Boliden Ab · OMXSTO:BOL
Boliden Ab — Q4 2017 Earnings Presentation
45 slides from Boliden Ab's earnings presentation, Feb 14, 2018
Slide 1: Q4 Interim and Year-end Report 2017
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Q4 Interim and Year-end Report 2017 Lennart Evrell President & CEO Håkan Gabrielsson CFO
Slide 2: Q4 – Strong production, high prices
Q4 – Strong production, high prices Expansion Acquisition Zn 1,613 USD/t Acquisition Aitik Zn 3,236 USD/t Garpenberg Kylylahti Cu 4,892 USD/t Kevitsa high grades Cu 6,808 USD/t • Revenues 13,619 (12,137) MSEK MSEK R4Q, MSEK • EBIT ex PIR* 2,912 (2,106) MSEK 3 200 3 000 9 600 9 000 • Free Cash Flow 2
Slide 3: Full Year 2017
Full Year 2017 • Revenues 49,531 (40,316) MSEK MSEK EBIT excl PIR* • EBIT ex PIR* 8,913 (5,094) MSEK 10 000 • Free Cash Flow 7,309 (-2,801) MSEK 9 000 ‒ Investments 5,588 MSEK 8 000 7 000 • Strong production 6 000 5 000 • Disturbances Zn smelters 4 000 • Maintenance Smelters -415 (-260) MSEK 3 000 •
Slide 4: Market Q4 2017 – positive macro, high metal prices
Market Q4 2017 – positive macro, high metal prices Macro • Strong global business cycle ‒ Global construction improved ‒ Lower auto production growth Base metals • Copper & zinc demand growth 1.5-2% • Ni demand growth 8% • Zn metal inventories low • Ni metal inventories high • Some shortage of Zn co
Slide 5: Base metal prices
Base metal prices Copper price, USD/tonne Copper KTonnes Zinc price, USD/tonne Zinc KTonnes 12 000 2 400 5 000 2 000 10 000 2 000 4 000 1 600 8 000 1 600 3 000 1 200 6 000 1 200 2 000 800 4 000 800 1 000 400 2 000 400 0 0 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009
Slide 6: High Cu and Zn prices relative to cash cost
High Cu and Zn prices relative to cash cost Zinc Copper Nickel USD/ton USD/ton USD/ton 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 25 000 25 000 3 500 3 500 7 000 7 000 3 000 3 000 20 000 20 000 6 000 6 0
Slide 7: Boliden market term index
Boliden market term index • Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Note: Index 100 = 1 January 2012 Boliden Group Q4 2017 7 2018-02-14
Slide 8: Mines
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Mines Boliden Group Q4 2017 8 2018-02-14
Slide 9: Mines – High production, higher prices
Mines – High production, higher prices R4Q, • EBIT 2,179 (1,136) MSEK MSEK 2 400 MSEK 7 200 ‒ 1,421 MSEK in Q3 2017 2 200 6 600 • Capex 1,264 (923) MSEK 2 000 6 000 1 800 5 400 1 600 4 800 1 400 4 200 • Strong production 1 200 3 600 ‒ High milled production 1 000 3 000 800 2 400 ‒ High grades 600 1
Slide 10: Full year 2017 – Stable production, increased prices
Full year 2017 – Stable production, increased prices Aitik • Milled production 39 (36) Mtonnes • Cu grade 0.28 (0.22)% MSEK EBIT 8 000 Boliden Area • Lower production 7 000 6681 • Rock instability 6 000 5 000 Garpenberg • Milled production 2.6 (2.6) Mtonnes 4 000 • Zn grade 4.3 (4.4)%, Ag grade 133
Slide 11: Mines – Production
Mines – Production Milled ore, Metal content, Milled ore, Metal content, Mtonnes Copper Ktonnes Mtonnes Zinc Ktonnes 16 48 2,0 100 14 42 1,6 80 12 36 10 30 1,2 60 8 24 6 18 0,8 40 4 12 0,4 20 2 6 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 Q
Slide 12: Mineral Reserves & Mineral Resources
Mineral Reserves & Mineral Resources • Long life-of-mine in Aitik, Kevitsa and Garpenberg ‒ Limited new additions • Increased mineral reserves and resources in Tara • Increased life-of-mine in Kylylahti into 2020 ‒ Nickel and Cobalt • Exploration 470 (380) MSEK ‒ Drifts in Tara and Boliden Area Boli
Slide 13: Smelters
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Smelters Boliden Group Q4 2017 13 2018-02-14
Slide 14: Smelters – Maintenance, improved stability
Smelters – Maintenance, improved stability • EBIT ex PIR* 766 (1,094) MSEK R4Q, MSEK MSEK 1 300 3 900 ‒ 568 MSEK in Q3 2017 • Capex 602 (420) MSEK 1 100 3 300 900 2 700 • Improved process stability Kokkola 700 2 100 • Maintenance Odda -105 (0) MSEK 500 1 500 • Higher costs 300 900 ‒ Maintenance ‒ Se
Slide 15: Full year 2017 – Extensive maintenance, higher prices
Full year 2017 – Extensive maintenance, higher prices Rönnskär MSEK EBIT ex PIR • Cu production 219 (207) kton 3 000 • Improved process stability 2759 2732 2 500 Harjavalta • Cu production 133 (129) kton • Ni in matte production 25 (31) kton 2 000 • Stable Cu process, maintenance Ni 1 500 Kokkola •
Slide 16: Smelters – Production
Smelters – Production Copper Metal Total feed, production, Ktonnes Ktonnes 400 120 • Cu production 89 (89) ktonnes 350 105 ‒ Stable production 300 90 250 75 ‒ 48 (31) % internal feed 200 60 ‒ Complex materials 150 45 100 30 • Zn production 111 (116) ktonnes 50 15 0 0 ‒ Production stability improved
Slide 17: Financials
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level Financials ‒ Fifth level Boliden Group Q4 2017 17 2018-02-14
Slide 18: Q4 - Strong earnings
Q4 - Strong earnings MSEK Q4 2017 Q4 2016 Q3 2017 Revenues 13,619 12,137 11,628 EBITDA 4,332 3,500 2,987 EBIT 3,091 2,353 1,860 Process inventory revaluation (PIR) 179 247 116 EBIT ex PIR 2,912 2,106 1,744 Investments 1,867 1,343 1,240 Free cash flow 2,382 1,692 1,715 Earnings per share, SEK 8.22 6.
Slide 19: Q4 vs. Q4 – Higher metal prices and mine production
Q4 vs. Q4 – Higher metal prices and mine production EBIT excl. PIR MSEK Q4 2017 2,912 Q4 2016 2,106 Deviation 805 Specification of deviation High grades in Mines Volumes 396 Prices and Terms (incl. hedges) 660 Higher metal prices, lower FX & TC Whereof currency effects -649 Costs -69 Depreciation -9
Slide 20: Q4 vs. Q3 – Higher production & market terms
Q4 vs. Q3 – Higher production & market terms EBIT excl. PIR MSEK Q4 2017 2,912 Q3 2017 1,744 Deviation 1,168 Specification of deviation High grades and milled production in Mines Volumes 1,035 Reduced inventories Prices and Terms (incl. hedges) 705 Higher base metal prices Whereof currency effects 3
Slide 21: Full-year financial development
Full-year financial development MSEK (Unless otherwise stated) FY 2017 FY 2016 Revenues 49,531 40,316 EBITDA 13,617 9,881 EBIT 9,015 5,682 EBIT ex PIR 8,913 5,094 Investments 5,588 4,127 Acquisitions - 5,961 Free cash flow 7,309 -2,801 Earnings per share, SEK 25.06 15.49 Net debt / equity ratio 11 3
Slide 22: 2017 vs. 2016 – Higher metal prices and production
2017 vs. 2016 – Higher metal prices and production EBIT excl. PIR pro forma* MSEK FY 2017 8,913 FY 2016 pro forma 4,946 Deviation 3,969 Specification of deviation Higher production, mainly Mines Volume 1,515 Higher metal prices Prices and Terms (incl. hedges) 3,547 Lower FX Lower TC Whereof currency
Slide 23: Cash flow – higher profit, lower working capital
Cash flow – higher profit, lower working capital MSEK Q4 2017 Q4 2016 Q3 2017 EBITDA excluding PIR 4,152 3,253 2,871 Cash flow from working capital 565 -194 404 Inventories -264 -651 241 Operating receivables -149 -424 -39 Operating liabilities 976 866 209 Other 1 14 -6 Cash flow from investments -1
Slide 24: Strong balance sheet
Strong balance sheet SEK bn 31 Dec 30 Sep 31 Dec 2017 2017 2016 MSEK % Total Assets 55.9 53.1 53.9 12 000 45 Capital employed 42.9 42.3 42.5 10 000 40 35 Equity 35.1 32.5 29.4 8 000 30 Net debt 3.8 6.0 9.3 6 000 25 20 Net debt / equity ratio 11 19 32 4 000 15 10 Loan duration, years 2.4 2.6 3.3 2 00
Slide 25: Dividend proposal
Dividend proposal • Strong cashflow generation • Net Debt/Equity 11% • Financial targets ‒ Net Debt/Equity ratio in an economic upturn ca 20% ‒ Dividend shall correspond to one third of net profit • Board recommends ‒ Ordinary dividend 8.25 (5.25) SEK, 33 % of net profit ‒ Mandatory redemption of sh
Slide 26: Copper expansion in Harjavalta and Pori
Copper expansion in Harjavalta and Pori • De-bottlenecking of Harjavalta smelter and Pori refinery ‒ Capex 45 MEUR • Copper production 2017 ‒ Cathode production 135,000 tonnes ‒ External anode sales 15,000 tonnes • New capacity 170,000 tonnes cathodes 2020 • Part of strategic development of copper a
Slide 27: Expansion Kevitsa
Expansion Kevitsa New mill with infrastructure Integration of acquisition ready New building Large resources, high grades Capex 80 MEUR Concentrator bottleneck, milling Capacity increase from 7,5 to 9,5 Mton/year Synergies with Harjavalta Full production Q1 2020 Growing copper -
Slide 28: Going forward
Going forward • Record production in Q4 2017 in several mines • Winter conditions in Q1 • Aitik ‒ New crusher ramp-up – volatile production Q1 and Q2 ‒ 2018-19: Cu 0.25% • Garpenberg ‒ 2018: Zn 4.0%, Ag 115 g/tonne ‒ Q1: Zn grades lower • Zn smelters on normal production end of 2017 ‒ Tight concentr
Slide 29: Conclusion
Conclusion • Well positioned in the metal market ‒ Mines and smelters ‒ Base metals and precious metals ‒ High productivity • Strong production Mines • Disturbances in Zn smelters – improved • Extensive maintenance 2017 • Higher prices, lower FX and TC Boliden Group Q4 2017 29 2018-02-14
Slide 30: 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 31: • Click to edit Master text styles
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Boliden Group Q4 2017 31 2018-02-14
Slide 32: Appendix
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Appendix Boliden Group Q4 2017 32 2018-02-14
Slide 33: Zinc price
Zinc price Zinc price, USD/tonne KTonnes USD/tonne 3 900 Q4 Q3 Q2 Q1 Q4 5 000 2 000 3 400 4 000 1 600 2 900 2 400 3 000 1 200 1 900 1 400 2 000 800 okt-16 jan-17 apr-17 jul-17 okt-17 jan-18 1 000 400 Average price in Q4 vs. period Q3-17 Q2-17 Q1-17 Q4-16 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 34: Zinc TC and premia
Zinc TC and premia US$/t Treatment charges US$/t metal Metal premia concentrate 250 300 200 250 200 150 150 100 100 50 50 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Realized TC - European contract Ex-Works Premia Europe Spot TC - China imports Delivered Premia US Midwest Premia Far East -
Slide 35: Copper price
Copper price Copper price, USD/tonne KTonnes USD/tonne Q4 Q3 Q2 Q1 Q4 7 500 12 000 2 400 7 000 6 500 10 000 2 000 6 000 5 500 8 000 1 600 5 000 4 500 6 000 1 200 4 000 okt-16 jan-17 apr-17 jul-17 okt-17 jan-18 4 000 800 2 000 400 Average price in Q4 vs. period Q3-17 Q2-17 Q1-17 Q4-16 0 0 2007 2008 2
Slide 36: 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 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Contract TC - annual and mid-year benchmark CIF European benchmark premia Standard grade spot TC CIF Average Eur
Slide 37: Nickel price
Nickel price Nickel price, USD/tonne KTonnes 60 000 600 USD/tonne Q4 Q3 Q2 Q1 Q4 15 000 14 000 50 000 500 13 000 12 000 11 000 40 000 400 10 000 9 000 30 000 300 8 000 7 000 6 000 okt-16 jan-17 apr-17 jul-17 okt-17 jan-18 20 000 200 10 000 100 Average price in Q4 vs. period Q3-17 Q2-17 Q1-17 Q4-16 0
Slide 38: Gold, silver and lead prices
Gold, silver and lead prices Gold price, USD/troy oz. 2 000 Gold Lead price, USD/tonne 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 2010 2011 2012 2013 2014
Slide 39: Market balance – zinc and copper
Market balance – zinc and copper Zinc – global market Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Metals demand, kt 3 381 3 459 3 417 3 437 3 458 3 564 3 524 3 487 Year on year change 1,6% 3,0% 3,0% 2,6% 2,3% 3,0% 3,1% 1,5% Smelter production, kt 3 274 3 327 3 374 3 549 3 303 3 299 3 279 3 541 Year on y
Slide 40: Market balance – nickel and lead
Market balance – nickel and lead Nickel - global market Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Metals demand, kt 483 517 494 525 513 508 551 566 Year on year change 1,7% 9,3% 8,0% 13,2% 6,4% -1,7% 11,5% 7,7% Smelter production, kt 468 506 490 512 486 481 531 536 Year on year change -1,5% 1,0% 1,8%
Slide 41: Economic development
Economic development Industrial production, year on year % 10 8 6 4 2 0 -2 J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND 2014 2015 2016 2017 EU28 USA China World Source: Thomson Reuters Datastream, world data calculated by Boliden Boliden Group Q4 2017 41 2018-02-14
Slide 42: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 20 15 10 5 0 -5 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2014 2015 2016 2017 EU USA China China: year on year based on cumulative investments at each point. USA: construction
Slide 43: Automotive – lower in USA & China
Automotive – lower in USA & China 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 2014 2015 2016 2017 Europe North America China World Source: LMC Automotive Boliden Group Q4 2017 43 2018-02-14
Slide 44: China – metals demand and economic growth
China – metals demand and economic growth Year on year growth % 25 20 15 10 5 0 -5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2014 2015 2016 2017 Zinc demand Copper demand Nickel demand GDP growth % Industrial production growth % Source: CRU Ltd, Thomson Reuters Datastream Boliden Group Q4 2017
Slide 45: • Click to edit Master text styles
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Boliden Group Q4 2017 45 2018-02-14