Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — FY2016 Earnings Presentation
36 slides from Kghm Polska Miedz's earnings presentation, Mar 17, 2017
Slide 1: Layers of possibilities – Results of the Group for 2016
Layers of possibilities Results of the Group for 2016 17 March 2017
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: Introduction
Introduction
Slide 4: Highlights of the year 2016 in the Group
Highlights of the year 2016 in the KGHM Polska Miedź S.A. Group Key events 36 km of mine tunnels excavated Start-up of the flash furnace at the Work on updating the strategy of in the Deep Głogów area Głogów I Copper Smelter and KGHM Polska Miedź S.A. for the and achievement of a 5% share by Refiner
Slide 5: Summary of 2016 in the Group
Summary of 2016 in the KGHM Polska Miedź S.A. Group Production, sales and finance Payable copper production [kt] - 6% Copper production and sales - 6% The lower production of electrolytic copper as 718 677 compared to 2015 was mainly due to the shutdown 180 170 at the Głogów I Copper Smelter and Ref
Slide 6: Macroeconomic environment
go KGHM POLSKA MIEDZ Macroeconomic environment
Slide 7: Turning point on the commodities market – an end to the bear market
Turning point on the commodities market – an end to the bear market in commodities, average copper price below 2015, but a significant rise in the fourth quarter. A lower copper price alongside a weaker PLN; Metals prices stand out well against the backdrop recovery on the silver market of the commo
Slide 8: Improved global economic outlook
Improved global economic outlook Visible improvement in copper market sentiment Industrial market indicators* indicate economic in the 4th quarter of 2016 expansion in the near term Aluminium Lead Ołów Zinc Cynk Nickel Nikiel Tin Cyna Copper Miedź USA Eurozone Strefa Euro China Chiny Poland Polska 2
Slide 9: Economic results of the Group
Economic results of the KGHM Polska Miedź S.A. Group
Slide 10: Stable copper equivalent production by the Group despite shutdown at Głogów I
KGHM Polska Miedź S.A. KGHM INTERNATIONAL Sierra Gorda (55%) Stable copper equivalent production by the Group despite shutdown at Głogów I due to change in technology Payable copper production (kt) Production of copper 718 -6% 677 equivalent 98 46 52 from own concentrate (kt) The lower production of
Slide 11: Decrease in C1 unit cost in the Group
Decrease in C1 unit cost in the Group C1 – KGHM Polska Miedź S.A. C1 cost in the Group in 2016 was lower by 11%, C1 – Group (USD/lb) mainly due to an increase in the value of associated +2% metals. (USD/lb) 1.47 -12% 1.50 1.30 0.42 Under the metals prices and exchange rates of the 0.42 -3% 0.37 incl
Slide 12: Operating results of the Group
Segment Segment Segment Other segments KGHM Polska Miedź S.A. KGHM INTERNATIONAL Sierra Gorda Operating results of the Group Adjusted EBITDA * The decrease in the Group’s EBITDA by PLN 44 million was due to Adjusted EBITDA in KGHM (mn PLN) International (mn USD) the lower result of KGHM Polska Miedź
Slide 13: Financial results of the Group
Segment Segment Other KGHM Polska Miedź S.A. KGHM INTERNATIONAL Financial results of the Group Profit for the period Sales revenue (mn PLN) (mn PLN) Consolidated net result for 2016 of -4% –PLN 4 449 million, mainly due to the 20 008 1 202 +2% 1 225 19 156 impairment losses recognised on non- 1 492
Slide 14: Net debt of the Group – as at end-December 2016
Net debt of the KGHM Polska Miedź S.A. Group – as at end-December 2016 KGHM Group net debt In accordance with the financial strategy adopted by KGHM Polska Miedź S.A., the basic currency in which debt is incurred is the USD (natural hedging). (mn USD)* USD 59 mn The change in the level of debt in 20
Slide 15: Cash generated from operating activities covered 96% of non-operating expenditures
Cash generated from operating activities covered 96% of non- operating expenditures mn PLN -3 251 +4 212 -300 -12 -671 +565 -144 860 461 Cash as at Net cash generated Acquisition of Acquisition of newly- Change in Dividends Interest paid and Other Cash as at 1 Jan 2016 from operating property, plant
Slide 16: Results of testing for the impairment of key international mining assets
Results of testing for the impairment of key international mining assets of the KGHM Polska Miedź S.A. Group Loans granted to Mining assets of KGHM International Sierra Gorda Net impairment: PLN 927 mn (USD 222 mn) Net impairment: The amount of the impairment is the difference between the carrying a
Slide 17: Summation
Summation
Slide 18: Main goals in 2017
Main goals in 2017 Strategy of the Approval and publication of the Strategy for the years 2017-2021 1 KGHM Group – by the end of April 2017. Copper in concentrate 425 thousand tonnes Silver in concentrate 1 221 tonnes Production by Electrolytic copper from own concentrate 401 thousand tonnes 2 KGHM
Slide 19: Supplementary slides
Supplementary slides
Slide 20: Key international projects
go KGHM POLSKA MIEDZ Key international projects
Slide 21: Sierra Gorda
Sierra Gorda Production of copper in concentrate in 2016 of approx. 94 thousand tonnes, including 25 thousand tonnes in Q4, with production of molybdenum in concentrate of approx. 22.1 million pounds, including 5.2 million pounds in Q4 (on a 100% basis). In 2016, Sierra Gorda, with the support of te
Slide 22: Status of development projects advanced by KGHM in 2016
Status of development projects advanced by KGHM in 2016 In 2016 independent consultants reviewed the technical and economic projects. In addition, based on updated pricing paths in KGHM, investment projects were valued as at 31 December 2016. SG Oxide In 2016 analyses were conducted regarding altern
Slide 23: Key domestic projects
go KGHM POLSKA MIEDZ Key domestic projects
Slide 24: Ore access program in KGHM's concessioned areas in Poland – Deep Głogów
Ore access program in KGHM’s concessioned areas in Poland Deep Głogów (GGP) area Work performed in 2016 Scope of development-preparatory tunneling Share of production from Deep Głogów Status of the Ore Access Program completed (in meters) in total production in Poland The sinking of the GG-1 (materi
Slide 25: Metallurgical Development in KGHM – Flash Furnace at Głogów I
Metallurgical Development in KGHM Construction of a Flash Furnace and associated infrastructure at Głogów I Work performed in 2016 Status of Pyrometallurgy Modernisation Efficiency parameters of the Expected impact Program (PMP) installation As at the end of 2016, since start-up the Will account for
Slide 26: Economic results of KGHM Polska Miedź S.A.
Economic results of KGHM Polska Miedź S.A.
Slide 27: Stable level of mine production
Stable level of mine production Ore extraction Production of Cu Electrolytic copper Metallic silver (mn t dry weight) in concentrate production production (kt) (kt) (t) +1% -0,4% -7% -3% 31.6 32.0 426 424 From purchased 574 1 283 metal-bearing 536 1 191 Silver grade materials in ore (g/t) 154 160 44
Slide 28: Revenues from sales in 2016
Revenues from sales in 2016 Sales of copper and copper Silver sales (t) products (kt) Sales revenue +3% (mn PLN) 1 245 1 279 -2% 571 560 91 15 939 Other -5% 15 112 35 1 047 Silver 1 250 Copper of which in 2 394 776 concentrate concentrate 2 596 of which wire rod Copper and 248 249 copper products 12
Slide 29: Cost discipline maintained
Cost discipline maintained Expenses by nature (mn PLN) Total expenses by nature as compared to 2015 were lower by PLN 6 million, due to a lower minerals extraction tax by PLN 101 million, no change alongside higher costs of consumed metal-bearing materials 12 782 12 776 purchased by PLN 117 million
Slide 30: Financial results in 2016
Financial results in 2016 Adjusted EBITDA Profit for the period (mn PLN) (mn PLN) After excl. The decrease in adjusted EBITDA by PLN 612 million (-15%) was 4 163 impairments* 3 551 -16% mainly due to the lower sales volume (due to the shutdown at 2 431 2 042 Głogów I) and to the deterioration in met
Slide 31: Accrued result on derivatives – hedging position, metals and currencies
The accrued result on derivatives achieved by KGHM Polska Miedź S.A. as at 31 December 2016 amounted to –PLN 56 million Market risk management – hedging position (as at 31 December 2016) Position in derivatives on the metals and currencies markets Copper USD/PLN in tonnes in million USD Seagull 21 0
Slide 32: Accrued result on derivatives – interest rates
The accrued result on derivatives achieved by KGHM Polska Miedź S.A. as at 31 December 2016 amounted to –PLN 56 million Market risk management – hedging position (as at 31 December 2016) Position in derivatives on the interest rates markets Interest rate (LIBOR 3M USD) Result on derivatives in milli
Slide 33: Impairments recognised on the assets of KGHM
Impairments recognised on the assets of KGHM
Slide 34: Indications to conduct testing for the impairment of international mining assets
Indications to conduct testing for the impairment of international mining assets As a result of the review of technical and economic assumptions regarding the Group’s key international mining assets there were changes to the parameters for these assets in terms of: mine life, metals production volum
Slide 35: Results of the tests with respect to key international mining assets
Results of the tests with respect to key international mining assets in the standalone financial statements of KGHM Polska Miedź S.A. Shares in Future 1 and loans granted to the KGHM International Group Pre-tax impairment loss: PLN 5 900 million (USD 1 412 million). The amount of the impairment was
Slide 36: Thank you!
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