Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Kghm Polska Miedz Sa Ord — H1 2024 Earnings Presentation
48 slides from Kghm Polska Miedz's earnings presentation, Aug 14, 2024
Slide 1: Results of the KGHM Group for the first half of 2024
Layers of possibilities Results of the KGHM Group for the first half of 2024 Warsaw, 14 August 2024
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: Intellectual Property Rights
Intellectual Property Rights All rights reserved. All content on this presentation of the KGHM are protected by copyright and other protective laws. The presentation and the trademarks, service marks and logos on the presentation are owned by or licensed to KGHM, and are subject to copyright, tradem
Slide 4: Agenda
Agenda 1. Sustainable development – commitments and initiatives of KGHM Polska Miedź S.A. 2. Key issues and execution of main targets 3. Production results of the KGHM Group by segment 4. Advancement of development initiatives 5. Financial results of the KGHM Group 4
Slide 5: Sustainable development – commitments and initiatives of KGHM
Sustainable development – commitments and initiatives of KGHM Polska Miedź S.A.
Slide 6: Actions by KGHM's employee volunteers
Actions by KGHM’s employee volunteers 66 actions involving volunteers Number of volunteer projects 435 employee volunteers took part in actions 163 66 1 695 hours dedicated to advancing H1 2023 H1 2024 volunteer projects 6
Slide 7: Climate neutrality by 2050
Climate neutrality by 2050 Achieving climate neutrality by 2050 is the overriding goal of the Climate Policy of KGHM Polska Miedź S.A. Intermediate goal – the reduction of total Scope 1 and Scope 2 emissions by 2030 by 30%1) Emissions reduction by 30% 2030 versus the base year 2020 2050 Climate neut
Slide 8: Increase in share of RES by 2030 will reduce CO2 emissions
By 2030 the increase in share of RES will lead to a substantial reduction in CO2 emissions Share of power source in supplies to KGHM Polska Miedź S.A. 2020 – base year (2.9 TWh): H1 2024: Own generation sources, including RES, covered 21.29% of KGHM Polska Miedź S.A.’s total power needs. Natural Mar
Slide 9: Employee safety as a strategic priority for the KGHM Group
Pokłady Employee możliwości safety as a strategic priority for the KGHM Group ▪ 2021 Safety and development Accident rates1) ▪ ISO 45001:2018 Change2) in LTIFR 2023 vs 2020 We hold an Occupational Health and Safety Management System Certificate. -18.2% in KGHM Polska Miedź S.A. ▪ Leader’s Gold Card
Slide 10: Key issues and execution of main targets
Key issues and execution of main targets
Slide 11: Macroeconomic environment: commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in H1 2024 ranged between 8 085 and 10 857 USD/t, remaining at the beginning of the year in a sideways trend, along [USD/t] Price SD t Annual av. or TD SD t [PLN/t] with worse data from the Chinese market and Euro Zone. Copper
Slide 12: Precious metals prices in H1 2024
Precious metals prices in H1 2024 Investors purchased gold in the expectation of the start of a cycle of interest rates cuts and as a hedge against geopolitical risk. In May 2024 gold prices reached their historic maximum. In H1 2024 the price of gold, contrary to its historic dependence, Silver pri
Slide 13: Weak growth in eurozone and China led to lower copper demand
Weak growth in the eurozone, problems in the German Economy and a lower-than- expected rise in GDP in China led to lower demand for copper Despite the reaching of new price records by copper, market fundamentals did not improve Amongst the largest globaln economies, only the USA Copper inventories i
Slide 14: Eurozone industrial sentiment versus USA industrial indicators
Although indicators of sentiment in the eurozone indicate that industry has not been able to pull itself out of the stagnation of the last two years, industrial indicators in the USA remain elevated. ▪ In H1 2024 PMI in the USA returned to above 50, which marks the border between expected economic s
Slide 15: IMF World Economic Outlook – July 2024
Pokłady IMF Worldmożliwości Economic Outlook – July 2024 15 Forecasts (F) of real GDP growth – International Monetary Fund - World Economic Outlook – Update in July 2024 compared to April 2024; for Chile April 2024 compared to January 2024.
Slide 16: Advancement of key strategic performance indicators in H1 2024
Advancement of key strategic performance indicators in H1 2024 Strategic measure of success Base year 2020 H1 2024 (strategic KPI) Goal 2030 Domestic approx. 560 kt Approx. 600 thousand tonnes of electrolytic copper copper production of electrolytic copper (including production based on a higher amo
Slide 17: Summation of H1 2024 in the KGHM Group
Summation of H1 2024 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to H1 2023 Macroeconomic environment1) Operating results Indicators no change +4% -3% in extraction of ore, dry weight in KGHM Polska Miedź S.A. +15% Copper price Copper price Higher CAPEX execution i
Slide 18: Basic measures of the results in H1 2024
Pokłady możliwości Summation of H 202 in the KGHM Group and KGHM Polska Miedź S.A. Basic measures of the results in H1 2024 KGHM Group KGHM Polska Miedź S.A. PLN 17 480 mn PLN 15 076 mn Revenues Revenues PLN 4 208 mn PLN 2 472 mn Adjusted EBITDA Adjusted EBITDA PLN 1 074 mn PLN 1 331 mn Profit for t
Slide 19: Group production and sales in H1 2024
Group production and sales in H1 2024 Execution of annual targets 2024 Budget Production Copper in concentrate [kt] 205.5 391.0 KGHM Polska Miedź S.A. Silver in concentrate [t] 679.7 1 281.0 Electrolytic copper, total [kt] 292.5 569.2 Electrolytic copper from own concentrate [kt] 193.3 370.4 Metalli
Slide 20: Payable copper production by the KGHM Group
Key production indicators H1 2024 358 Payable copper production +2% H1/H1 by the KGHM Group [kt] higher by 2% (H1/H1) ▪ KGHM Polska Miedź Payable copper production Payable copper production -10% H1/H1 Production slightly lower than in KGHM Polska Miedź S.A. [kt] Sierra Gorda1) [kt] the prior year –
Slide 21: Metals production
Metals production KGHM Group ▪ Slightly lower copper production by KGHM Silver production Polska Miedź S.A. due to execution of the Payable copper production [t] -5% H1/H1 adopted production plan for 2024 [kt] 712 678 ▪ Higher copper production by KGHM +2% H1/H1 INTERNATIONAL LTD. due to higher 351
Slide 22: Production results of the KGHM Group by segment
Production results of the KGHM Group by segment
Slide 23: Production result
Production result KGHM Polska Miedź S.A. Ore extraction No change H1/H1 Production of copper Electrolytic copper -1.0% H1/H1 Metallic silver -4.7% H1/H1 [mn t dry weight] in concentrate [kt] +1.6% H1/H1 production [kt] production [t] 296 293 15.6 15.6 99 From 699 205.5 666 202.3 101 purchased metal-
Slide 24: Production results: Sierra Gorda S.C.M.
Production results Sierra Gorda S.C.M.1) Payable copper production -11% H1/H1 Silver production +7% H1/H1 [kt] [t] ▪ The volume of precious 11.1 11.9 metals production 5.8 6.1 derived from the content 40.1 of these metals in mined 35.7 Q2 2023 Q2 2024 H1 2023 H1 2024 ore TPM production -17% H1/H1 ▪
Slide 25: Production results: KGHM INTERNATIONAL LTD.
Production results KGHM INTERNATIONAL LTD. Payable copper production +91% H1/H1 Silver production -53% H1/H1 ▪ Lower silver production by [kt] [t] 1.5 the Sudbury Basin due to 0.8 lower silver content in ore 0.7 0.3 and a lower volume of ore 29.4 extraction 13.4 15.4 Q2 2023 Q2 2024 H1 2023 H1 2024
Slide 26: Advancement of development initiatives
Advancement of development initiatives
Slide 27: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in H 202 CAPEX execution in H1 2024. incl. borrowings by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development (incl. R&D) Leasing IFRS 16 Adaptaion project
Slide 28: CAPEX execution in key investments
CAPEX execution in key investments Deposit Access Program ▪ GG-1 shaft – Work continues on the final facilities. An environmental decision was obtained for the target facilities. Adaptation Outfitting of the mines 267 Shafts maintenance Outfitting of the mines ▪ GG-2 „Odra” shaft – Work carried out
Slide 29: Role of Deep Głogów (GGP) in maintaining output in Poland
Role of Deep Głogów (GGP) in maintaining output in Poland Deposit access program in KGHM’s concessioned areas Share of production from GGP in total production Active concessions and in Poland future potential Ore extraction dry weight from GGP [kt] +2% Q2/Q1 +18% H1/H1 2 629 3 111 1 540 1 570 19.5%
Slide 30: Execution of strategy by the Group's entities in Poland in H1 2024
Execution of strategy by the Group’s entities in Poland in H1 2024 Advancement of the energy transformation strategy of KGHM. Continuation of the process of acquiring target companies, being operators of solar power farms – Reorganisation of the Group Supporting purchase of shares of three additiona
Slide 31: Energy Development Program, including RES: major events in H1 2024
Energy Development Program, including RES| major events in H1 2024 Ensuring energy security in KGHM M&A Development of wind energy ▪ The Natural Gas-Steam (CCGT) blocks of the Head Office ensured energy security for the Core ▪ On 12 September 2023 a preliminary contingent agreement was ▪ A siting an
Slide 32: Financial results of the Group
Financial results of the Group
Slide 33: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group H1 2024 Group adjusted EBITDA1) Group adjusted EBITDA1) [mn PLN] [mn PLN] Adjusted EBITDA of the KGHM Group +35% H1/H1 4 208 2 657 Higher adjusted EBITDA compared to H1 2023 applies mainly to KGHM 184 INTERNATIONAL LTD. and to a lesser extent 475 4 208 to K
Slide 34: Group sales revenue
Group sales revenue H1 2024 Revenues from contracts with Revenues from contracts with -2% H1/H1 customers customers [mn PLN] [mn PLN] 17 757 17 480 17 757 +723 +43 +57 17 480 1 030 1 043 1 217 1 361 -37 -1 063 15 510 15 076 Revenues for Change in sales Change in prices Change in Adjustments of Other
Slide 35: Expenses by nature
Expenses by nature KGHM Group Lower expenses by nature compared to H1 2023 mainly due to lower costs of purchased metal- Expenses by nature bearing materials, as well as energy and natural [mn PLN] gas 17 371 Impairments/reversals of impairments 7 16 394 -6% H1/H1 11 174 1 973 15 Minerals extraction
Slide 36: C1 unit cost
C1 unit cost 1) KGHM Group C1 – KGHM Group C1 – KGHM Polska Miedź S.A. [USD/lb] [USD/lb] ▪ KGHM Polska Miedź S.A. – a decrease in C1 by -1% H1/H1 -7% H1/H1 3.03 3.00 1% mainly due to higher production from own incl. the minerals concentrates, higher valuation of by-products 2.95 extraction tax and l
Slide 37: Financial results: profit for the period
Financial results KGHM Group Profit/loss for the period [mn PLN] 1 074 Consolidated profit in H1 2024 An increase in KGHM Group profit. mainly due to an EBITDA increase in KGHM INTERNATIONAL LTD. and exchange differences [mn PLN] +1 233 + 865 1 074 - 373 - 162 401 - 890 Profit for Change in Profit/l
Slide 38: Cash flow
Cash flow KGHM Group [mn PLN] +3 028 + 405 2 441 - 102 - 43 1 729 -2 576 Cash as at 1 January 2024 Net cash generated from Net cash used in investing Proceeds from/repayments of Interest paid Other Cash as at 30 June 2024 operating activities activities borrowings 38
Slide 39: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q2 2024 Main factors affecting net debt in 2024 Net debt / adjusted EBITDA1) 1.2 1.0 1.4 Increases in debt 0.9 0.7 ▪ Cash expenditures on property, plant and equipment (PLN 2 599 mn) 30-06-2023 30-09-2023 31-12-2023 31-03-2024 30-06-2024 ▪ The minerals ext
Slide 40: Operating results
Operating results KGHM Group Change in adjusted EBITDA1) +35% H1/H1 Adjusted EBITDA [mn PLN] [mn PLN] 4 208 260 +1 021 +29 4 208 3 108 807 3 108 +183 231 -133 940 669 H1 2023 KGHM Polska KGHM Sierra Other segments H1 2024 2 472 Miedź S.A. INTERNATIONAL Gorda 2 289 LTD. An increase in adjusted EBITDA
Slide 41: Revenues and EBITDA in Q2 2024
Revenues and EBITDA in Q2 2024 KGHM Group and operating segments Revenues from contracts with Adjusted EBITDA [mn PLN] customers [mn PLN] 9 165 2 657 8 172 532 526 836 184 506 Higher adjusted EBITDA compared to 475 Q2 2023 by PLN 1 351 million mainly in 1 306 422 respect of KGHM Polska Miedź S.A. an
Slide 42: The financial situation of the KGHM Group remains stable and safe
The financial situation of the KGHM Group remains stable and safe 2024 Budget Total unit production cost of electrolytic copper from own concentrate of KGHM Polska Miedź S.A.1) 31.1 36.0 [k PLN/t] 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% Investments Capital expenditures 1 400 4 100 KGHM Pols
Slide 43: Sales revenue
Sales revenue KGHM Polska Miedź S.A. Lower revenues from contracts with customers Revenues from contracts with customers [mn PLN] by PLN 434 million (-3%) in H1 2024 compared to -3% H1/H1 H1 2023, mainly due to less favourable macroeconomic conditions 15 510 15 076 Other 1 272 1 145 Silver 2 256 2 2
Slide 44: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. Lower expenses by nature compared to the first half of 2023 mainly due to lower Expenses by nature costs of purchased metal-bearing materials, [mn PLN] electricity and natural gas 14 150 13 277 -6% H1/H1 Minerals extraction tax 9 368 1 973 1 955 Impairments/
Slide 45: EBITDA and profit for the period
EBITDA and profit for the period KGHM Polska Miedź S.A. Adjusted EBITDA Profit for the period EBITDA and profit for the period [mn PLN] [mn PLN] +8% H1/H1 +10% H1/H1 ▪ Higher EBITDA compared to H1 2023 by PLN 183 million, despite 2 472 1 331 2 289 1 207 less favourable macroeconomic conditions and l
Slide 46: Profit for the period
Profit for the period KGHM Polska Miedź S.A. Profit for the period [mn PLN] +340 +183 1 331 1 207 -221 -91 -87 Profit for Change in adjusted Exchange differences Change in fair value of Income tax Other Profit for H1 2023 EBITDA financial assets H1 2024 measured at fair value through profit or loss
Slide 47: Market risk management
Market risk management Hedged position on the copper, silver, currency and interest rate markets (as at 30 June 2024) Copper Hedged position – open- otwarta as at 31na December 2023 At the end of the first half of 2024 the Parent Entity Pozycja zabezpieczająca 31.12.2023 [kt] Hedged Pozycja position
Slide 48: Thank you
Thank you Follow us on social media: Investor Relations Department https://kghm.com/en/investors ir@kghm.com +48 76 74 78 280
Kghm Polska Miedz Sa Ord — H1 2024 Earnings Presentation on 6ix