Slide 1: Interim Report, January-September, 2004
Boliden Interim Report, January-September, 2004 Mining Smelting Zinc Copper and Refining Boliden AB October 25, 2004
Slide 2: Strong global economic recovery
Strong global economic recovery Growth – Q3 2004 • Global Industrial production - Cu consumption 7% 20 - Cu production 6% - Zn consumption 6% 15 - Zn production 2% • USA 10 - Cu consumption 6% - Zn consumption 7% 5 • Europe - Cu consumption 4% - Zn consumption 2% 0 • China - Cu consumption 13 % -5 0
Slide 3: Major Zn and Cu imbalance in 2004 & 2005
Major Zn and Cu imbalance in 2004 & 2005 Zinc balance Copper balance supply – demand supply – demand Thousand Thousand tonnes tonnes 500 1200 1000 300 800 600 100 400 200 -100 0 -200 -300 -400 -600 -500 -800 90 92 94 96 98 00 02 04 90 92 94 96 98 00 02 04 3
Slide 4: Zinc: Price and LME stocks
Zinc: Price and LME stocks USc/lb Tonnes 55 800 000 50 750 000 45 700 000 40 650 000 35 600 000 30 550 000 03 04 3 4 3 4 3 4 -0 -0 r-0 r-0 l-0 l-0 n- n- ct ct Ju Ju Ap Ap Ja Ja O O 4
Slide 5: Copper: Price and LME stocks
Copper: Price and LME stocks USc/lb Tonnes 150 900 000 140 800 000 130 700 000 120 600 000 110 500 000 100 400 000 90 300 000 80 200 000 70 100 000 60 0 03 04 3 4 3 3 4 4 -0 -0 l-0 r-0 r-0 l-0 n- n- kt ct Ju Ju Ap Ap Ja Ja O O 5
Slide 6: Business cycle of metals
Business cycle of metals Availability of raw materials + low metal high metal prices prices high TC/RC high TC/RC Availability + of metal - low metal high metal prices prices low TC/RC low TC/RC - 6
Slide 7: Exchange rates: USD/SEK – EUR/USD
Exchange rates: USD/SEK – EUR/USD USD/SEK 9.00 8.75 8.50 8.25 8.00 7.75 7.50 7.25 7.00 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 04 Feb Mar Apr May Jun Jul Aug Sep Oct EUR/USD 1.300 1.275 1.250 1.225 1.200 1.175 1.150 1.125 1.100 1.075 1.050 1.025 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 04 Feb
Slide 8: Metal prices and exchange rates
Metal prices and exchange rates First nine months Change Third Quarter Change 2004 2003 in % 2004 2003 in % Metal prices Copper (USD/lb) 1.27 0.77 65 1.29 0.80 61 Zinc (USD/lb) 0.47 0.36 31 0.44 0.37 19 Lead (USD/lb) 0.39 0.22 77 0.42 0.23 83 Gold (USD/oz) 401 354 13 401 363 10 Silver (USD/oz) 6.46
Slide 9: Record result for first nine months of 2004
Record result for first nine months of 2004 SEK m First nine months Third quarter 2004 2003 2004 2003 Net sales 13 310 6 962 4 265 2 326 Operating result 1 194 297 363 87 Earnings per share 3.37 2.35 1.01 0.76 Return on capital employed, % 10.6 5.4 9.6 4.6 Net debt/Shareholders’ equity, % 96 138 96
Slide 10: Operating result – quarterly
Operating result – quarterly 1200 1194 1000 800 600 434 397 408 400 363 297 200 126 84 87 0 Q1 2003 Q2 2003 Q3 2003 9 months Q1 2004 Q2 2004 Q3 2004 Q3 2004 9 months 2003 underlying 2004 10
Slide 11: Mines: Zinc & copper production
Mines: Zinc & copper production* Tonnes Zink Zinc Koppar Copper Tonnes Zinc Copper 90,000 300,000 80,911 276,528 79,657 80,000 254,107 250,000 70,000 60,000 200,000 50,000 150,000 40,000 30,000 100,000 22,678 20,486 67,176 66,132 20,000 50,000 10,000 0 0 Q3 -03 Q3 -04 9 months -03 9 months -04 • Ait
Slide 12: Smelters: Copper production
Smelters: Copper production* Tonnes Tonnes 89 898 90 000 270 000 268 624 89 500 268 000 89 000 266 000 88 500 264 000 88 000 262 000 87 500 260 000 87 000 86 804 258 000 257 129 86 500 256 000 86 000 254 000 85 500 252 000 85 000 250 000 Q3 -03 Q3 -04 9 months -03 9 months -04 • Increased production
Slide 13: Smelters: Zinc production
Smelters: Zinc production* Tonnes Tonnes 107 994 108 000 320 000 316 329 106 000 315 000 104 000 310 000 102 000 305 000 100 740 301 419 100 000 300 000 98 000 295 000 96 000 290 000 Q3 -03 Q3 -04 9 months -03 9 months -04 • Increased production of zinc • Coordination benefits between mining and sme
Slide 14: Operating result per Area
Operating result per Area SEK m First nine months Third quarter 2004 2003 2004 2003 Mining Operations 1 046 210 503 74 Copper 539 189 148 61 Zinc 42 - 34 - Other -433 -102 -322 -48 Total 1 194 297 363 87 14
Slide 15: Operating result – copper and zinc
Operating result – copper and zinc*) Copper Zinc Zinc excl Tara land sale MSEK 1200 1000 800 600 400 200 0 -200 Q1 2003 Q2 2003 Q3 2003 YTD Sep-03 Q1 2004 Q2 2004 Q3 2004 YTD Sep-04 *) Excl OH & other 15
Slide 16: Key ratios
Key ratios 30 Sept 30 Sept 31 Dec Operating margin % 2004 2003 2003 10 9.6 9 8.7 8.5 Operating margin, % 9.0 4.3 Neg 8 7 Earnings per share, SEK 3.37 2.35 0.12 6 5.4 5 Return on capital 4 3.7 3.7 employed, % 10.6 5.4 - 3 3.0 2 Return on shareholders’ 1 equity, % 14.6 11.2 0.4 0 Q1 -03 Q2 -03 Q3 -03
Slide 17: Cash flow
Cash flow • Cash flow from operating Operating result before depreciation activities: SEK 1,257 million (EBITDA), SEK m (SEK 618 m) 800 771 743 686 700 • Cash flow from investment 600 activities: SEK -1,234 million 500 (SEK -393 m) 400 293 300 • Net loan amortisation: 245 249 SEK 1,812 million (SEK
Slide 18: Investments
Investments • Total investments for first nine First nine months of 2004 months of 2004: SEK 1 110 breakdown of investments % million (SEK 414 m) Zinc 50 % Mines 40 % • Odda and Tara investment programmes complete in the fourth quarter of 2004 • Investment levels will return to normal from 2005 Copp
Slide 19: Capital structure
Capital structure 30 Sept 30 Sept 31 Dec 2004 2003 2003 Net debt/Shareholders’ equity, % Balance Sheet total, 778% 800% SEK bn 20.2 11.1 19.9 700% Capital employed, 600% SEK bn 15.2 7.6 14.8 500% Shareholders’ equity, 400% SEK bn 7.9 3.3 6.1 300% Net debt, SEK bn 7.6 4.6 9.0 200% 190% 183% 147% 109%
Slide 20: New Credit Agreement of MEUR 840
New Credit Agreement of MEUR 840 Facilities - Term loan MEUR 500, 5 year - Revolving credit MEUR 340, 5 year No security Negative pledge Amortization (Term loan) MEUR 27,8 /semi-annual Margin 1,25–0,45 % (depending on gearing) Commitment fee 0,45 % Mandated Lead Arrangers Nordea, ABN AMRO, SEB, Swed
Slide 21: The project portfolio
The project portfolio The rights issue, completed in Q2, was over-subscribed and generated SEK 1,374 million for the company. A new partnership agreement will increase supplies of copper concentrate from the Portuguese mine, Neves Corvo. The Canadian Myra Falls mine was sold in Q3. Boliden received
Slide 22: Summary
Summary • Strong global economic recovery • Higher prices for all of Boliden’s metals • Full capacity in all operations within new Boliden • Operating result for the first nine months of 2004: SEK 1 194 million (SEK 297 m) • Stronger financial position • Increased potential for operational synergies