Boliden Ab · OMXSTO:BOL
Boliden Ab — Q2 2018 Earnings Presentation
39 slides from Boliden Ab's earnings presentation, Jul 20, 2018
Slide 1: Q2 Interim report 2018
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Q2 Interim report 2018 Mikael Staffas President & CEO Håkan Gabrielsson CFO
Slide 2: Q2 Interim report 2018 – Strong results due to continued favourable prices and terms
Q2 Interim report 2018 – Strong results due to continued favourable prices and terms R4Q, • Revenues 14,071 (11,554) MSEK MSEK MSEK 3 400 10 200 • EBIT ex PIR* 2,329 (2,196) MSEK 3 200 3 000 9 600 9 000 • Free Cash Flow 1,718 (2,152) MSEK 2 800 2 600 8 400 7 800 2 400 7 200 2 200 6 600 • Favourable
Slide 3: Market Q2 2018
Market Q2 2018 Macro • Strong industrial output • Increased uncertainty Base metals • Strong prices • Healthy growth in metals demand ‒ Especially Ni Concentrate markets • Still tight Zn concentrate market, despite increasing mine supply • Modest increase in Cu mine supply Copper Cathodes from Rönns
Slide 4: High Cu and Zn prices relative to cash cost
High Cu and Zn prices relative to cash cost Zinc Copper Nickel USD/ton USD/ton USD/ton USD/ton USD/ton USD/ton 5 000 5 000 11 000 11 000 35 000 35 000 4 500 4 500 10 000 10 000 30 000 30 000 9 000 9 000 4 000 4 000 8 000 8 000 3 500 3 500 25 000 25 000 7 000 7 000 3 000 3 000 6 000 6 000 20 000 20 0
Slide 5: Base metal prices
Base metal prices Copper price, USD/tonne Copper KTonnes Zinc price, USD/tonne Zinc KTonnes 12 000 2 400 4 000 2 000 10 000 2 000 1 600 3 000 8 000 1 600 1 200 6 000 1 200 2 000 800 4 000 800 1 000 400 2 000 400 0 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012
Slide 6: 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 2013 Boliden Group Q2 2018 6 2018-07-20
Slide 7: Mines
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Mines KID 2, the new crusher at Aitik Boliden Group Q2 2018 7 2018-07-20
Slide 8: Q2 2018 Mines
Q2 2018 Mines R4Q, • EBIT 2,044 (1,555) MSEK MSEK 2 600 MSEK 7 800 ‒ 1,931 MSEK in Q1 2018 2 400 7 200 • Capex 1,123 (889) MSEK 2 200 6 600 2 000 6 000 • Favourable prices & terms 1 800 1 600 5 400 4 800 1 400 4 200 1 200 3 600 • Aitik 1 000 3 000 ‒ Lower grades q-o-q 800 2 400 600 1 800 ‒ Lower mil
Slide 9: 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 10: Smelters
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Smelters Control room at Bergsoe Boliden Group Q2 2018 10 2018-07-20
Slide 11: Q2 2018 Smelters
Q2 2018 Smelters R4Q, MSEK • EBIT ex PIR* 630 (563) MSEK MSEK 1 300 3 900 ‒ 640 MSEK in Q1 2018 • Capex 437 (495) MSEK 1 100 3 300 • Stable prices & terms 900 2 700 ‒ Strong metal prices 700 2 100 ‒ Lower TC´s 500 1 500 • Stable production 300 900 • Maintenance shutdowns in Q2 -130 (-260) MSEK 100 3
Slide 12: Smelters – Production
Smelters – Production Copper Metal Total feed, production, Ktonnes Ktonnes 400 120 • Cu production 90 (87) ktonnes 350 105 ‒ Increased production in both smelters 300 90 250 75 200 60 • Zn production 125 (115) ktonnes 150 45 ‒ Improved process stability in Kokkola 100 30 ‒ Production record at Odda
Slide 13: Financials
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level Financials ‒ Fifth level 4.5 tonnes gold produced in Q2 2018 Boliden Group Q2 2018 13 2018-07-20
Slide 14: 2018 Q2 – Earnings
2018 Q2 – Earnings MSEK Q2 2018 Q2 2017 Q1 2018 Revenues 14,071 11,554 13,331 EBITDA 3,691 3,058 3,941 EBIT 2,468 1,916 2,672 EBIT ex PIR 2,329 2,196 2,724 Investments 1,561 1,385 1,109 Free cash flow 1,718 2,152 1,431 Earnings per share, SEK 7.45 5.34 7.35 Net debt / equity ratio 13 25 6 Boliden Gr
Slide 15: EBIT ex. PIR by segment
EBIT ex. PIR by segment MSEK Q2 2018 Q2 2017 Q1 2018 Mines 2,044 1,555 1,931 Smelters 630 563 640 Other/eliminations -346 78 154 The Group 2,329 2,196 2,724 Boliden Group Q2 2018 15 2018-07-20
Slide 16: 2018 Q2 vs. 2017 Q2
2018 Q2 vs. 2017 Q2 Group EBIT excl. PIR MSEK Q2 2018 2,329 Q2 2017 2,196 Deviation 132 Lower milled production/grades in Mines Higher production in Zn Smelters Specification of deviation Internal profit elimination Volumes -290 Positive effect from metal prices, offset by Prices and Terms (incl. he
Slide 17: 2018 Q2 vs. 2018 Q1
2018 Q2 vs. 2018 Q1 Group EBIT excl. PIR MSEK Q2 2018 2,329 Q1 2018 2,724 Deviation -396 Specification of deviation Lower grades, high deliveries in Mines Higher free metals in Smelters Volumes -371 Internal profit elimination Prices and Terms (incl. hedges) 149 Stronger USD Whereof currency effects
Slide 18: Cash flow
Cash flow MSEK Q2 2018 Q2 2017 Q1 2018 EBITDA excluding PIR 3,552 3,338 3,994 Cash flow from working capital 171 541 -823 Inventories 322 416 -974 Operating receivables -31 261 -224 Operating liabilities -118 -125 378 Other -2 -10 -3 Cash flow from investments -1,554 -1,383 -1,108 Financial items -6
Slide 19: Balance sheet
Balance sheet SEK bn 30 June 30 June 31 Dec MSEK % 2018 2017 2017 12 000 45 Total Assets 57.8 53.5 55.9 10 000 40 35 Capital employed 44.8 42.6 42.9 8 000 30 Equity 36.2 31.1 35.1 6 000 25 20 Net debt 4.6 7.8 3.8 4 000 15 10 Net debt / equity ratio 13 25 11 2 000 5 Loan duration, years 3.8 2.9 2.4 0
Slide 20: New ruling on Aitik´s reclamation
New ruling on Aitik´s reclamation • Increased collateral requirement from 1.8 BSEK to 2.9 BSEK • Increased reclamation provision and reclamation asset by 0.8 BSEK • The adjustment does not affect the Q2 income statement ‒ depreciation will increase by 30 MSEK per year • The ruling has been appealed
Slide 21: Going forward
Going forward • Q2 production above reserve grade • Aitik ‒ Remainder of 2018 and 2019: Cu 0.25% ‒ 2020: 45 Mtonnes milled volume • Garpenberg ‒ 2018: Zn 4.0%, Ag 115 g/ton, 2019: Zn 4.0% ‒ 2020: 3 Mtonnes milled volume • Kevitsa ‒ 2020: 9.5 Mtonnes milled volume pace • Negative internal profit elim
Slide 22: Conclusion
Conclusion • 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 ‒ Milled volume expans
Slide 23: 2019 Capital Markets Day
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level 2019 Capital Markets Day • Stockholm 13 March • Aitik site visit 14 March • More info to be available on www.boliden.com Top of KID 2, the new crusher at Aitik Boliden Group Q2 2018 23 2018-07-20
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 25 2018-07-20
Slide 26: Appendix
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Appendix Zinc slabs Boliden Group Q2 2018 26 2018-07-20
Slide 27: Zinc price
Zinc price Zinc price, USD/tonne KTonnes USD/tonne 3 900 Q2 Q3 Q4 Q1 Q2 4 000 2 000 3 400 1 600 2 900 3 000 2 400 1 200 1 900 2 000 1 400 800 apr-17 jul-17 okt-17 jan-18 apr-18 jul-18 1 000 400 Average price in Q2 vs. period Q1-18 Q4-17 Q3-17 Q2-17 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 28: Copper price
Copper price Copper price, USD/tonne KTonnes USD/tonne Q2 Q3 Q4 Q1 Q2 7 500 12 000 2 400 7 000 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 4 500 6 000 1 200 4 000 apr-17 jul-17 okt-17 jan-18 apr-18 jul-18 4 000 800 2 000 400 Average price in Q2 vs. period Q1-18 Q4-17 Q3-17 Q2-17 0 0 2008 2009 2
Slide 29: Nickel price
Nickel price Nickel price, USD/tonne KTonnes 35 000 600 USD/tonne Q2 Q3 Q4 Q1 Q2 18 000 30 000 16 000 500 14 000 25 000 400 12 000 20 000 10 000 300 8 000 15 000 6 000 apr-17 jul-17 okt-17 jan-18 apr-18 jul-18 200 10 000 100 Average price in Q2 vs. period 5 000 Q1-18 Q4-17 Q3-17 Q2-17 0 0 2008 2009
Slide 30: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/tonne 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 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 31: Zinc TC and premia
Zinc TC and premia US$/t concentrate Treatment charges US$/t metal Metal premia 300 250 250 200 200 150 150 100 100 50 50 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Realized TC - European contract" Ex-Works Premia Delivered Premia Spot TC - China imports Premia Contract benchmark accordin
Slide 32: Copper TC and premia
Copper TC and premia US$/t concentrat Treatment charges US$/t metal Metal premia e 120 160 100 140 120 80 100 60 80 60 40 40 20 20 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Contract TC - annual and mid-year benchmark CIF European benchmark premia Standard grade spot TC CIF Average Europe
Slide 33: Market balance – zinc and copper
Market balance – zinc and copper Zinc – global market Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Metals demand, kt 3 416 3 441 3 450 3 564 3 503 3 493 3 513 3 611 Year on year change 3,0% 2,7% 1,8% 3,3% 2,6% 1,5% 1,8% 1,3% Smelter production, kt 3 378 3 555 3 303 3 297 3 280 3 544 3 342 3 317 Year on y
Slide 34: Market balance – nickel and lead
Market balance – nickel and lead Nickel - global market Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Metals demand, kt 494 525 515 509 552 577 569 570 Year on year change 8,0% 13,1% 6,7% -1,5% 11,7% 10,0% 10,6% 11,9% Smelter production, kt 490 512 484 483 529 543 525 550 Year on year change 1,8% 3,8% 3,5
Slide 35: Economic development
Economic development Industrial production, year on year % 10 8 6 4 2 0 -2 -4 J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND 2015 2016 2017 2018 EU28 USA China World Source: Thomson Reuters Datastream, world data calculated by Boliden Boliden Group Q2 2018 35 2018-07-20
Slide 36: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 20 15 10 5 0 -5 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 2014 2015 2016 2017 2018 EU USA China China: year on year based on cumulative investments at each point. USA:
Slide 37: 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 2014 2015 2016 2017 2018 Europe North America China World Source: LMC Automotive Boliden Group Q2 2018 37 2018-07-20
Slide 38: China – metals demand and economic growth
China – metals demand and economic growth Year on year growth % 25 20 15 10 5 0 -5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2014 2015 2016 2017 2018 Zinc demand Copper demand Nickel demand GDP growth % Industrial production growth % Source: CRU Ltd, Thomson Reuters Datastream Boli
Slide 39: • Click to edit Master text styles
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Boliden 39 2018-07-20