Boliden Ab · OMXSTO:BOL

Boliden Ab — Q3 2011 Earnings Presentation

37 slides from Boliden Ab's earnings presentation, Oct 25, 2011

  1. Slide 1: Interim Report January – September 2011

    Interim Report January – September 2011 Lennart Evrell President & CEO Mikael Staffas CFO

  2. Slide 2: Q3 Summary

    Q3 Summary Market Boliden  Financial turmoil - low visibility  Revenues MSEK 10,553 (9,373)  Price drop end of period  EBIT ex PIR* MSEK 1,397 (1,213)  Low growth in construction and ‒ Operating profit MSEK 1,180 (1,348) automotive markets  Free Cash Flow MSEK 820 (1,203) ‒ China develops well

  3. Slide 3: Group EBIT Development

    Group EBIT Development MSEK 2 500 Quarterly EBIT 2 000 Quarterly EBIT excl PIR* 1 500 1 000 500 0 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 -500 *Process Inventory Revaluation Boliden Group 3 2011-10-25

  4. Slide 4: The Market

    The Market Boliden Group 4 2011-10-25

  5. Slide 5: Metal markets – Q3 2011

    Metal markets – Q3 2011  Demand ‒ China – high activity in construction and industry ‒ Mature economies – higher vehicle production, construction markets remained weak, generally lower growth in metal demand  Metal supply ‒ Zinc metal production flat vs Q2 ‒ Copper production lower than Q2  Conce

  6. Slide 6: Construction

    Construction year on year % Monthly data  China strong 40  Low activity in USA and 30 Europe 20 10 0 -10 -20 -30 2006 2007 2008 2009 2010 2011 China - investments residential building (cum.value) EU27 - Construction IP SA USA - Construction spending, total value SA, AR Source: Reuters Datastream B

  7. Slide 7: Automotive

    Automotive  Higher growth in all key Year on year % 3 months moving average data 150 regions 100 50 USA* China 0 Germany Japan -50 -100 200 200 200 200 201 201 6 7 8 9 0 1 * Light vehicle assemblies Source: Reuters, VDA Boliden Group 7 2011-10-25

  8. Slide 8: Zinc price and inventories

    Zinc price and inventories USD/t LME Inventory Shanghai Inventory Price Price Quarter avg Tonnes 5 000 1 400 000 Zinc price (LME average) 4 500 1 200 000 Q3-11 vs 4 000 USD/t period 3 500 1 000 000 Q3 10 2,013 + 10% 3 000 Q4 10 2,315 - 4% 800 000 2 500 Q1 11 2,393 - 7% 600 000 2 000 Q2 11 2,250 - 1%

  9. Slide 9: Zinc TC and premiums

    Zinc TC and premiums Zinc treatment charge (TC) Zinc metal price premium USD/t USD/t metal concentrate 400 600 350 500 300 400 250 200 300 150 200 100 100 50 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Realised TC (including price participation) Spot TC - outturn Europe ex-works

  10. Slide 10: Copper price and inventories

    Copper price and inventories USD/t LME Inventory Shanghai Inventory COMEX Inventory Price Price Quarter avg Tonnes 11 000 1 600 000 10 000 Copper price (LME average) 1 400 000 9 000 Q3-11 vs 1 200 000 USD/t period 8 000 Q3 10 7,242 + 24% 7 000 1 000 000 Q4 10 8,634 + 4% 6 000 800 000 5 000 Q1 11 9,6

  11. Slide 11: Copper TC and premiums

    Copper TC and premiums Copper treatment charge (TC) Copper metal price premium USD/t USD/t metal concentrate 160 180 140 160 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Standard grade TC Cif spot mine/trader USD/t Spot Copper premium CI

  12. Slide 12: Gold, Silver and Lead prices

    Gold, Silver and Lead prices USD/oz USD/oz 2 000 Gold 60 Silver 1 800 50 1 600 1 400 40 1 200 1 000 30 800 20 600 400 10 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 USD/t 5 000 Lead Tonnes 450 000 Inventory Price Price Quarter avg 4 500 400 000 A

  13. Slide 13: Mines

    Mines Boliden Group 13 2011-10-25

  14. Slide 14: Mines - Summary Q3

    Mines - Summary Q3 MSEK 1 400  EBIT – MSEK 1,047 (1,061) in Q3 1 200 Quarterly EBIT – MSEK 1,064 in Q2 1 000 800  Lower USD prices vs Q2 600  Sold volumes lower vs Q2 400  Stable production – Lower grades in Aitik 200  Final pricing impact, Aug-Sep 0  Sharp drop end of period  Lower costs vs

  15. Slide 15: Mines - Production

    Mines - Production Metal Copper Zinc content, Milled ore, Metal Milled ore, ktonnes content, ktonnes tonnes tonnes 100 000 10 000 24 000 1 500 80 000 8 000 20 000 1 200 16 000 60 000 6 000 900 12 000 600 40 000 4 000 8 000 2 000 300 20 000 4 000 0 0 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q

  16. Slide 16: Aitik development – Ore, Head Grade & Metal

    Aitik development – Ore, Head Grade & Metal 22 000 0,55% 20 000 0,50% 18 000 0,45% 16 000 0,40% 14 000 0,35% 12 000 0,30% 10 000 0,25% 8 000 0,20% 6 000 0,15% 4 000 0,10% 2 000 0,05% 0 0,00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2007 2008 2009 2010 2011 Milled pro

  17. Slide 17: Smelters

    Smelters Boliden Group 17 2011-10-25

  18. Slide 18: Smelters – Summary Q3

    Smelters – Summary Q3 MSEK 1 500  EBIT excl. PIR* ‒ MSEK 356 (238) in Q3 Quarterly EBIT 1 300 Quarterly EBIT excl PIR* 1 100 R12 EBIT excl PIR* ‒ MSEK 143 in Q2 900  Positive volume effect 700  Higher copper TC/RCs 500  Lower zinc TCs 300 100  Maintenance stops in Q3 and Q2 – 45 vs 180 MSEK EBI

  19. Slide 19: Smelters - Production

    Smelters - Production Zinc Metal Cathode Total f eed, Copper production, Total f eed, production, tonnes tonnes tonnes tonnes 400 000 100 000 250 000 140 000 350 000 120 000 80 000 200 000 300 000 100 000 250 000 60 000 150 000 80 000 200 000 40 000 100 000 60 000 150 000 100 000 40 000 20 000 50 00

  20. Slide 20: E-scrap expansion 2012

    E-scrap expansion 2012  Largest electronics recycling capacity in the world ‒ 45,000 to 120,000 tonnes/year  Capex MSEK 1,300  Start early 2012 Boliden Group 20 2011-10-25

  21. Slide 21: Financials

    Financials Boliden Group 21 2011-10-25

  22. Slide 22: Financial Summary

    Financial Summary MSEK Q3 2011 Q3 2010 YTD 11 YTD 10 Revenues 10 553 9 373 30 607 26 596 Operating profit (EBIT) 1 180 1 348 3 673 3 701 EBIT excl Process Inventory Revaluation 1 397 1 213 4 017 3 385 EBIT excl PIR margin, % 13 13 13 13 Free cash flow 820 1 203 479 1 352 Capex 965 566 2 649 1 971 Ea

  23. Slide 23: Group EBIT Q3 2011 versus Q3 2010

    Group EBIT Q3 2011 versus Q3 2010 MSEK Q3 2011 Q3 2010 Q2 2011 EBIT 1 180 1 348 1 134 Process Inventory revaluation -216 136 14  Higher production EBIT excl Process Inventory 1 397 1 213 1 120  Lower grades Revaluation Deviation 184 277 Specification of deviation Volume 112 -19  Higher production

  24. Slide 24: Cost development Q3 2011 vs Q3 2010

    Cost development Q3 2011 vs Q3 2010 MSEK 300 250 3 19 200 20 239 Q3 2011 vs 83 MSEK 150 Q3 2010 100 Volume + 140 45 Depreciation + 20 50 Other + 80 70 Total cost increase + 239 0 Total operating costs in Q3 equals 3,027 MSEK Boliden Group 24 2011-10-25

  25. Slide 25: Group EBIT Q3 2011 versus Q2 2011

    Group EBIT Q3 2011 versus Q2 2011 MSEK Q3 2011 Q3 2010 Q2 2011 EBIT 1 180 1 348 1 134 Process Inventory revaluation -216 136 14  Aitik EBIT excl Process Inventory 1 397 1 213 1 120  Higher production Revaluation Deviation 184 277  Lower grades Specification of deviation Volume 112 -19 Costs -239

  26. Slide 26: Cash Flow

    Cash Flow MSEK Q3 11 Q3 10 YTD 11 YTD 10 Op profit before depreciation (EBITDA)* 1 672 1 827 5 122 5 048 Change in inventories 806 661 857 -1 419 Change in receivables 232 97 -40 54 Change in liabilities -516 -1 088 -1 297 -438 Other change in working capital -305 148 -185 -155 Changes in working ca

  27. Slide 27: Balance sheet

    Balance sheet MSEK 10 000 Net debt & Gearing 100% 50% Gearing 46% 45% 8 000 80% 40% Net debt 37% Gearing 35% 33% 6 000 60% 30% 27% 4 000 40% 25% 24% 21% 20% 2 000 20% 15% 10% 0 0% 5% -2 000 -20% 0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q2 Q3 Q4 Q1 Q2 Q3 07 07 08 08 09 09 10 10 11 11 10 10 10 11 11 11 Bolide

  28. Slide 28: Sensitivity Analysis

    Sensitivity Analysis 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 Copper 400 USD/SEK 980 TC/RC Cu 50 Zinc 425 EUR/USD 350 TC Zn 45 Lead 90 USD/NOK 70 TC Pb -10 Gold 150 Silver 160 Boliden Group 28 2011-10-25

  29. Slide 29: Boliden summary

    Boliden summary Comparing 2011 and 2007 Profit trend Committed capex Similar Cost/capex reduction potential 2011-Q3 2007 Debt and debt structure 27% 43% Hedge portfolio, MUSD -mid 2013 1,360 900 Hedge prices, until mid 2013 Copper, USD/tonne 9,072 6,145 Improved Zinc, USD/tonne 2,223 - Gold, USD/tro

  30. Slide 30: Summary

    Summary  Decline in global economy  Good demand, low growth ‒ Continued high activity in China  Boliden Q3 ‒ Good production compensated for lower grades ‒ Underlying cost increase ‒ Lower costs vs Q2 due to maintenance stops in Q2 ‒ Prices and USD combined on similar level as Q2 2011 and Q3 2010

  31. Slide 31: Going forward

    Going forward  Expansion projects: ‒ E-scrap expansion Q1 2012 ‒ Kankberg gold mine 2H 2012 ‒ Garpenberg expansion 2014  Aitik below reserve grade (0,25%)  Capex ‒ Approx SEK 4 billion 2011 and 2012 Boliden Group 31 2011-10-25

  32. Slide 32: Disclaimer

    Disclaimer  This presentation has been prepared by Boliden for information purposes only. Nothing in this material shall be construed as an offer or solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction.  This presentation has been prepare

  33. Slide 33: Boliden - metals for modern society

    Boliden - metals for modern society Boliden Group 33 2011-10-25

  34. Slide 34: Appendix

    Appendix Boliden Group 34 2011-10-25

  35. Slide 35: Mines - Production

    Mines - Production Gold metal Gold & silver Metal Lead Silver metal content, content, content, kg kg tonnes 1 200 100 000 20 000 1 000 80 000 15 000 800 60 000 600 10 000 40 000 400 5 000 200 20 000 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 08 08 09 09 09 09

  36. Slide 36: Smelters - Production

    Smelters - Production Gold Gold & silver Silver Production, Lead production, production, tonnes kg kg 5 000 160 000 16 000 4 000 12 000 120 000 3 000 80 000 8 000 2 000 40 000 4 000 1 000 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 08 08 09 09 09 09 10 10 10 1

  37. Slide 37: Capital Structure

    Capital Structure SEK bn 30 Sep 31 Dec Unless otherwise stated 2011 2010 Total Asset 37,0 35,1 Capital employed 29,7 27,2 Shareholders' equity1 20,4 18,8 Net debt 5,6 4,6 Gearing % 27 24 Equity/asset ratio, % 55 54 Duration of committed credit facilities, years 3,4 4,2 Average interest rate, % 3,05

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