Boliden Ab · OMXSTO:BOL

Boliden Ab — Q2 2014 Earnings Presentation

32 slides from Boliden Ab's earnings presentation, Jul 18, 2014

  1. Slide 1: Interim report Q2 2014

    Interim report Q2 2014 Lennart Evrell President & CEO Mikael Staffas CFO

  2. Slide 2: Summary Q2 2014

    Summary Q2 2014  Quarterly EBIT excl PIR* Revenues 9 438 (8 035) MSEK MSEK Rolling Q EBIT, RHS R4Q, MSEK 1 800 7 200  EBIT ex PIR* 374 (370) MSEK 1 600 Rolling Q EBIT excl PIR*, RHS 6 400 ‒ EBIT 478 (-59) MSEK 1 400 5 600  Free Cash Flow 920 (-1 477) MSEK 1 200 4 800 1 000 4 000  High production

  3. Slide 3: Improved market sentiment

    Improved market sentiment Macro  Continued recovery in mature economies  Good growth in China, housing sector a concern Metals markets  Metal prices increased  Supply disruptions caused metal deficits  Lower supply forecast Zn and Cu (mines and smelters)  Premiums stable Exchange rates  Swedi

  4. Slide 4: Market balance

    Market balance Zinc – global market Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Metals demand 2.5% 3.1% 3.4% 4.2% 4.4% Smelter production 4.5% 7.8% 4.1% -1.7% 2.4% Metal balance, kt 43 10 110 -155 -20 Mine production 3.0% 3.0% 0.9% -4.3% -4.2% Concentrate balance, kt 232 180 37 -273 36 Copper – global market Q2 1

  5. Slide 5: Zinc – inventories down and price up

    Zinc – inventories down and price up Zinc price highest since August 2011 2,400 USD/t LME Inventory Shanghai Inventory Price Price Q avg USD/t 2,300 Q2 Q3 Q4 Q1 Q2 5,000 1.8 Millions 2,200 4,500 1.6 2,100 4,000 2,000 1.4 1,900 3,500 1.2 1,800 3,000 1,700 1.0 1,600 2,500 1,500 0.8 Apr/13 Jul/13 Oct/1

  6. Slide 6: Copper – inventories down and price stable

    Copper – inventories down and price stable 9,000 USD/t LME Inventory Shanghai Inventory COMEX Inventory Price Price Q avg USD/t Q2 Q3 Q4 Q1 Q2 11,000 1.6 8,500 Millions 10,000 8,000 1.4 9,000 7,500 1.2 8,000 7,000 7,000 1.0 6,500 6,000 0.8 5,000 6,000 Apr/13 Jul/13 Oct/13 Jan/14 Apr/14 Jul/14 4,000

  7. Slide 7: Gold, silver and lead prices

    Gold, silver and lead prices USD/troy oz. 2,000 Gold USD/t 5,000 Lead 450 Thousands 1,800 4,500 400 1,600 4,000 350 1,400 3,500 300 1,200 3,000 250 1,000 2,500 200 800 2,000 150 600 1,500 400 100 1,000 200 500 50 0 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2

  8. Slide 8: Mines

    Mines Boliden Group Q2 2014 8 2014-07-18

  9. Slide 9: Mines – Q2 2014

    Mines – Q2 2014  EBIT 336 (376) MSEK MSEK R4Q, ‒ 147 MSEK in Q1 2014 1 600 Quarterly EBIT MSEK 4 800 Rolling Q EBIT  Capex 657 (977) MSEK 1 200 3 600  Improved prices and currency  High production 800 2 400 ‒ Production start Garpenberg ‒ Record production Aitik 400 1 200  Higher operating cost

  10. Slide 10: Mines – Production

    Mines – Production Milled ore, Copper Metal Milled ore, Zinc Metal mt content, kt mt content, kt 24 100 1,5 10 20 80 1,2 8 16 60 6 0,9 12 40 4 0,6 8 2 4 0,3 20 0 0 0,0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2014 2011 2012 2013 2014 Milled ore (

  11. Slide 11: Smelters

    Smelters Boliden Group Q2 2014 11 2014-07-18

  12. Slide 12: Smelters – Q2 2014

    Smelters – Q2 2014  EBIT ex PIR* 174 (-30) MSEK MSEK Quarterly EBIT excl PIR* R4Q, MSEK ‒ 900 Rolling Q EBIT, RHS 2 700 199 MSEK in Q1 2014 Rolling Q EBIT excl PIR*, RHS 700 2 100  Improved metal prices and TC/RC  Maintenance shutdowns better than plan 500 1 500 ‒ -120 (-305) MSEK  Stable produc

  13. Slide 13: Smelters – Production

    Smelters – Production Total feed, Copper Cathode Total feed, Metal production, Zinc production, kt kt kt kt 250 140 400 100 350 120 80 200 300 100 250 60 150 80 200 60 150 40 100 40 100 20 50 50 20 0 0 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2

  14. Slide 14: Financials

    Financials Boliden Group Q2 2014 14 2014-07-18

  15. Slide 15: Financial development – Summary

    Financial development – Summary MSEK Q2 2014 Q2 2013 Q1 2014 Revenues 9 438 8 035 8 550 EBITDA 1 293 664 989 EBIT 478 -59 265 EBIT ex PIR 374 370 385 Investments 907 1510 868 Free cash flow 920 -1 477 -432 Earnings per share, SEK 1.08 -0.37 0.56 Net debt / equity ratio 39 41 40 Boliden Group Q2 2014

  16. Slide 16: EBIT analysis Q2 vs. Q2

    EBIT analysis Q2 vs. Q2 Higher production and improved metal prices MSEK Q2 2014 Q2 2013 EBIT 478 -59 Process inventory revaluation (PIR) 104 -429 EBIT excl. PIR 374 370 Deviation 4 Garpenberg Specification of deviation Lower Smelter maintenance Volume 176 Higher metal prices (+256 MSEK) Prices and

  17. Slide 17: EBIT analysis Q2 vs. Q1

    EBIT analysis Q2 vs. Q1 Higher mine production and improved prices MSEK Q2 2014 Q1 2014 EBIT 478 265 Process inventory revaluation (PIR) 104 -120 EBIT excl. PIR 374 385 Deviation -11 Specification of deviation Higher mine production Volume 208 Improved metal prices and Prices and Terms (incl. hedges

  18. Slide 18: Cash flow

    Cash flow Lower inventory and investments MSEK Q2 2014 Q2 2013 Q1 2014 EBITDA including PIR 1 293 664 989 PIR adjustment -104 120 Inventories 1 026 816 -190 Payables 207 -838 -109 Receivables -438 -108 -122 Other 0 -2 0 Changes in working capital 795 -132 -421 Cash flow from investments -898 -1 507

  19. Slide 19: Capital structure

    Capital structure SEK bn 30 June 31 Mar Unless otherwise stated 2014 2014 Total Asset 42.5 41.9 MSEK % Capital employed 34.3 34.9 10 000 45 40 Shareholders' equity 22.9 23.1 8 000 35 30 Net debt 8.9 9.2 6 000 25 20 Gearing, % 39 40 4 000 15 Loan duration, years 3.9 2.4 2 000 10 5 Average interest ra

  20. Slide 20: Project update

    Project update  Garpenberg  Initial production in March, ramping up in Q2  Silver recovery Kokkola  Initial production in Q2  Aitik45  Early stage – on budget and on time Boliden Group Q2 2014 20 2014-07-18

  21. Slide 21: Acquisition of mine and exploration rights

    Acquisition of mine and exploration rights  Announced 8 July 2014  Operating mine in Outokumpu area, Finland  Enterprise value: 95 MUSD ‒ Kylylahti mine and Luikonlahti ‒ EV/EBIT: 5 concentrator  Seller: Altona Mining, Australia ‒ Geology similar to Boliden’s  Transaction subject to: ‒ Synergie

  22. Slide 22: Summary going forward

    Summary going forward  Aitik ‒ Below average grades through 2014, average reserve grade 2015-2016  Garpenberg ‒ 2 Mton production plan 2014 ‒ 2.5 Mton pace end 2015 ‒ Below average grades in Q3 2014  Tara ‒ Production stoppage 1 week in July ‒ Cost reduction plan under negotiations  Kokkola – si

  23. Slide 23: Capital Markets Day on 10-11 November 2014

    Capital Markets Day on 10-11 November 2014  Stockholm 10 November  Garpenberg site visit 11 November  More info will be posted on www.boliden.com Boliden Group Q2 2014 23 2014-07-18

  24. Slide 24: 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

  25. Slide 25: Boliden Group Q2 2014

    25 Boliden Group Q2 2014 2014-07-18

  26. Slide 26: Appendix

    Appendix Boliden Group Q2 2014 26 2014-07-18

  27. Slide 27: Economic development

    Economic development GDP growth, year on year % Industrial production, year on year % 14 25 China World 12 20 USA EU27 10 15 8 10 6 5 4 0 2 -5 0 -10 China World -2 USA EU27 -4 -15 -6 -20 Latest data: Q1 2014 Latest data: China and USA May, World & EU27 April -8 -25 2009 2010 2011 2012 2013 2014 Sour

  28. Slide 28: Construction

    Construction Largest segment for Cu and Zn Activity, year on year % 40 30 20 10 0 -10 EU27 construction IP -20 USA - construction expenditure China - fixed assets investment -30 Source: Reuters Datastream Boliden Group Q2 2014 28 2014-07-18

  29. Slide 29: Automotive

    Automotive Year on year % China - production of passenger cars 120 USA - IP Automobile & light duty motor vehicle 100 Europe - production light vehicles 80 60 40 20 0 -20 -40 -60 Latest data: Q1 2014 -80 2009 2010 2011 2012 2013 2014 Source: Reuters Datastream, European data from LMC Automotive Boli

  30. Slide 30: Zinc TC and premiums

    Zinc TC and premiums Treatment charge Metal premium USD/tonne concentrate USD/tonne metal 250 250 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Spot TC, China imports Annual contract, Europe US Midwest Europe Far East (western) Annual contract according to CRU  Increasin

  31. Slide 31: Copper TC and premiums

    Copper TC and premiums Treatment charge Metal premium USD/tonne concentrate USD/tonne metal 140 160 120 140 100 120 100 80 80 60 60 40 40 20 20 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Spot, Europe Benchmark, Europe Spot TC Annual and mid-year contract Benchmark according to market sources includ

  32. Slide 32: Boliden Group Q2 2014

    Boliden Group Q2 2014 32 2014-07-18

Boliden — Q2 2014 Earnings Presentation on 6ix