Slide 1: Q4 Interim and Year-end Report 2016
Q4 Interim and Year-end Report 2016 Lennart Evrell President & CEO Håkan Gabrielsson CFO
Slide 2: High production, improved market terms & a strong cash flow
High production, improved market terms & a strong cash flow • Revenues 12,137 (9,699) MSEK MSEK R4Q, MSEK • EBIT ex PIR* 2,106 (596) MSEK 2 400 6 000 2 200 5 500 ‒ EBIT 2,353 (416) MSEK 2 000 5 000 • Free Cash Flow 1,692 (36) MSEK 1 800 4 500 1 600 4 000 1 400 3 500 • Strong result Smelters 1 200 3
Slide 3: FY 2016
FY 2016 • Revenues 40,316 (40,242) MSEK MSEK 6 000 • EBIT ex PIR* 5,094 (4,010) MSEK ‒ EBIT 5,682 (3,590) MSEK 5 000 • Free Cash Flow -2,801 (2,565) MSEK 4 000 ‒ Excluding Kevitsa 3,124 MSEK 3 000 • Profitable Smelter strategy 2 000 • Higher production, mainly Mines • Production record at several un
Slide 4: Market Q4 2016 – Supply driven market
Market Q4 2016 – Supply driven market Macro • Improved industrial production growth Base metals markets • Cu, Zn demand growth 3 % • Strong growth in Ni demand • Disruptions to Cu mine production • Zn concentrate deficit • Cu, Zn inventories down • Ni supply flat, inventories still large • Easing of
Slide 5: 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 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 00
Slide 6: Boliden market term index
Boliden market term index Boliden Group Q4 2016 6 2017-02-10
Slide 7: Mines
Mines Boliden Group Q4 2016 7 2017-02-10
Slide 8: Mines – high production, higher metal prices
Mines – high production, higher metal prices R4Q, MSEK MSEK • EBIT 1,136 (31) MSEK 1 400 4 800 ‒ 804 MSEK in Q3 2016 1 200 4 000 • Capex 923* (688) MSEK 1 000 3 200 800 • High production in all mines 2 400 600 ‒ Garpenberg strong performance 1 600 • Higher metal prices and USD 400 • Higher costs 200
Slide 9: 2016 – higher volumes & improved market terms
2016 – higher volumes & improved market terms Aitik MSEK EBIT • Volatile production 3000 2804 • Cu grade 0.22 (0.21)% • Low Cu price 2500 2063 Boliden Area 2000 • Stronger production – improved processes 1452 1500 1429 Garpenberg • Successful expansion – 2.6 (2.4) Mton milled 1000 • High Zn price 54
Slide 10: Kevitsa update June-December 2016
Kevitsa update June-December 2016 • EBIT 166 MSEK and EBITDA 500 MSEK (June-Dec 2016) • Record milled volume pace 7.7 Mton • Integration according to plan • Actions so far: ‒ Process tuning for AG milling ‒ Optimization of concentrate quality Boliden Group Q4 2016 10 2017-02-10
Slide 11: Kevitsa plan
Kevitsa plan • Plan 9 Mton milled volume 2020 ‒ Continued tuning ‒ Improvements in milling efficiency • Grades 2017-18 on June-Dec 2016 level • Shifting feed to Boliden’s smelters ‒ Ni concentrate going to Harjavalta ‒ External long-term contracts expired 1 Jan 2017 ‒ Before closing ~1/3 of volume ‒
Slide 12: Mineral Reserves & Resources
Mineral Reserves & Resources Boliden Group Q4 2016 12 2017-02-10
Slide 13: Mineral Reserves & Mineral Resources
Mineral Reserves & Mineral Resources • Mined volume replaced by new additions • Significant increase in mineral reserve at Garpenberg ‒ +36 Mton ‒ Lower reserve grades have not impacted mine plan for next 5 years ‒ Reserve life almost doubled • Extension of Tara following exploration • Disappointing
Slide 14: Aitik and Boliden Area
Aitik and Boliden Area Mton Aitik kton Boliden Area 2 500 25 000 2 000 20 000 1 500 15 000 1 000 10 000 500 5 000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Proven/Probable Measured/Indicated Proven/Probable Measured/Indicated Inferred Pro
Slide 15: Garpenberg and Kevitsa
Garpenberg and Kevitsa kton Garpenberg kton Kevitsa 90 000 160 000 80 000 140 000 70 000 120 000 60 000 100 000 50 000 80 000 40 000 60 000 30 000 20 000 40 000 10 000 20 000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Proven/Probable Measu
Slide 16: Garpenberg's mineral reserves and resources
Garpenberg’s mineral reserves and resources Kyrkan, Tyskgården, Finnhyttan +4.2 Mt Resources Huvudmalmen Dammsjön +9.5 Mt Reserves +13 Mt Reserves Lappberget +15 Mt Reserves +6 Mt Resources Note: Gross mineral reserves and resources shown in illustration Boliden Group Q4 2016 16 2017-02-10
Slide 17: Kylylahti and Tara
Kylylahti and Tara kton Kylylahti kton Tara 9 000 30 000 8 000 25 000 7 000 6 000 20 000 5 000 15 000 4 000 3 000 10 000 2 000 5 000 1 000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Proven/Probable Measured/Indicated Proven/Probable Measur
Slide 18: Smelters
Smelters Boliden Group Q4 2016 18 2017-02-10
Slide 19: Smelters – improved terms, stable Cu & Zn production
Smelters – improved terms, stable Cu & Zn production R4Q, • EBIT ex PIR* 1,094 (583) MSEK MSEK MSEK 1 300 3 400 ‒ 613 MSEK in Q3 2016 • Capex 420 (496) MSEK 1 100 2 900 900 2 400 • Higher metal prices and USD 700 1 900 • Stable Cu and Zn production 500 1 400 • Higher volume free metals vs Q3 • Capit
Slide 20: 2016 – solid earnings
2016 – solid earnings • Rönnskär’s and Bergsöe’s actions MSEK EBIT ex PIR* compensate for lower market terms 3000 2759 2692 Rönnskär 2500 • Action plan completed • Improved prices and terms 2000 Harjavalta • New Ni model improved position 1500 • Lower market terms 1000 852 Kokkola 727 736 739 704 •
Slide 21: Financials
Financials Boliden Group Q4 2016 21 2017-02-10
Slide 22: Strong earnings
Strong earnings Financial development MSEK Q4 2016 Q4 2015 Q3 2016 Revenues 12,137 9,699 9,733 EBITDA 3,500 1,339 2,653 EBIT 2,353 416 1,529 Process inventory revaluation (PIR) 247 -181 211 EBIT ex PIR 2,106 596 1,318 EBIT ex PIR pro forma 537 Investments 1,343 1,187 1,028 Acquisitions* -18 - - Free
Slide 23: Q4 vs. Q4 – Higher volumes & metal prices
Q4 vs. Q4 – Higher volumes & metal prices EBIT excl. PIR pro forma* MSEK Q4 2016 2,106 Q4 2015 - pro forma 537 Deviation 1,570 Specification of deviation Higher volume in all mines Volumes 508 Prices and Terms (incl. hedges) 1,369 Higher metal prices Whereof currency effects 227 Volume impact Costs
Slide 24: Q4 vs. Q3 – Higher production & market terms
Q4 vs. Q3 – Higher production & market terms EBIT excl. PIR MSEK Q4 2016 2,106 Q3 2016 1,318 Deviation 788 Higher production Mines Specification of deviation Higher volume free metals Cu smelters Volumes 730 Mainly FX Prices and Terms (incl. hedges) 390 Volume impact Whereof currency effects 293 Mai
Slide 25: Higher free cash flow
Higher free cash flow Free cash flow MSEK Q4 2016 Q4 2015 Q3 2016 EBITDA excluding PIR 3,253 1,520 2,442 Changes in working capital -194 -143 -1,117 Inventories -651 462 -807 Payables 866 -873 -152 Receivables -424 265 -151 Other 14 3 -7 Cash flow from investments -1,147 -1,211 -981 Cash flow from a
Slide 26: Stronger balance sheet
Stronger balance sheet SEK bn 31 Dec 30 Sep MSEK % (Unless otherwise stated) 2016 2016 12 000 45 40 Total Assets 53.9 51.7 10 000 35 Capital employed 42.5 42.1 8 000 30 Shareholders' equity 29.4 27.6 25 6 000 20 Net debt 9.3 11.1 4 000 15 Gearing, % 32 40 10 2 000 Loan duration, years 3.3 3.4 5 0 0
Slide 27: Full-year financial development – Summary
Full-year financial development – Summary MSEK (Unless otherwise stated) FY 2016 FY 2015 Revenues 40,316 40,242 EBITDA 9,881 7,112 EBIT 5,682 3,590 EBIT ex PIR 5,094 4,010 Investments 4,127 3,650 Acquisitions 5,961 - Free cash flow -2,801 2,565 Earnings per share, SEK 15.49 9.65 Net debt /equity rat
Slide 28: 2016 vs 2015 – Higher production & improved terms
2016 vs 2015 – Higher production & improved terms EBIT excl. PIR pro forma* MSEK FY 2015 pro forma 3,961 FY 2016 pro forma 4,946 Deviation 985 Specification of deviation Higher production, mainly Mines Volume 1,207 Prices and Terms (incl. hedges) 579 Improved metal prices & FX Lower smelter terms Wh
Slide 29: Going forward
Going forward • Mines ‒ Aitik: volatile production, 2017-19: Cu 0.25% ‒ Garpenberg: 2017: Zn 4.5%, Ag 120 g/ton, lower reserve grades have not impacted mine plan for next 5 years ‒ Kevitsa: Grades 2017-18 on June-Dec 2016 level ‒ Winter conditions in Q1 in open pits • Smelters ‒ Planned maintenance
Slide 30: Strong FY 2016
Strong FY 2016 • Well positioned in the metal market ‒ Mines and smelters ‒ Base metals and precious metals ‒ High productivity • Garpenberg expansion exceeding expectations • Kevitsa acquisition strengthens Boliden • Production records at several units Boliden Group Q4 2016 30 2017-02-10
Slide 31: 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 32: Boliden Group Q4 2016
Boliden Group Q4 2016 32 2017-02-10
Slide 33: Appendix
Appendix Boliden Group Q4 2016 33 2017-02-10
Slide 34: Mines – Production
Mines – Production Milled ore, Metal content, Milled ore, Metal content, mt Copper kt mt Zinc kt 12 2,0 100 30 10 25 1,6 80 8 20 1,2 60 6 15 0,8 40 4 10 2 0,4 20 5 0 0 0,0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2013 2014
Slide 35: 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 36: Zinc price
Zinc price Zinc price, USD/t KTonnes USD/t Q4 Q1 Q2 Q3 Q4 3 000 5 000 2 000 2 800 2 600 4 000 1 600 2 400 2 200 2 000 3 000 1 200 1 800 1 600 1 400 2 000 800 okt-15 jan-16 apr-16 jul-16 okt-16 jan-17 1 000 400 Average price in Q4 vs. period Q3-16 Q2-16 Q1-16 Q4-15 0 0 2006 2007 2008 2009 2010 2011 2
Slide 37: Copper price
Copper price Copper price, USD/t KTonnes 12 000 2 400 USD/t 7 000 Q4 Q1 Q2 Q3 Q4 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 6 000 1 200 4 500 4 000 okt-15 jan-16 apr-16 jul-16 okt-16 jan-17 4 000 800 2 000 400 Average price in Q4 vs. period Q3-16 Q2-16 Q1-16 Q4-15 0 0 2006 2007 2008 2009 2010
Slide 38: Nickel price
Nickel price Nickel price, USD/t KTonnes 60 000 600 USD/t Q4 Q1 Q2 Q3 Q4 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 okt-15 jan-16 apr-16 jul-16 okt-16 jan-17 20 000 200 10 000 100 Average price in Q4 vs. period Q3-16 Q2-16 Q1-16 Q4-15 0 0 2006 2007 2008 2009
Slide 39: 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 40: Market balance – zinc and copper
Market balance – zinc and copper Zinc – global market Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Metals demand, kt 3324 3344 3307 3339 3356 3419 3403 3442 Year on year change -1% -1% -1% 1% 1% 2% 3% 3% Smelter production, kt 3365 3484 3408 3440 3275 3323 3334 3468 Year on year change 8% 7% 2% -2% -3% -
Slide 41: Market balance – nickel and lead
Market balance – nickel and lead Nickel - global market Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Metals demand, kt 476 475 460 466 485 518 495 510 Year on year change 0% -4% -2% 3% 2% 9% 7,7% 9,4% Smelter production, kt 473 500 483 490 462 499 490 493 Year on year change -5% 3% -6% -4% -2% 0% 2% 1% M
Slide 42: Economic development
Economic development Industrial production, year on year % 14 12 10 8 6 4 2 0 -2 -4 -6 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 w
Slide 43: 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 44: 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 Q4 2016 44 2017-02-10
Slide 45: 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 Q1 Q2 Q3 Q4 2011 2012 2013 2014 2015 2016 Zinc demand Copper demand GDP Industrial production Source: CRU Ltd, Thomson Reuters Datastream Boliden Group
Slide 46: Zinc TC and premia
Zinc TC and premia US$/t concentrate Treatment charges 300 US$/t metal 250 Metal premia 250 200 200 150 150 100 100 50 50 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Realized TC - European contract Ex-Works Premia Europe Spot TC, China imports Delivered Premia US Midwest Contract benchmark
Slide 47: Copper TC and premia
Copper TC and premia US$/t metal Metal premia US$/t concentrate Treatment charges 160 140 140 120 120 100 100 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 CIF European benchmark premia Standard grade spot TC CIF Average Eur
Slide 48: Boliden Group Q4 2016
Boliden Group Q4 2016 48 2017-02-10