Boliden Ab · OMXSTO:BOL

Boliden Ab — Q3 2014 Earnings Presentation

33 slides from Boliden Ab's earnings presentation, Oct 22, 2014

  1. Slide 1: Interim report Q3 2014

    Interim report Q3 2014 Lennart Evrell President & CEO Mikael Staffas CFO

  2. Slide 2: Summary Q3 2014

    Summary Q3 2014  Revenues 9 287 (8 471) MSEK MSEK R4Q, MSEK  EBIT ex PIR* 711 (603) MSEK 1,800 Quarterly EBIT excl PIR* 7,200 ‒ EBIT 858 (681) MSEK 1,600 Rolling Q EBIT, RHS 6,400 Rolling Q EBIT excl PIR*, RHS  Free Cash Flow 728 (436) MSEK 1,400 5,600 1,200 4,800  Higher zinc prices and TC 1,00

  3. Slide 3: Firm metals demand but weaker macro

    Firm metals demand but weaker macro Macro  Lower global economic growth  Uncertainties going forward Metals markets  Metals demand firm, Zn prices up  Metals; Zn deficit, Cu in balance  Concentrates; Zn surplus, Cu in balance Exchange rates  Weaker SEK and stronger USD Boliden Group Q3 2014 3

  4. Slide 4: Market balance

    Market balance Zinc – global market Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Metals demand 2.9% 2.8% 2.5% 2.9% 2.7% Smelter production 8.5% 4.0% 0.2% 1.5% 1.5% Metal balance, kt -36 47 -145 -88 -78 Mine production 1.7% 0.5% -3.6% -4.7% 3.5% Concentrate balance, kt 123 26 -239 92 177 Copper – global market Q3 1

  5. Slide 5: Currencies

    Currencies USD/SEK EUR/USD 10 0.90 9 1.05 8 1.20 7 1.35 6 1.50 5 1.65 4 1.80 3 1.95 2 2.10 1 2.25 0 2.40 2009 2010 2011 2012 2013 2014 Boliden Group Q3 2014 5 2014-10-22

  6. Slide 6: Zinc – price up

    Zinc – price up USD/t Price Price Q avg 5,000 2,500 Q3 Q4 Q1 Q2 USD/t 2,400 Q3 4,500 2,300 2,200 4,000 2,100 3,500 2,000 1,900 3,000 1,800 1,700 2,500 1,600 2,000 1,500 Jul/13 Oct/13 Jan/14 Apr/14 Jul/14 Oct/14 1,500 1,000 Average price in Q3 vs period 500 Q2-14 Q1-14 Q4-13 Q3-13 0 2004 2005 2006 20

  7. Slide 7: Copper – price stable

    Copper – price stable USD/t Price Price Q avg 11,000 9,000 USD/t Q3 Q4 Q1 Q2 Q3 10,000 8,500 9,000 8,000 8,000 7,500 7,000 7,000 6,000 6,500 5,000 6,000 4,000 Jul/13 Oct/13 Jan/14 Apr/14 Jul/14 Oct/14 3,000 2,000 1,000 Average price in Q3 vs period 0 Q2-14 Q1-14 Q4-13 Q3-13 2004 2005 2006 2007 2008

  8. Slide 8: Gold, silver and lead prices stable

    Gold, silver and lead prices stable USD/troy oz. Gold USD/t Lead 2,000 5,000 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 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 USD/troy oz

  9. Slide 9: Mines

    Mines Boliden Group Q3 2014 9 2014-10-22

  10. Slide 10: Mines – Q3 2014

    Mines – Q3 2014 MSEK R4Q, MSEK  EBIT 355 (372) MSEK 1,600 4,800 Quarterly EBIT ‒ 336 MSEK in Q2 2014 Rolling Q EBIT  Capex 603 (947) MSEK 1,200 3,600  Higher zinc prices and weaker SEK  Negative TC development 800 2,400  Low grade Aitik  Higher zinc and silver production 400 1,200 ‒ Production

  11. Slide 11: Mines – Production

    Mines – Production Milled ore, Metal content, mt Copper kt Milled ore, Zinc Metal content, mt kt 12 24 1.8 120 10 20 1.5 100 8 16 1.2 80 6 12 0.9 60 4 8 0.6 40 2 4 0.3 20 0 0 0.0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2012 2013 2014 2011 2012 2013 2014 M

  12. Slide 12: Smelters

    Smelters Boliden Group Q3 2014 12 2014-10-22

  13. Slide 13: Smelters – Q3 2014

    Smelters – Q3 2014 MSEK R4Q, MSEK  EBIT ex PIR* 464 (262) MSEK 900 Quarterly EBIT excl PIR* 2,700 ‒ 174 MSEK in Q2 2014 Rolling Q EBIT, RHS Rolling Q EBIT excl PIR*, RHS 700 2,100  Stronger USD 500 1,500  Higher zinc prices ‒ TC 300 900 ‒ Free metals  Lower costs 100 300  Rönnskär actions on pl

  14. Slide 14: Smelters – Production

    Smelters – Production Cathode Metal Total feed, Copper production, Total feed, kt Zinc production, kt kt kt 240 120 400 120 350 105 200 100 300 90 160 80 250 75 200 60 120 60 150 45 80 40 100 30 40 20 50 15 0 0 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 20

  15. Slide 15: Financials

    Financials Boliden Group Q3 2014 15 2014-10-22

  16. Slide 16: Financial development – Summary

    Financial development – Summary MSEK Q3 2014 Q3 2013 Q2 2014 Revenues 9 287 8 471 9 438 EBITDA 1 709 1 380 1 293 EBIT 858 681 478 EBIT ex PIR 711 603 374 Investments 720 1 151 907 Free cash flow 728 436 920 Earnings per share, SEK 2.24 1.81 1.08 Net debt / equity ratio 35 38 39 Boliden Group Q3 2014

  17. Slide 17: EBIT analysis Q3 vs. Q3

    EBIT analysis Q3 vs. Q3 Favorable currencies, higher zinc prices and lower production MSEK Q3 2014 Q3 2013 EBIT 858 681 Process inventory revaluation (PIR) 146 78 EBIT excl. PIR 711 603 Lower grade Aitik Accident Kokkola Deviation 108 Lower secondary feed Specification of deviation Ramp-up Garpenber

  18. Slide 18: EBIT analysis Q3 vs. Q2

    EBIT analysis Q3 vs. Q2 Lower costs, improved prices and terms, lower production MSEK Q3 2014 Q2 2014 EBIT 858 478 Process inventory revaluation (PIR) 146 104 EBIT excl. PIR 711 374 Deviation 337 Grade Aitik Accident Kokkola Specification of deviation Secondary feed mix Volume -272 Prices and Terms

  19. Slide 19: Cash flow

    Cash flow Higher EBITDA and lower investments MSEK Q3 2014 Q3 2013 Q2 2014 EBITDA including PIR 1 709 1 380 1 293 PIR adjustment -146 -78 -104 Inventories -22 -633 1 026 Payables -138 602 207 Receivables 178 31 -438 Other 0 -9 0 Changes in working capital 19 -86 795 Cash flow from investments -718 -

  20. Slide 20: Capital structure

    Capital structure SEK bn 30 Sept 30 June Unless otherwise stated 2014 2014 MSEK Net debt Gearing % 10,000 45 Total Asset 41.7 42.5 40 8,000 Capital employed 34.3 34.3 35 30 Shareholders' equity 23.5 22.9 6,000 25 20 Net debt 8.2 8.9 4,000 15 Gearing, % 35 39 2,000 10 5 Loan duration, years 3.6 3.9 0

  21. Slide 21: No 1 annual report

    No 1 annual report ”Concise, dense, well-structured and well-balanced document. Reports most outstandingly on strategic aspects often unclear or even neglected in many annuals: market and pricing trends (and cyclical patterns), market and cost position, income model, business process” Boliden Group

  22. Slide 22: Project update

    Project update  Garpenberg ‒ Ramping up  Silver recovery Kokkola ‒ Initial production in Q2, limited production Q3  Aitik45 ‒ Aitik45 permit granted ‒ Early stage – on budget and on time  Laver ‒ Exploitation concession application submitted in Q3 Boliden Group Q3 2014 22 2014-10-22

  23. Slide 23: Summary going forward

    Summary going forward  Aitik ‒ Below average reserve grades 2014  Garpenberg ‒ 2.1 Mton production plan 2014 ‒ 2.5 Mton pace end 2015  Tara ‒ Implementation of new organisation  Kylylahti ‒ Consolidated from Q4 2014  Kokkola – silver project ‒ Full production from November 2014  Rönnskär ‒ Act

  24. Slide 24: Welcome to Capital Markets Day 10-11 November 2014

    Welcome to Capital Markets Day 10-11 November 2014 Monday 10 November 12.30 Registration, buffet lunch and Exhibition “90 years of knowledge” 13.30 Presentations by Strategy and market – Lennart Evrell Corporate Responsibility – Henrik Östberg Mines update – Jan Moström Smelters update – Kerstin Kon

  25. Slide 25: 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

  26. Slide 26: Boliden Group Q3 2014

    Boliden Group 26 Q3 2014 2014-10-22

  27. Slide 27: Appendix

    Appendix Boliden Group Q3 2014 27 2014-10-22

  28. Slide 28: Economic development

    Economic development 14 GDP growth, year on year % Industrial production, year on year % 20 12 USA China USA China 10 EU27 World EU27 World 15 8 10 6 4 5 2 0 0 Data: August, China September, Boliden estimates for certain Data: Q2 2014 USA, Europe, Q3 2014 China countries/regions to calculate August

  29. Slide 29: Construction

    Construction Largest segment for Cu and Zn Activity, year on year % 40 EU27 construction IP 30 USA - construction expenditure China - fixed assets investment 20 10 0 -10 -20 China: year on year based on cumulative investments at each point -30 Source: Reuters Datastream Boliden Group Q3 2014 29 2014

  30. Slide 30: Automotive

    Automotive Production of light vehicles, year on year % China North America 30 Europe Global 25 20 15 10 5 0 -5 -10 Latest data: Q3 2014 -15 2011 2012 2013 2014 Source: Reuters Datastream, data USA and Europe LMC Automotive Boliden Group Q3 2014 30 2014-10-22

  31. Slide 31: Zinc TC and premiums

    Zinc TC and premiums Treatment charges US$/t metal Metal premias US$/t concentrate 300 250 250 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Spot TC China imports Ex-Works Premia Europe Realized, annual European contract Delivered Premia US Midwest Premia Far East - Weste

  32. Slide 32: Copper TC and premiums

    Copper TC and premiums US$/t Treatment charges US$/t Metal premias concentrate concentrate 140 160 120 140 100 120 100 80 80 60 60 40 40 20 20 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Contract TC - annual and mid-year benchmark Spot Copper premium CIF W. Europe Standard grade spot TC Benchmark CI

  33. Slide 33: Boliden Group Q3 2014

    Boliden Group Q3 2014 33 2014-10-22

Boliden — Q3 2014 Earnings Presentation on 6ix