Boliden Ab · OMXSTO:BOL

Boliden Ab — Q4 2014 Earnings Presentation

45 slides from Boliden Ab's earnings presentation, Feb 12, 2015

  1. Slide 1: Q4 and full year 2014 report

    Q4 and full year 2014 report Lennart Evrell President & CEO Mikael Staffas CFO

  2. Slide 2: Summary Q4 2014

    Summary Q4 2014  Revenues 9 614 (8 653) MSEK MSEK R4Q, MSEK  EBIT ex PIR* 1 134 (548) MSEK 1 800 Quarterly EBIT excl PIR* 7 200 Rolling Q EBIT, RHS ‒ 1 600 6 400 EBIT 1 158 (486) MSEK Rolling Q EBIT excl PIR*, RHS 1 400 5 600  Free Cash Flow 366 (-206) MSEK 1 200 4 800 1 000 4 000  Strong produc

  3. Slide 3: Summary 2014

    Summary 2014  Revenues 36 891 (34 409) MSEK  EBIT ex PIR* 2 605 (2 271) MSEK  Higher production ‒ Production ramp-up Garpenberg ‒ Kylylahti acquired ‒ Odda at full production H2 2014  Higher costs and depreciation ‒ Higher mine production  Action plan Rönnskär +150 MSEK  Strong USD  Improved

  4. Slide 4: Firm metals demand but weaker macro

    Firm metals demand but weaker macro Macro  Economic growth lower than Q3  Uncertainties Metals markets  Slower copper demand growth  Balanced Zn concentrate market  Zn project delays  Cu metal surplus, smaller than expected  Several Cu mine disruptions Exchange rates  USD strengthened furthe

  5. Slide 5: Market balance

    Market balance Zinc – global market, kt metal Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 2013 2014 Metals demand 3.7% 4.1% 3.1% 2.8% 3.1% 3.0% 2.3% 3.5% 3.4% 3.0% Smelter production 0.4% 4.6% 8.1% 5.4% 1.0% 2.3% 3.9% 3.2% 4.6% 2.6% Metal balance -77 -58 -52 94 -151 -83 -4 88 -93 -150 Mine produ

  6. Slide 6: Metal price index, SEK

    Metal price index, SEK 250 BOLIDEN PRICE INDEX, SEK (Index 100 per 2009-01-01) 200 150 100 50 0 2009 2010 2011 2012 2013 2014 2015 Boliden Group Q4 2014 6 2015-02-12

  7. Slide 7: Currencies

    Currencies USD/SEK EUR/USD 10 0,90 9 1,05 8 1,20 7 1,35 6 1,50 5 1,65 4 1,80 3 1,95 2 2,10 1 2,25 0 2,40 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/SEK EUR/USD Note: Graph shows period 1 January 2005 until 30 January 2015. Boliden Group Q4 2014 7 2015-02-12

  8. Slide 8: Zinc – price up in 2014

    Zinc – price up in 2014 USD/t Price Price Q avg 5 000 2 500 Q4 Q1 Q2 Q3 Q4 USD/t 2 400 4 500 2 300 4 000 2 200 2 100 3 500 2 000 1 900 3 000 1 800 2 500 1 700 1 600 2 000 1 500 okt-13 jan-14 apr-14 jul-14 okt-14 jan-15 1 500 1 000 Average price in Q4 vs period 500 Q3-14 Q2-14 Q1-14 Q4-13 0 2005 2006

  9. Slide 9: Copper – price drop

    Copper – price drop USD/t Price Price Q avg Q4 Q1 Q2 Q3 Q4 11 000 8 000 USD/t 10 000 7 500 9 000 7 000 8 000 6 500 7 000 6 000 6 000 5 500 5 000 5 000 4 000 okt-13 jan-14 apr-14 jul-14 okt-14 jan-15 3 000 2 000 Average price in Q4 vs period 1 000 Q3-14 Q2-14 Q1-14 Q4-13 0 2005 2006 2007 2008 2009 20

  10. Slide 10: Gold, silver and lead prices down

    Gold, silver and lead prices down USD/troy oz. Gold USD/t Lead 2 000 5 000 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/troy oz.

  11. Slide 11: Mines

    Mines Boliden Group Q4 2014 11 2015-02-12

  12. Slide 12: Mines – Q4 and full year

    Mines – Q4 and full year Q4 MSEK R4Q,  EBIT 461 (422) MSEK 1 600 MSEK 4 800 ‒ 355 MSEK in Q3 2014 Quarterly EBIT Rolling Q EBIT  Capex 1 458 (1 037) MSEK 1 200 3 600  Higher production ‒ Kylylahti acquired ‒ Garpenberg ramp-up 800 2 400  Higher costs and depreciation  Stronger USD 400 1 200  L

  13. Slide 13: Mines – Production

    Mines – Production Milled ore, Metal content, Milled ore, Metal content, mt Copper kt mt Zinc kt 12 24 1,8 120 10 20 1,5 100 8 16 1,2 80 6 12 0,9 60 4 8 0,6 40 2 4 0,3 20 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0,0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 2012 2013 2014 Milled ore

  14. Slide 14: Mines by unit – full year

    Mines by unit – full year Aitik EBIT  Copper grade 0.20 MSEK  39 (37) Mton 1800  Higher depreciation 1598* 1600 Boliden area 1299 1400  Higher production of metals in concentrate 1200 919 1000 Garpenberg 882  2.2 (1.5) Mton 800 776  Expansion ramp-up 600 558 Kylylahti 400  Consolidated 1 Octo

  15. Slide 15: Mineral Reserves & Resources

    Mineral Reserves & Resources Boliden Group Q4 2014 15 2015-02-12

  16. Slide 16: Mineral Reserves & Mineral Resources

    Mineral Reserves & Mineral Resources  Mineral reserves up in Garpenberg and Tara ‒ Lower grades  Aitik in line with update in May 2014  Mineral resources increased in Garpenberg but lower grades  Exploration in 2014 280 (300) MSEK ‒ 122 000 (159 000) m drilled  Tara’s life of mine extended 1 ye

  17. Slide 17: Aitik and Boliden Area

    Aitik and Boliden Area Aitik Boliden Area Mton Kton 2,500 18,000 16,000 2,000 14,000 12,000 1,500 10,000 8,000 1,000 6,000 500 4,000 2,000 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Inferred Measured/Indicated Inferred Measured/Indicated P

  18. Slide 18: Garpenberg and Kylylahti

    Garpenberg and Kylylahti Garpenberg Kylylahti Kton Kton 60,000 8000 7000 50,000 6000 40,000 5000 30,000 4000 3000 20,000 2000 10,000 1000 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Inferred Measured/Indicated Inferred Measured/Indicated Pr

  19. Slide 19: Tara

    Tara Tara Kton 30,000 25,000 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Inferred Measured/Indicated Proven/Probable Production*10  Reserves increased ‒ Life of mine plan 2020 (2019) Boliden Group Q4 2014 19 2015-02-12

  20. Slide 20: Smelters

    Smelters Boliden Group Q4 2014 20 2015-02-12

  21. Slide 21: Smelters – Q4 and full year

    Smelters – Q4 and full year R4Q, Q4: 900 MSEK MSEK 2 700  EBIT ex PIR* 681 (149) MSEK Quarterly EBIT excl PIR* Rolling Q EBIT, RHS ‒ 464 MSEK in Q3 2014 700 Rolling Q EBIT excl PIR*, RHS 2 100  Capex 268 (254) MSEK  Strong production 500 1 500  Improved terms vs Q4 2013  Kokkola silver ramp-up

  22. Slide 22: Smelters – Production

    Smelters – Production Cathode Metal Total feed, Copper production, Total feed, kt Zinc production, kt kt kt 250 150 400 120 350 105 200 120 300 90 250 75 150 90 200 60 100 60 150 45 100 30 50 30 50 15 0 0 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 201

  23. Slide 23: Smelters by unit – full year

    Smelters by unit – full year Bergsöe EBIT excl PIR MSEK  Stable production 1800 1518 Odda 1600  Record production – at full capacity 1400 H2 2014 1200  Improved prices and terms 1000 Kokkola 800  Lower costs 679 600  Improved prices and terms 459 316 405 400 248 279 Harjavalta 209 200  Record

  24. Slide 24: Financials

    Financials Boliden Group Q4 2014 24 2015-02-12

  25. Slide 25: Quarterly financial development – Summary

    Quarterly financial development – Summary MSEK Q4 2014 Q4 2013 Q3 2014 Revenues 9,614 8,653 9,287 EBITDA 2,044 1,212 1,709 EBIT 1,158 486 858 EBIT ex PIR 1,134 548 711 Investments 1,727 1,294 720 Free cash flow 366 -206 728 Earnings per share, SEK 3.06 1.42 2.24 Net debt / equity ratio 35 38 35 Boli

  26. Slide 26: EBIT analysis Q4 vs. Q3

    EBIT analysis Q4 vs. Q3 Strong production and higher costs MSEK Q4 2014 Q3 2014 EBIT 1,158 858 Process inventory revaluation (PIR) 24 146 EBIT excl. PIR 1,134 711 Kylylahti Deviation 423 Garpenberg – Ag grade, Zn recovery Boliden area – improved ore mix Specification of deviation High and stable Sme

  27. Slide 27: EBIT analysis Q4 vs. Q4

    EBIT analysis Q4 vs. Q4 Higher production, stronger USD but also higher costs and depreciation MSEK Q4 2014 Q4 2013 EBIT 1,158 486 Process inventory revaluation (PIR) 24 -62 EBIT excl. PIR 1,134 548 Deviation 586 Kylylahti Ramp-up Garpenberg Specification of deviation High Smelter production Volume

  28. Slide 28: Cash flow quarterly

    Cash flow quarterly MSEK Q4 2014 Q4 2013 Q3 2014 EBITDA including PIR 2,044 1,212 1,709 PIR adjustment -24 0 -146 Inventories -433 159 -22 Payables 572 -187 -138 Receivables -44 -3 178 Other 0 6 0 Changes in working capital 96 -25 19 Cash flow from investments -1,716 -1,296 -718 Financial items -70

  29. Slide 29: Capital structure

    Capital structure SEK bn 31 Dec 30 Sept 31 Dec Unless otherwise stated 2014 2014 2013 MSEK Net debt Gearing % Total Assets 43.9 41.7 41.8 10 000 45 40 Capital employed 35.1 34.3 34.5 8 000 35 Shareholders' equity 24.0 23.5 23.1 30 6 000 25 Net debt 8.3 8.2 8.7 20 4 000 15 Gearing, % 35 35 38 10 2 00

  30. Slide 30: Full-year financial development – Summary

    Full-year financial development – Summary MSEK FY 2014 FY 2013 Revenues 36,891 34,409 EBITDA 6,035 4,632 EBIT 2,759 1,803 EBIT ex PIR 2,605 2,271 Investments 4,222 4,974 Free cash flow 1,583 -1,466 Earnings per share, SEK 6.94 4.72 Net debt / equity ratio 35 38 Boliden Group Q4 2014 30 2015-02-12

  31. Slide 31: EBIT analysis 2014 vs 2013

    EBIT analysis 2014 vs 2013 Higher production and stronger USD MSEK FY 2014 FY 2013 EBIT 2,759 1,803 Process inventory revaluation (PIR) 154 -469 EBIT excl. PIR 2,605 2,271 Deviation 333 Specification of deviation Higher mine production Volume 532 Prices and Terms (incl. hedges) 892 Stronger USD Wher

  32. Slide 32: Cash flow

    Cash flow Higher EBITDA, less WC tied up and lower investments MSEK FY 2014 FY 2013 EBITDA including PIR 6,035 4,632 PIR adjustment -154 0 Inventories 381 216 Payables 533 -580 Receivables -426 -177 Other 0 -5 Changes in working capital 488 -546 Cash flow from investments -4,206 -4,971 Financial ite

  33. Slide 33: EBIT sensitivity breakdown by business area

    EBIT sensitivity breakdown by business area Effect on operating profit BA BA GROUP MSEK Mines Smelters Metal prices +10% Copper 390 355 35 Zinc 610 385 225 Lead 105 90 15 Gold 180 130 50 Silver 160 135 25 USD +10% USD/SEK 1,130 840 290 EUR/USD 445 190 255 USD/NOK 115 - 115 Smelter charges +10% Coppe

  34. Slide 34: Project update

    Project update  Garpenberg ‒ Ramping up – 2.2 Mton 2014  Silver recovery Kokkola ‒ Ramp-up behind schedule  Aitik45 ‒ Ramp up on plan, cap ex postponed ‒ Permit appealed  Odda ‒ Decision to increase to 200 (170) Kton/year Boliden Group Q4 2014 34 2015-02-12

  35. Slide 35: Summary 2014

    Summary 2014  Weak start, strong finish ‒ Favourable currencies ‒ Strong production ‒ Production records in Odda and Harjavalta  Garpenberg ramp-up ‒ Milled production 2.2 (1.5) Mton ‒ Mined production 1.9 (1.6) Mton  Rönnskär action plan delivers  Decision to expand Aitik to 45 Mton/year  Deci

  36. Slide 36: Going forward

    Going forward  Aitik ‒ Copper grade 0.21% in 2015-2016 ‒ 40 Mton ore 2015 plan ‒ 45 Mton ore 2017 plan  Garpenberg ‒ 2.5 Mton pace end 2015 ‒ Limited ore stock pile 2015  Tara ‒ Mining deeper ‒ Implementation new organisation  Kylylahti ‒ Full year impact 2015  Rönnskär ‒ Action plan under impl

  37. Slide 37: 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

  38. Slide 38: Boliden Group Q4 2014

    Boliden Group 38 Q4 2014 2015-02-12

  39. Slide 39: Appendix

    Appendix Boliden Group Q4 2014 39 2015-02-12

  40. Slide 40: Economic development

    Economic development 14 GDP growth, year on year % Industrial production, year on year % 20 12 USA China USA China 10 EU28 World EU28 World 15 8 10 6 4 5 2 0 0 Data: EU and World November, China and USA December, Boliden Data: Q3 2014 Europe, world Q4 estimates for certain 2014 China, USA countries/

  41. Slide 41: Construction

    Construction Largest segment for Cu and Zn Activity, year on year % 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 China: year on year based on cumulative investments at each point -30.0 EU27 construction IP USA - construction expenditure China - fixed assets investment Source: Reuters Datastream Boliden Group

  42. Slide 42: Automotive

    Automotive Production of light vehicles, year on year % China North America Europe Global 30 25 20 15 10 5 0 -5 -10 Latest data: Q4 2014 -15 2011 2012 2013 2014 Source: Reuters Datastream, data USA and Europe LMC Automotive Boliden Group Q4 2014 42 2015-02-12

  43. Slide 43: Zinc TC and premiums

    Zinc TC and premiums Treatment charges US$/t metal Metal premias US$/t concentrate 300 250 250 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014 2011 2012 2013 2014 Spot TC China imports Ex-Works Premia Europe Realized, annual European contract Delivered Premia US Midwest Premia Far East - Weste

  44. Slide 44: Copper TC and premiums

    Copper TC and premiums US$/t Treatment charges US$/t Metal premias concentrate concentrate 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 Contract TC - annual and mid-year benchmark Spot Copper premium CIF W. Europe Standard grade spot TC Benchmark CI

  45. Slide 45: Boliden Group Q4 2014

    Boliden Group Q4 2014 45 2015-02-12

Boliden — Q4 2014 Earnings Presentation on 6ix