Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Kghm Polska Miedz Sa Ord — Q3 2023 Earnings Presentation
58 slides from Kghm Polska Miedz's earnings presentation, Nov 16, 2023
Slide 1: Results of the KGHM Group for Q3 and 9M 2023
Pokłady możliwości Results of the KGHM Group for the third quarter and first 9 months of 2023 Lubin, 16 November 2023
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. Strategy of the KGHM Polska Miedź S.A. Group 2. Sustainable development – KGHM’s environmental and climate commitments 3. Key issues and execution of main targets 4. Production results of the KGHM Group by segment 5. Advancement of development initiatives 6. Financial results of the KGHM G
Slide 5: Strategy of the Group
Strategy of the KGHM Polska Miedź S.A. Group
Slide 6: Strategy of the KGHM Group to 2030 with an outlook to 2040
Pokłady Strategy ofmożliwości the KGHM Group to 2030 with an outlook to 2040 While the mission and vision of KGHM remain unchanged, the strategic directions were expanded to include a fifth element – Energy, to reflect changes in the overall environment. MISSION To always have copper VISION To use o
Slide 7: Key elements of the Strategy advanced in the first nine months of 2023
Key elements of the Strategy advanced in the first nine months of 2023 ▪ Completion on 31 August 2023, in accordance with the plan, of the Program to adapt the technological installations of the Company to the requirements of BAT conclusions for the ▪ Continuation of the Hybrid Legnica Smelter and R
Slide 8: Advancement of key strategic performance indicators in the first nine months of 2023
Advancement of key strategic performance indicators in the first nine months of 2023 Strategy pillar Strategic measure 2020 (base year) Goal 2030 9M 2023 of success (strategic KPI) Approx. 600 thousand tonnes of electrolytic copper 443.5 kt Core business Domestic copper approx. 560 kt (including pro
Slide 9: Advancement of key strategic performance indicators in the first nine months of 2023
Advancement of key strategic performance indicators in the first nine months of 2023 Strategy pillar Strategic measure 2020 (base year) Goal 2030 9M 2023 of success (strategic KPI) Approx. 124 kt of Approx. 350 kt of copper scrap 107.7 kt Supporting Recycling of scrap copper scrap activities 110% 1)
Slide 10: Sustainable development – KGHM's environmental and climate commitments
Sustainable development – KGHM’s environmental and climate commitments
Slide 11: Actions in support of families and CSR
Actions in support of families and CSR 311 Beneficiaries: We create a good climate for families! employees of KGHM joined the 1 500 wonderful parents of CUdowni Rodzice (Wonderful parents) of KGHM program KGHM since the start of the program 1500 books collected during the Over 4 000 books borrowed u
Slide 12: Actions by KGHM's employee volunteers
Actions by KGHM’s employee volunteers 217 actions involving volunteers Number of volunteer projects 217 1 917 employee volunteers took part in actions 14 over 9 000 9M 2022 9M 2023 hours dedicated to advancing volunteer projects 12
Slide 13: Actions by KGHM's employee volunteers
Actions by KGHM’s employee volunteers Variety of actions: 62 involving science and education 44 involving science and education 39 involving health and safety 28 involving ecology 19 involving sport and recreation 13
Slide 14: KGHM's efforts towards energy transformation
KGHM’s efforts towards energy transformation KGHM Polska Miedź S.A. aims at permanently increasing the share of renewable energy sources and in-house generation to meet its energy needs BACKGROUND CONDITIONS ACTIONS UNDERTAKEN Climate Policy EU The Company is currently advancing further investments
Slide 15: 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 climate reduction by 30% 2030 versus the base year 2020 2050 neut
Slide 16: By 2030 the increase in share of RES will lead to a substantial reduction in 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): 9M 2023: Own generation sources, including RES, covered 16.89%1) of KGHM Polska Miedź S.A.’s total power needs. Natural M
Slide 17: Seizing opportunities arising from the energy transformation
Pokłady możliwości Seizing opportunities arising from the energy transformation The Climate Policy is a significant step towards seizing opportunities, and as a result ensuring that long-term value is enhanced Support of the transformation Strategic investments compliant with ESG to a low-carbon eco
Slide 18: Selected ESG Policies
Pokłady możliwości Selected ESG Policies KGHM Polska Miedź S.A. Environment ▪ Environmental Policy ▪ Climate Policy Society ▪ Code of Ethics ▪ Code of Conduct ▪ Organisational Health and Safety Policy in KGHM Polska Miedź S.A. ▪ Responsible Supply Chains Policy ▪ Declaration of Diversity ▪ Human Rig
Slide 19: Key issues and execution of main targets
Key issues and execution of main targets
Slide 20: Macroeconomic environment: commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in Q3 2023 ranged between 8 017 and 8 720 Price (USD/t) Annual av. or YTD (USD/t) [USD/t] [PLN/t] USD/t. The price of copper in Q3 exhibited a sideways trend, Price (PLN/t) Annual av. or YTD (PLN/t) 55 000 given the lack of de
Slide 21: Precious metals prices and the copper market in Q3 2023
Precious metals prices and the copper market in Q3 2023 Precious metals were under pressure from the rising profitability of US bonds The prices of gold and silver in Q3 2023 fell in step with The decrease in investor interest can be seen in the size of rising interest rates and the profitability of
Slide 22: Copper inventories remain at low levels in China
Copper inventories remain at low levels in China, despite a weakening rate of economic growth in the world’s most important economies Quarterly GDP growth in 2023 was very low in Europe, bordering on recession. The economies of the USA and China, despite having higher GDP Official copper inventories
Slide 23: Purchasing managers' sentiment remained at a low level in Q3 2023
Purchasing managers’ sentiment remained at a low level in Q3 2023. PMI was particularly low amongst European countries. ▪ PMI indices began to deteriorate at the end of 2022, and in the third quarter of 2023 reached low levels, close to readings from the time of the Covid- 19 pandemic ▪ The deterior
Slide 24: IMF World Economic Outlook - October 2023
Pokłady IMF Worldmożliwości Economic Outlook - October 2023 24 Forecasts (F) of real GDP growth – International Monetary Fund - World Economic Outlook – October 2023 compared to July 2023
Slide 25: Summation of the first 9 months of 2023 in the KGHM Group
Summation of the first 9 months of 2023 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to the first 9M of 2022 Macroeconomic environment1) Operating results Indicators -5% -8% +1.3% Increase in extraction of ore, +19% Copper price Copper price dry weight in KGHM Polsk
Slide 26: Basic measures of the 9M 2023 results
Pokłady możliwości Summation of the first 9 months of 2023 in the KGHM Group and KGHM Polska Miedź S.A. Basic measures of the 9M 2023 results PLN 25 648 mn PLN 4 235 mn PLN 836 mn KGHM Group Revenues Adjusted EBITDA Profit PLN 22 470 mn PLN 3 162 mn PLN 1 737 mn KGHM Polska Miedź S.A. Revenues Adjus
Slide 27: Production results of the KGHM Group by segment
Production results of the KGHM Group by segment
Slide 28: Payable copper production by the KGHM Group
Key production indicators 9M 2023 527 Payable copper production -5% 9M/9M by the KGHM Group [kt] lower by 5% (9M/9M) ▪ KGHM Polska Miedź – Payable copper production Payable copper production -12% 9M/9M KGHM Polska Miedź S.A. [kt] Sierra Gorda1) [kt] production similar to prior year; +0.2% 9M/9M 68 6
Slide 29: Metals production
Metals production KGHM Group Payable copper production Silver production [t] [kt] +8% 9M/9M ▪ Copper production by KGHM Polska 1 100 Miedź S.A. similar to prior year -5% 9M/9M 1 022 ▪ Copper production lower 9M/9M: 557 527 − in KGHM INTERNATIONAL LTD. 47 24 due to lower production by the 68 60 9M 20
Slide 30: Production results
Production results KGHM Polska Miedź S.A. Ore extraction +1.3% 9M/9M Production of copper +2.7% 9M/9M Electrolytic copper +0.2% 9M/9M Metallic silver +8.0% 9M/9M [mn t dry weight] in concentrate [kt] production [kt] production [t] 443 444 23.0 23.3 157 1 080 303.2 169 1 000 295.3 From 50.3 50.5 purc
Slide 31: Production results: Sierra Gorda
Production results Sierra Gorda1) Payable copper production -12% 9M/9M Silver production -20% 9M/9M [kt] [t] ▪ The volume of precious 20.7 16.6 metals production derived 6.8 5.5 from the content of these 67.7 metals in mined ore 59.7 Q3 2022 Q3 2023 9M 2022 9M 2023 ▪ The increase in molybdenum produ
Slide 32: Production results: KGHM INTERNATIONAL LTD.
Production results KGHM INTERNATIONAL LTD. Payable copper production Silver production +57% 9M/9M [kt] [t] -49% 9M/9M ▪ Higher silver production by 2.2 the Sudbury Basin due to 47.3 1.4 higher silver content in ore 0.6 0.7 and a higher volume of ore extracted Q3 2022 Q3 2023 9M 2022 9M 2023 24.1 ▪ L
Slide 33: Advancement of development initiatives
Advancement of development initiatives
Slide 34: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in 9M 2023 CAPEX execution in 9M 2023 by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development (incl. R&D) Leasing IFRS 16 Adaptation projects Development -
Slide 35: CAPEX execution in key investments
CAPEX execution in key investments Deposit Access Program Program to adapt the technological ▪ GG-1 shaft 1 – Construction/installation work underway to Deposit Access Outfitting of installations to BAT Conclusions prepare the shaft as a ventilation shaft (transitional period). Program the mines Des
Slide 36: 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] +35% 4 070 +12% Q3/Q2 3 016 1 289 1 441 16.7% 18.7%
Slide 37: The financial situation of the KGHM Group remains stable and safe
The financial situation of the KGHM Group remains stable and safe 2023 Budget Total unit production cost of electrolytic copper from own concentrate 33.4 36.3 of KGHM Polska Miedź S.A.1) [k PLN/t] 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% Investments Capital expenditures 1 928 3 250 KGHM Pols
Slide 38: Group production and sales in the first 9M of 2023
Group production and sales in the first 9M of 2023 Execution of annual targets 2023 Budget Production Copper in concentrate [kt] 303.2 389.7 KGHM Polska Miedź S.A. Silver in concentrate [t] 1 011.6 1 261.5 Electrolytic copper, total [kt] 443.5 582.1 Electrolytic copper from own concentrate [kt] 287.
Slide 39: Energy Development Program, including RES: major events in Q3 2023
Energy Development Program, including RES| major events in Q3 2023 Development of solar energy ▪ Administrative proceedings commenced, including for a building permit and an announcement of intent to build a cable network for the HMG I-III1) photovoltaic power plants complex at the Głogów Copper Sme
Slide 40: Energy Development Program: nuclear energy and energy security
Energy Development Program, including RES| major events in Q3 2023 Development of nuclear energy ▪ KGHM continued work on the SMR project. ▪ Jointly with the company Przedsiębiorstwo Energoprojekt-Katowice, work continued on analysing specific sites for the SMR installation under the second stage of
Slide 41: Financial results of the Group
Financial results of the Group
Slide 42: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group 9M 2023 Group adjusted EBITDA 2) Group revenues Adjusted EBITDA of the KGHM Group [mn PLN] [mn PLN] -0.2% 9M/9M Lower adjusted EBITDA compared to the -40% 9M/9M 25 696 25 648 4 235 first nine months of 2022, mainly due to a less favourable exchange rate and
Slide 43: Group sales revenue
Group sales revenue 9M 2023 Revenues from contracts with Revenues from contracts with -0.2% 9M/9M customers customers [PLN mn] [PLN mn] 25 696 25 648 25 696 +382 +679 +62 25 648 1 649 1 491 2 264 1 687 -290 -881 21 783 22 470 Revenues for Change in sales Change in prices Change in Adjustment of Othe
Slide 44: Expenses by nature
Expenses by nature Group Expenses by nature Cost pressure in the KGHM Group due to global [PLN mn] inflation. 25 366 +7% 9M/9M 23 747 Minerals extraction tax 9 119 2 797 recognised in expenses 8 641 8 252 2 300 by nature 7 995 Minerals extraction 7 674 tax recognised in Purchased metal- expenses by
Slide 45: C1 unit cost
C1 unit cost 1) KGHM Group ▪ The increase in C1 cost in KGHM Polska Miedź by 26% compared to the first 9M of 2022 was mainly due to a higher minerals extraction tax charge and C1 – KGHM Group C1 – KGHM Polska Miedź S.A. to higher costs of materials, fuels and energy, and [USD/lb] [USD/lb] labour cos
Slide 46: Financial results
Financial results KGHM Group Profit for the period [PLN mn] 836 consolidated net profit in the first 9 months of 2023 Lower KGHM Group profit mainly due to a lower result on basic operating activities and a very large impact of exchange differences [PLN mn] Lower net result on sales by PLN 2 597 mil
Slide 47: Cash flow
Cash flow KGHM Group [PLN mn] +1 708 +1 566 +1 692 -1 324 1 200 -3 039 1 403 - 71 - 43 - 200 - 86 Cash as at Profit/loss before Exclusions of Income tax paid Change in Acquisition of Proceeds Interest paid Dividend paid Other Cash as at 1 January 2023 income tax income working property, from/repayme
Slide 48: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q3 2023 Main factors affecting net debt in 2023 Net debt / adjusted EBITDA 1.2 Increases in debt 0.8 0.9 0.9 0.7 ▪ Cash expenditures on property, plant and equipment (PLN 3 200 mn) 30-09-2022 31-12-2022 31-03-2023 30-06-2023 30-09-2023 ▪ The minerals extra
Slide 49: Revenues and EBITDA in Q3 2023
Revenues and EBITDA in Q3 2023 KGHM Group and operating segments Revenues from contracts with Adjusted EBITDA [PLN mn] customers [PLN mn] 1 652 100 7 770 7 891 402 1 173 550 461 56 Lower adjusted EBITDA compared to 648 470 145 357 Q3 2022 by PLN 479 million, mainly due to KGHM INTERNATIONAL LTD. and
Slide 50: Operating results
Operating results KGHM Group Change in adjusted EBITDA1) -40% 9M/9M Adjusted EBITDA [PLN mn] [PLN mn] 7 075 243 7 075 1 556 4 235 4 235 -1 328 786 241 -1 251 -259 -2 1 297 9M 2022 KGHM Polska KGHM Sierra Other 9M 2023 4 490 Miedź S.A. INTERNATIONAL Gorda LTD. 3 162 -465 A decrease in adjusted EBITDA
Slide 51: Sales revenue
Sales revenue KGHM Polska Miedź S.A. Higher revenues from contracts with customers by PLN Revenues from contracts with customers [PLN mn] 687 million (+3%) in the first 9M of 2023 compared to 9M +3% 9M/9M 2022, due to a higher volume of sales and a more 21 783 22 470 favorable adjustment of revenues
Slide 52: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. Expenses by nature Cost pressures in the KGHM Group [PLN mn] due to global inflation 20 491 +7% 9M/9M 7 323 19 105 6 827 Minerals extraction tax 6 790 2 797 recognised in expenses 6 341 Minerals extraction 2 300 by nature 6 155 tax recognised in expenses by
Slide 53: 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 [PLN mn] [PLN mn] -30% 9M/9M -51% 9M/9M ▪ EBITDA lower versus the first 3 538 9M of 2022 mainly due to a less 4 490 favourable exchange rate and 3 162 global inflationary pr
Slide 54: Profit for the period
Profit for the period KGHM Polska Miedź S.A. Profit for the period [PLN mn] +687 3 538 +416 1 737 -2 173 -8 -723 Profit for Increase in Increase in cost of Impact of Decrease in Other Profit for 9M 2022 revenues sales, selling costs exchange income 9M 2023 from contracts and differences tax with adm
Slide 55: Market risk management
Market risk management Hedged position on the copper, silver and currency markets (as at 30 September 2023) Copper Silver At the end of Q3 2023 the Parent Entity recorded a [kt] [koz] result on derivatives* and hedges in the amount of PLN 279 million: 47.25 1 050 − +PLN 425 mn adjusted revenues from
Slide 56: Cash flow to the Group in Q3 2023 and 9M 2023
Cash flow to the Group in Q3 2023 and in the first 9 months of 2023 Pokłady możliwości Proceeds to KGHM Polska Miedź S.A. The international assets paid USD 46.6 million to KGHM Polska Miedź S.A. in the first 9 months of 2023* Q3 2023 9M 2023 Sierra Gorda KGHM INTERNATIONAL LTD. Sierra Gorda KGHM INT
Slide 57: Impact of Russia's aggression against Ukraine on the Group
Information on the impact of Russia’s aggression against Ukraine on the functioning of the Company and the KGHM Group ▪ The geopolitical situation associated with the direct aggression of Russia on Ukraine and the implemented system of sanctions does not currently limit the operations of KGHM Polska
Slide 58: 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 — Q3 2023 Earnings Presentation on 6ix