/RC

  33. Slide 33: EBIT by segment

    EBIT by segment SEK m Q4 08 Q4 07 2008 2007 Smelters -414 1 372 2,297 Mines 2 536 734 3,135 Other / Eliminations -79 53 -102 -4 The Boliden Group -491 590 1,004 5,428 Smelters – EBIT analysis FY period Mines – EBIT analysis FY period ƒ Exchange rate effects SEK -228 million ƒ Exchange rate effects S

  34. Slide 34: Operating costs increased

    Operating costs increased Depreciation Energy & Other 17% 11% Change in 2008 vs. Q4 2008 vs. operating costs 2007 Q4 2007 Energy +11% +10% External Consum ables Consumables +5% +8% services 17% 19% Personnel +1% -13% Transports +33% +64% External services +9% - Transports 7% Depreciation & -2% +18%

  35. Slide 35: Cash flow

    Cash flow SEK m Q4 08 Q4 07 2008 2007 Cash flow from operating activities -520 103 1,576 4,773 Cash flow from changes in working capital 1,524 406 3,894 -1,043 Investments -1,533 -920 -4,624 -2,512 Other -5 -7 -9 -6 Free cash flow (before financing activities) -534 -418 837 1,212 Net debt 6,305 5,52

  36. Slide 36: Capital structure on December 31 2008

    Capital structure on December 31 2008 SEK bn 31 Dec 31 Dec Gearing Unless otherwise stated 2008 2007 50% Balance sheet turnover 30.3 27.2 43% 39% 39% 40% Capital employed 24.7 20.1 37% 31% Shareholders’ equity 16.1 12.9 30% Net debt 6.3 5.5 20% Gearing, % 39 43 10% Equity/assets ratio, % 53 47 Avera

  37. Slide 37: Sensitivity analysis on December 31 2008

    Sensitivity analysis on December 31 2008 Change in metal EBIT EBIT Change in EBIT prices, effect, Change in effect, TC/RC, effect, +10% SEK m USD, +10% SEK m +10% SEK m Zinc 325 USD/SEK 450 TC Zn 45 Copper 140 EUR/USD 290 TC/RC Cu 60 Lead 55 USD/NOK 70 TC Pb -15 Gold 70 Silver 55 Estimate of the 12-

  38. Slide 38: Metal price hedging on December 31 2008

    Metal price hedging on December 31 2008 Market Metal Volume Metal price, value2, Coverage Metal futures Maturity year USD Quantity SEK m rate1 Copper (tonne) 2009 5,920 42,600 933 2010 7,606 62,700 2 160 3 093 65% Lead (tonne) 2009 1,252 36,300 71 71 50% Gold (troy oz) 2009 702 102,000 -131 2010 961

  39. Slide 39: Currency hedging after December 31 2008

    Currency hedging after December 31 2008 Maturity Amount sold, Currency future contracts year Rate MUSD USD/SEK 2009 8.30 414 2010 8.26 688 39 2009-02-13

  40. Slide 40: To summarize 2008

    To summarize 2008 Q4 2008 ƒ Price pressure in main metals ƒ Re-valuation of process inventory ƒ Smelter output reduced in December ƒ Mining output improved Full year 2008 ƒ Zinc prices fell across the year ƒ Copper price fell in Q4 ƒ Stronger USD in 2H ƒ Smelter output higher ƒ Mining production low

  41. Slide 41: Actions in 2009

    Actions in 2009 ƒ Reduction of workforce ƒ Procurement project ƒ Reduced zinc and copper smelter production ƒ Cost reduction programme in Tara 41 2009-02-13

  42. Slide 42: Forward-looking statements

    Forward-looking statements Certain statements in this presentation are forward-looking, and the actual outcome could be materially different. Such forward-looking statements are based on Boliden’s present plans, estimates, assumptions, projections and expectations and are subject to risks and uncert

  43. Slide 43: Boliden produces metals that make modern life work

    Boliden produces metals that make modern life work

Boliden — FY2008 Earnings Presentation on 6ix