Boliden Ab · OMXSTO:BOL
Boliden Ab — Q3 2016 Earnings Presentation
34 slides from Boliden Ab's earnings presentation, Oct 20, 2016
Slide 1: Q3 Interim Report 2016
Q3 Interim Report 2016 Lennart Evrell President & CEO Håkan Gabrielsson CFO
Slide 2: Strong earnings and high mine production
Strong earnings and high mine production MSEK R4Q, MSEK • Revenues 9,733 (9,764) MSEK 1 800 7 200 1 600 6 400 • EBIT ex PIR* 1,318 (1,055) MSEK 1 400 5 600 ‒ EBIT 1,529 (880) MSEK 1 200 4 800 • Free Cash Flow 91 (953) MSEK 1 000 4 000 800 3 200 • Improved market terms 600 2 400 • High production Min
Slide 3: Market – Slow demand growth, supply driven market
Market – Slow demand growth, supply driven market Macro • Low industrial production growth Base metals markets • Cu, Zn demand growing slowly • Stronger Ni demand • Zn mine supply down, smelter supply down slightly • Continued growth in Cu mine supply • Ni supply down Boliden Group Q3 2016 3 2016-10
Slide 4: Zinc price
Zinc price Zinc price, USD/t KTonnes USD/t 2 600 Q3 Q4 Q1 Q2 Q3 5 000 2 000 2 400 2 200 4 000 1 600 2 000 1 800 3 000 1 200 1 600 1 400 2 000 800 jul-15 okt-15 jan-16 apr-16 jul-16 okt-16 1 000 400 Average price in Q3 vs. period Q2-16 Q1-16 Q4-15 Q3-15 0 0 2006 200720072008 2006 2008 200920092010201
Slide 5: Copper price
Copper price Copper price, USD/t KTonnes 12 000 2 400 USD/t 7 000 Q3 Q4 Q1 Q2 Q3 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 6 000 1 200 4 500 4 000 jul-15 okt-15 jan-16 apr-16 jul-16 okt-16 4 000 800 2 000 400 Average price in Q3 vs. period Q2-16 Q1-16 Q4-15 Q3-15 0 0 20062006200720072008 2008
Slide 6: Nickel price
Nickel price Nickel price, USD/t KTonnes 60 000 600 USD/t Q3 Q4 Q1 Q2 Q3 13 000 12 000 50 000 500 11 000 10 000 40 000 400 9 000 8 000 30 000 300 7 000 6 000 jul-15 okt-15 jan-16 apr-16 jul-16 okt-16 20 000 200 10 000 100 Average price in Q3 vs. period Q2-16 Q1-16 Q4-15 Q3-15 0 0 2006200620072007200
Slide 7: Zinc, copper and nickel prices
Zinc, copper and nickel prices Normal C1 – Zinc Normal C1 – Copper Normal C1 – Nickel 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 4 000 4 000 9 000 9 000 8 000 8 000 3 500 3 500 25 000 25 000 7 000 7 000 3 000 3 000 20 000 20 000 6 000 6 00
Slide 8: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/t 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 2006 2006 2007 2007 2008 2008 20092009 2010 2010 20112011 20122012 20132013 20142014 2015 2015 20162016
Slide 9: Boliden market term index
Boliden market term index Boliden Group Q3 2016 9 2016-10-20
Slide 10: Mines
Mines Boliden Group Q3 2016 10 2016-10-20
Slide 11: Mines – Strong quarter with high production
Mines – Strong quarter with high production R4Q, • EBIT 804 (260) MSEK MSEK 1 200 MSEK 4 800 ‒ 621 MSEK in Q2 2016 1 000 4 000 • Capex 748 (563) MSEK 800 3 200 • Higher metal prices 600 2 400 • High production in most mines 400 1 600 • Kevitsa positive EBIT 200 800 • Good cost control 0 0 3 4 1 2 3
Slide 12: Mines – Production
Mines – Production Milled ore, Metal content, Milled ore, Metal content, mt Copper kt mt Zinc kt 12 30 2,0 100 10 25 1,6 80 8 20 1,2 60 6 15 0,8 40 4 10 2 5 0,4 20 0 0 0,0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 2016 2013 2014 2015 2
Slide 13: Smelters
Smelters Boliden Group Q3 2016 13 2016-10-20
Slide 14: Smelters – Production disturbances at zinc smelters
Smelters – Production disturbances at zinc smelters R4Q, MSEK MSEK • EBIT ex PIR* 613 (825) MSEK 1 100 3 300 ‒ 397 MSEK in Q2 2016 900 2 700 • Capex 280 (315) MSEK 700 2 100 • Improved market terms 500 1 500 • Higher Zn TC vs Q2 • Production disturbances zinc smelters 300 900 • Maintenance shutdowns
Slide 15: Smelters – Production
Smelters – Production Copper Metal Metal Total feed, production, Total feed, Zinc production, kt kt kt kt 400 120 250 150 350 105 200 120 300 90 250 75 150 90 200 60 100 60 150 45 100 30 50 30 50 15 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 201
Slide 16: Financials
Financials Boliden Group Q3 2016 16 2016-10-20
Slide 17: Strong earnings
Strong earnings Financial development MSEK Q3 2016 Q3 2015 Q2 2016 Revenues 9 733 9 764 9 596 EBITDA 2 653 1 746 1 940 EBIT 1 529 880 912 Process inventory revaluation (PIR) 211 -175 11 EBIT ex PIR 1 318 1 055 901 EBIT ex PIR pro forma 1 067 885 Investments 1 028 880 956 Acquisitions - - 5 979 Free
Slide 18: Q3 vs. Q3, Higher metal prices & production Mines
Q3 vs. Q3, Higher metal prices & production Mines EBIT excl. PIR pro forma* MSEK Q3 2016 1,318 Q3 2015 - pro forma 1,067 Deviation 251 Higher milled volume Mines Specification of deviation Production disturbances Smelters Lower free metals Volumes 164 Prices and Terms (incl. hedges) 509 Higher metal
Slide 19: Q3 vs. Q2, Higher metal prices and lower costs
Q3 vs. Q2, Higher metal prices and lower costs EBIT excl. PIR pro forma* MSEK Q3 2016 1,318 Q2 2016 - pro forma 885 Deviation 433 Less favorable ore mix Boliden Area Specification of deviation Internal profit elimination Volumes -145 Higher metal prices Prices and Terms (incl. hedges) 597 Seasonally
Slide 20: Free cash flow impacted by inventory build-up
Free cash flow impacted by inventory build-up Free cash flow MSEK Q3 2016 Q3 2015 Q2 2016 EBITDA excluding PIR 2 442 1 921 1 929 Changes in working capital -1 117 36 837 Inventories -807 -500 368 Payables -152 443 701 Receivables -151 92 -233 Other -7 1 0 Cash flow from investments -981 -879 -944 Ca
Slide 21: Balance sheet
Balance sheet SEK bn 30 Sep 30 Jun (Unless otherwise stated) 2016 2016 MSEK Net debt Gearing % Total Assets 51.7 50.4 12 000 45 Capital employed 42.1 40.6 40 10 000 35 Shareholders' equity 27.6 26.2 8 000 30 Net debt 11.1 11.2 25 6 000 20 Gearing, % 40 43 4 000 15 Loan duration, years 3.4 3.6 10 2 0
Slide 22: Going forward
Going forward • Well positioned in the metal market • Metal prices – low macro visibility • Mines ‒ Aitik: volatile production, Cu 0.21% (2016), 0.25% (2017-2019) ‒ Garpenberg: Zn 4.5%, Ag 120 g/ton (until FY 2017) ‒ Tara: lower Zn grade in Q4 vs Q3 ‒ Kevitsa & Boliden Area: soft ore Q3 • Smelters ‒
Slide 23: 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 24: Boliden Group Q3 2016
Boliden Group Q3 2016 24 2016-10-20
Slide 25: Appendix
Appendix Boliden Group Q3 2016 25 2016-10-20
Slide 26: Market balance – zinc and copper
Market balance – zinc and copper Zinc – global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Metals demand, kt 3 316 3 306 3 361 3 316 3 329 3 345 3 420 3 380 Year on year change 0% -1% -1% 0% 0% 1% 2% 2% Smelter production, kt 3 514 3 349 3 489 3 396 3 453 3 270 3 380 3 335 Year on year change 5%
Slide 27: Market balance – nickel and lead
Market balance – nickel and lead Nickel - global market Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Metals demand, kt 451 476 479 465 471 487 515 492 Year on year change -3% 0% -3% -1% 4% 2% 7% 6% Smelter production, kt 511 473 497 486 493 468 488 473 Year on year change -4% -5% 3% -5% -3% -1% -2% -3% M
Slide 28: Economic development
Economic development Industrial production, year on year % 25 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 2012 2013 2014 2015 2016 EU28 USA China World Source: Thomson Reuters Datastream, Boliden calculations for world data
Slide 29: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 30 25 20 15 10 5 0 -5 -10 -15 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 2012 2013 2014 2015 2016 EU USA China China: year on year based on cumulative investments at ea
Slide 30: 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 2012 2013 2014 2015 2016 Europe USA China World Source: LMC Automotive Boliden Group Q3 2016 30 2016-10-20
Slide 31: China – metals demand and economic growth
China – metals demand and economic growth Year on year growth % 18 16 14 12 10 8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 Zinc demand Copper demand GDP Industrial production Source: CRU Ltd, Thomson Reuters Datastream Boliden Group Q3 2016 31 2016-
Slide 32: Zinc TC and premia
Zinc TC and premia US$/t Treatment charges concentrate US$/t metal 250 Metal premia 300 250 200 200 150 150 100 100 50 50 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Delivered Premia US Midwest Ex-Works Premia Europe Realized TC - European contract Premia Far East - Western Spot TC, China
Slide 33: Copper TC and premia
Copper TC and premia US$/t concentrate Treatment charges US$/t metal Metal premia 140 160 120 140 120 100 100 80 80 60 60 40 40 20 20 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Contract TC - annual and mid-year benchmark USD tonne Standard grade spot TC Contract benchmark according to mar
Slide 34: Boliden Group Q3 2016
Boliden Group Q3 2016 34 2016-10-20