Boliden Ab · OMXSTO:BOL
Boliden Ab — Q2 2019 Earnings Presentation
35 slides from Boliden Ab's earnings presentation, Jul 19, 2019
Slide 1: Q2 Interim report 2019
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Q2 Interim report 2019 Mikael Staffas, President & CEO Håkan Gabrielsson, CFO
Slide 2: Q2 2019 – Maintenance stops and lower grades
Q2 2019 – Maintenance stops and lower grades Group EBIT ex PIR* R4Q, • Revenues 12,747 (14,071) MSEK MSEK MSEK 3 400 10 200 • EBIT ex PIR* 1,631 (2,329) MSEK 3 200 9 600 3 000 9 000 2 800 8 400 • Projects on plan 2 600 2 400 7 800 7 200 ‒ Capex 2,132 (1,561) MSEK 2 200 6 600 2 000 6 000 1 800 5 400
Slide 3: Market Q2 2019
Market Q2 2019 Macro • Weakness in global manufacturing ‒ Negative growth in automotive sector Base metals • Flat global Zn demand ‒ Reduced Zn demand from automotive • Stable global Cu demand growth • Solid global Ni demand growth ‒ More Ni supply from Indonesia and China Concentrate markets • Incr
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 2 400 3 500 2 100 10 000 2 000 3 000 1 800 8 000 1 600 2 500 1 500 2 000 1 200 6 000 1 200 1 500 900 4 000 800 1 000 600 500 300 2 000 400 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 5: Gold, silver and lead prices
Gold, silver and lead prices Gold Lead Gold price, USD/troy oz. Lead price, USD/tonne 2 000 4 000 1 800 3 500 1 600 3 000 1 400 1 200 2 500 1 000 2 000 800 1 500 600 1 000 400 200 500 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
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 11 000 35 000 4 500 10 000 9 000 30 000 4 000 8 000 3 500 25 000 7 000 3 000 6 000 20 000 2 500 5 000 2 000 15 000 4 000 1 500 3 000 10 000 1 000 2 000 500 5 000 1 000 0 0 0 Cu average price Cu max pric
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 2014 Boliden Group Q2 2019 7 2019-07-19
Slide 8: Mines
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Mines Kevitsa, inauguration of new haul trucks, July 2019 Boliden Group Q2 2019 8 2019-07-19
Slide 9: Q2 2019 Mines – Stable production, lower grades
Q2 2019 Mines – Stable production, lower grades Mines EBIT • EBIT 1,149 (2,044) MSEK R4Q, MSEK MSEK 2 600 7 800 ‒ 1,353 MSEK in Q1 2019 2 400 7 200 2 200 6 600 2 000 6 000 • Projects on plan 1 800 5 400 ‒ Capex 1,388 (1,123) MSEK 1 600 4 800 1 400 4 200 1 200 3 600 • Generally stable production 1 00
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 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 11: Future reclamation in Kevitsa
Future reclamation in Kevitsa • New calculation and increased land use • Higher quantity of covering-material to be transported at a longer distance • Increased reclamation provision and reclamation asset by 56 MEUR • The adjustment does not affect the Q2 income statement ‒ Profit after tax affected
Slide 12: Smelters
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Smelters Harjavalta, New sulphuric acid plant Boliden Group Q2 2019 12 2019-07-19
Slide 13: Q2 2019 Smelters – Major maintenance stops
Q2 2019 Smelters – Major maintenance stops • EBIT ex PIR* 387 (630) MSEK MSEK Smelters EBIT excl. PIR* R4Q, MSEK ‒ 853 MSEK in Q1 2019 1 300 3 900 1 200 3 600 • Projects on plan 1 100 3 300 1 000 3 000 ‒ Capex 743 (437) MSEK 900 2 700 800 2 400 700 2 100 • Improved process stability in 600 1 800 Odd
Slide 14: Smelters – Maintenance Stops
Smelters – Maintenance Stops • Q2 ‒ Additional 45 MSEK EBIT effect vs guidance ‒ 2 days longer and more extensive stop in Harjavalta • Q3 ‒ Additional 150 MSEK EBIT effect vs previous guidance ‒ Disturbance in Ni electric furnace in Harjavalta, repair time estimated to 4 weeks, Cu line not impacted
Slide 15: Smelters – Production
Smelters – Production Copper Metal Total feed, production, Ktonnes Ktonnes 400 120 • Cu production 72 (90) ktonnes 350 105 ‒ Major maintenance stop in Harjavalta 300 90 ‒ Process disturbances in Rönnskär 250 75 200 60 150 45 • Zn production 120 (125) ktonnes 100 30 ‒ Process disturbances in Kokkola
Slide 16: Financials
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Financials Test of 5G network, Boliden Kankberg Boliden Group Q2 2019 16 2019-07-19
Slide 17: 2019 Q2 – Earnings
2019 Q2 – Earnings MSEK Q2 2019 Q2 2018 Q1 2019 Revenues 12,747 14,071 13,047 EBITDA 2,749 3,691 3,737 EBIT 1,539 2,468 2,441 EBIT ex PIR 1,631 2,329 2,048 Investments 2,132 1,561 1,606 Free cash flow 789 1,718 -323 Earnings per share, SEK 4.13 7.45 6.91 Net debt / equity ratio, % 14 13 6 Boliden Gr
Slide 18: Q2 2019 vs. Q2 2018
Q2 2019 vs. Q2 2018 Group EBIT excl. PIR MSEK Q2 2019 1,631 Q2 2018 2,329 Lower grades in Tara, Kevitsa and Aitik. Deviation -698 Maintenance stops and disturbances in Smelters Specification of deviation Volumes -607 Lower metal prices, partly compensated by FX, Prices and terms (incl. hedges) 99 Hi
Slide 19: Q2 2019 vs. Q1 2019
Q2 2019 vs. Q1 2019 Group EBIT excl. PIR MSEK Q2 2019 1,631 Q1 2019 2,048 Deviation -417 Lower grades in Tara, Kevitsa and Aitik, Specification of deviation Maintenance stops and disturbances in Smelters Volumes -359 Prices and terms (incl. hedges) 115 Lower metal prices compensated by FX Higher Zn
Slide 20: Cash flow
Cash flow MSEK Q2 2019 Q2 2018 Q1 2019 EBITDA excluding PIR 2,841 3,552 3,345 Cash flow from working capital 526 171 -1,507 Inventories 996 322 -1,231 Operating receivables 135 -31 -815 Operating liabilities -608 -118 551 Other 3 -2 -11 Cash flow from investments -2,115 -1,554 -1,603 Financial items
Slide 21: Balance sheet
Balance sheet Group Net debt & Gearing SEK bn 30 June 30 June 31 Dec MSEK % 2019 2018 2018 12 000 45 Total Assets 61.3 57.8 58.7 40 10 000 Capital employed 47.7 44.8 44.4 35 8 000 30 Equity 39.0 36.2 39.0 25 6 000 Net debt 5.5 4.6 2.0 20 4 000 15 Net debt / equity ratio, %* 14 13 5 10 2 000 Loan dur
Slide 22: EBIT sensitivity breakdown by Business Area
EBIT sensitivity breakdown by Business Area Effect on operating profit, MSEK Group BA Mines BA Smelters Metal prices + 10% Zinc 840 620 220 Copper 730 680 50 Gold 350 280 70 Silver 160 130 30 Lead 130 110 20 Nickel 110 105 5 Smelter charges +10% TC Zinc 90 -130 220 TC/RC Copper 80 -60 140 TC Lead -1
Slide 23: Going forward
Going forward • Aitik ‒ 2019: Cu 0.25%, 2020: 45 Mtonnes milled volume • Garpenberg ‒ 2019: Zn 4.0%, 2020: 3 Mtonnes milled volume • Kevitsa ‒ 2019: Mining below reserve average, 2020: 9.5 Mtonnes milled volume pace • Tara ‒ Rock stability issues to affect grades negatively in Q3 • New Swedish diese
Slide 24: 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 25: • Click to edit Master text styles
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Boliden Group Q2 2019 25 2019-07-19
Slide 26: Appendix
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Appendix Haul truck tires Boliden Group Q2 2019 26 2019-07-19
Slide 27: Boliden, key attractions
Boliden, key attractions • 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
Slide 28: Metal prices and USD/SEK since January 1, 2018
Metal prices and USD/SEK since January 1, 2018 Source: Refinitiv Datastream, prices up to and including July 17 2019 Boliden Group Q2 2019 28 2019-07-19
Slide 29: Zinc TC and premia
Zinc TC and premia US$/t Treatment charges US$/t metal Metal premia concentrate 300 250 250 200 200 150 150 100 100 50 50 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Contract TC - realized Ex-Works Premia Europe Delivered Premia US Midwest Spot TC imported concentrate to China Premia Far E
Slide 30: Copper TC and premia
Copper TC and premia US$/t Treatment charges US$/t metal Metal premia concentrate 120 60 100 50 80 40 60 30 40 20 20 10 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Contract TC - annual and mid-year benchmark Standard grade spot TC CIF Average European premia Contract benchmark according to
Slide 31: Economic development
Economic development Industrial production, year on year % 10 8 6 4 2 0 -2 -4 J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D 2016 2017 2018 2019 EU28 USA China World Source: Refinitiv Datastream, world data calculated by Boliden Boliden Group Q2 2019 31 2019-
Slide 32: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 25 20 15 10 5 0 -5 J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND 2015 2016 2017 2018 2019 EU USA China China: year on year based on cumulative investments at each point. USA: constructio
Slide 33: Automotive
Automotive Car production, year on year, quarterly data 40% 30% 20% 10% 0% -10% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 Europe North America Japan China Global Source: LMC Automotive research Boliden Group Q2 2019 33 2019-07-19
Slide 34: Market balance – Zinc and Copper
Market balance – Zinc and Copper Zinc – global market Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Metals demand, kt 3 482 3 491 3 433 3 529 3 474 3 495 3 412 3 528 Year on year change 1,8% 1,5% -0,6% -0,3% -0,2% 0,1% -0,6% 0,0% Smelter production, kt 3 272 3 577 3 317 3 350 3 146 3 453 3 219 3 471 Year
Slide 35: Market balance – Nickel and Lead
Market balance – Nickel and Lead Nickel - global market Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Metals demand, kt 552 576 566 577 572 576 573 597 Year on year change 12,0% 9,8% 10,0% 13,6% 3,6% 0,1% 1,3% 3,6% Smelter production, kt 529 546 516 538 535 563 556 589 Year on year change 7,6% 6,3% 5,8% 1