Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — FY2014 Earnings Presentation
29 slides from Kghm Polska Miedz's earnings presentation, Mar 16, 2015
Slide 1: Layers of possibilities: Group results for 2014
Layers of possibilities Group results for 2014 16 March 2015
Slide 2: Cautionary Statement
Cautionary Statement This presentation was prepared by KGHM Polska Miedź S.A. (KGHM). The presentation is strictly of an informational nature and should not be construed as containing investment advice. The users of this presentation are solely responsible for their own analysis and assessment of th
Slide 3: 2014 Highlights
2014 Highlights Key accomplishments Commissioning of the Sierra Gorda mine 1 Strategy adopted for the years 2015-2020 with an outlook to 2040 Target production: over 1 million tonnes CuEq Financing secured for development program 2 Production commencedat Sierra Gorda 3 Production commenced at De
Slide 4: Goals: New Strategy for 2015–2020 with an outlook to 2040
1 New Strategy for 2015–2020 with an outlook to 2040 Build the shareholder value of the KGHM Group based on a clear path of global Produce over 1 million tonnes of copper growth … equivalent and enhance efficiencies Resource Base Development Assets Development Optimizing Production Increase resour
Slide 5: Sierra Gorda – full production capacity to be reached by mid-2015
2 Sierra Gorda – full production capacity to be reached by mid-2015 Sierra Gorda Cu Mo Au Status Average 220 kt Cu annual 25 mn lbs Mo* production 64 kt Au Average daily ore processing is as planned (Phases I & II) at approx. 75% of designed phase I capacity. 55% KGHM Ownership In the proces
Slide 6: Sierra Gorda – promising results from near-mine exploration
2 Sierra Gorda – promising results from near-mine exploration Pampa Lina Drilling rig in the Pampa Lina exploration zone Areas adjacent to the current mine have substantial exploration potential. 6
Slide 7: Deep Głogów – guarantee of stable production
3 Deep Głogów – guarantee of stable production GGP Cu Ag Status 290 Mt @ Resources 2.4% Cu, 79 g/t Ag On 1 April 2014 the first mining section in Deep Głogów was opened through the Rudna mine. Ownership 100% KGHM By the end of Q4 2014 over 348 thousand tonnes of ore had been extracted. Mine
Slide 8: Gaworzyce-Radwanice – another 4 million tonnes of copper in Poland
Gaworzyce-Radwanice 4 – another 4 million tonnes of copper in Poland Gaworzyce- -Radwanice Cu Ag Status 216 Mt @ Resources 1.89% Cu, 35 g/t Ag Completion of 2008-2014 exploratory work in the concessioned areas Gaworzyce and Radwanice. Ownership 100% KGHM 216 million tonnes of copper resource
Slide 9: Macroeconomic outlook
gO KGHM Macroeconomic outlook
Slide 10: The copper downturn not felt equally everywhere
The copper downturn not felt equally everywhere The copper market balance is steadily improving Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 USD PLN CLP CNY 800 110 700 Estimated market balance in 2015 (thousand tonnes) 105 600 100 500 95 90 400 85 300 80 200 Copper price index in local currencies 75 100 70 0 Oct-
Slide 11: The US Fed in the spotlight; central banks in various stages of the monetary cycle
The US Fed in the spotlight; central banks in various stages of the monetary cycle cause higher currency volatility 180 Dollar index 160 140 120 100 80 60 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 The past year saw a change in monetary policy in the most important global economies. A w
Slide 12: Economic results KGHM Polska Miedź S.A. Group
Economic results KGHM Polska Miedź S.A. Group
Slide 13: Metals prices under pressure from a strengthening USD
Metals prices under pressure from a strengthening USD Local currencies partially offsetting volatility Copper price (USD/t) Exchange rate (USD/PLN) Positive data on the Polish The main cause of the copper economy in the first half of the price decrease in 2014 was the year sustained the USD/PLN
Slide 14: Copper production by the Group in 2014 similar to that in 2013
KGHM Polska Miedź S.A. KGHM INTERNATIONAL Copper production by the Group in 2014 similar to that in 2013 Payable copper production (kt) Total Group production of copper equivalent Production of copper equivalent from mined ore* from mined ore amounted to 661 thousand tonnes. 666 663 -0.5% (kt) Thi
Slide 15: The increase in unit C1 cost due to external factors
The increase in unit C1 cost due to external factors C1 – Group C1 – KGHM Polska Miedź S.A. C1 – KGHM INTERNATIONAL The increase in C1 concentrate (USD/lb) (USD/lb) (USD/lb) production cost is mainly related 2.26 2.15 2.14 to a change in macroeconomic 1.85 1.89 conditions (prices of by-products –
Slide 16: The KGHM Group achieved EBITDA of over PLN 5 billion
KGHM Polska Miedź S.A. KGHM INTERNATIONAL Other The KGHM Group achieved EBITDA of over PLN 5 billion EBITDA Net debt / EBITDA * (mn PLN) The decrease in Group EBITDA by 11% was mainly due to changes in metals prices 0.82 (Cu -6%, Ag -20%) alongside a decrease -11% in sales of copper products by 6%
Slide 17: Economic results KGHM Polska Miedź S.A.
Economic results KGHM Polska Miedź S.A.
Slide 18: Stable mined production, higher metallurgical output
Stable mined production, higher metallurgical output Ore extraction Production of Cu Electrolytic copper Metallic silver (mn t dry weight) in concentrate production production (kt) (kt) (t) +1% 30.6 31.0 +8% -2% +2% 1 256 429 From 1 161 Silver 421 565 577 grade purchased in ore (g/t) materials 135 1
Slide 19: Lower metals prices and lower copper sales led to lower sales revenue by 10%
Lower metals prices and lower copper sales led to lower sales revenue by 10% Sales revenue (mn PLN) Copper and copper Silver Other 18 579 products (kt) (t) -10% Silver 1 028 16 633 3 191 945 1 250 1 263 595 2 471 573 Copper and copper products -4% +1% 14 360 13 217 2013 2014 2013 2014 168 2013 2014
Slide 20: Cost discipline maintained in every quarter of 2014
Cost discipline maintained in every quarter of 2014 After excluding the minerals extraction tax and purchased Cu- -1% bearing materials, expenses by nature were lower by 1% than in 13 254 Total expenses by 2013 (-PLN 42 million) 13 093 nature The following factors impacted the level of costs as
Slide 21: Higher C1 cost due to external factors
Higher C1 cost due to external factors C1 cash cost of producing copper in concentrate (USD/lb) The decrease in silver and gold prices +2% 0.02 0.02 as compared to 2013 led to a lower 0.02 valuation of by-products, which resulted Minerals 0.54 extraction tax in a higher C1 cash cost. 0.65 0.65 U
Slide 22: Financial results of KGHM in line with market consensus
Financial results of KGHM in line with market consensus EBITDA (mn PLN) Net profit (mn PLN) Net Debt (mn PLN) Net Debt / EBITDA -12% -21% 4 976 2 108 3 058 85 4 363 0.46 2 414 Borrowings 1 123 123 2 023 Cash and cash 0.20 equivalents 1 000 2013 2014 2013 2014 2013 2014 2013 2014 813 1 234 1 235 629
Slide 23: Lower metals prices were mainly responsible for the lower profit
Lower metals prices were mainly responsible for the lower profit 3 058 -273 2 414 +236 -217 -52 +191 -1 446 +679 -42 +280 Net profit Change in sales Change in prices Change in Hedging Total cost of Minerals Purchased Cu- Other Income tax Net profit 2013 volume (Cu,Ag,Au)* USD/PLN products sold** ext
Slide 24: Accrued result on derivatives amounted to PLN 352 million
The accrued result on derivatives achieved by KGHM Polska Miedź S.A. as at 31 December 2014 amounted to PLN 352 million Market risk management – hedging position (as at 31 December 2014) Position in derivatives on the commodities and currencies markets Copper USD/PLN w tonach transactions transakcje
Slide 25: Dividend for 2014
gO KGHM Dividend for 2014
Slide 26: Results-oriented Dividend Policy
Results-oriented Dividend Policy KGHM Dividend Policy The Dividend Policy of KGHM Polska Miedź S.A. is part of its on-going efforts to ensure a balance between dividends paid out to shareholders and opportunities to efficiently invest the Company’s funds The Dividend Policy of KGHM Polska Miedź
Slide 27: Recommended profit allocation for 2014
Recommended profit allocation for 2014 Taking into consideration: the adopted Dividend Policy the assumptions and goals of the Company’s Strategy, including necessary expenditures by the Group to accomplish its development program and a safe level of debt The Management Board proposes payment
Slide 28: Goals and priorities for 2015
Goals and priorities for 2015 Maintain a stable level of copper production Achieve full phase I production capacity at the Sierra Gorda mine (110,000 tonnes of ore throughput per day) and commence molybdenum production Maintain the rate of progress in the Victoria and Ajax projects Continue
Slide 29: Thank you!
Thank you! Investor Relations kghm.com/en/investors ir@kghm.com +48 76 74 78 280 29