Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Q3 2021 Earnings Presentation
52 slides from Kghm Polska Miedz's earnings presentation, Nov 17, 2021
Slide 1: Results of the KGHM Group for Q3 and the first 9 months of 2021
Results of the KGHM Group for Q3 and the first 9 months of 2021 Lubin, 16-17 November 2021
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: Agenda
Agenda 1. KGHM’s commitments 2. Key issues 3. Production results of towards the environment and execution of main targets the KGHM Group by segment and climate 4. Financial results 5. Advancement of 6. Supporting slides – of the KGHM Group development initiatives KGHM Polska Miedź S.A. 3
Slide 4: KGHM awarded
KGHM awarded For effective advancement of its strategy, management and excellent financial results AMBER OF THE POLISH ECONOMY 2021 THE BEST OF THE BEST – THE BEST ANNUAL REPORT 2020 COMPANY OF THE MARCIN CHLUDZIŃSKI ECONOMIC AWARD BY YEAR IN CENTRAL- MOST VALUABLE CEO THE PRESIDENT OF GLOBEE EASTER
Slide 5: Sustainable development – commitments of KGHM Polska Miedź S.A.
Sustainable development – commitments of KGHM Polska Miedź S.A. CLIMATE POLICY ENVIRONMENTAL POLICY ANTI-CORRUPTION POLICY 5
Slide 6: Climate Policy of KGHM Polska Miedź S.A.
Climate Policy of KGHM Polska Miedź S.A. Testifying to KGHM’s ambitions of reducing its environmental footprint „To use our resources efficiently to become a leader KGHM’s Vision in sustainable development” Strategy of the Climate Policy of KGHM Polska Miedź S.A.1) KGHM Group A directional document
Slide 7: Climate Policy of KGHM Polska Miedź S.A.
Climate Policy of KGHM Polska Miedź S.A. The Policy will serve as direct support in advancing the the UN’s Sustainable Development goals. Moreover, its implementation ensures the achievement of measurable benefits for the Company and its stakeholders. The Climate Policy of KGHM Polska Miedź S.A. wil
Slide 8: Identifying opportunities in the transformation to a low-emissions economy
Identifying opportunities in the transformation to a low-emissions economy The Climate Policy is a major step in seizing opportunities, and consequently in building long-term value Supports the transformation into Lower emissions is a competitive advantage a low-emissions economy KGHM, as one of t
Slide 9: Inventorisation of key sources of greenhouse gas emissions
Inventorisation of key sources of greenhouse gas emissions At the Parent Entity level, to be followed in turn at the Group level Scope 1 and 2 greenhouse emissions of KGHM Polska Miedź S.A. [mn t CO2e] Annual CO2-equivalent emissions by KGHM Polska Miedź S.A. are around 3.3 mn tonnes, of which aroun
Slide 10: Climate neutrality by 2050
Climate neutrality by 2050 Achieving climate neutrality by 2050 is the overriding goal of the Climate Policy of KGHM Polska Miedź S.A. Intermediate goal – the reduction of total Scope 1 and Scope 2 emissions by 2030 by 30%1) emissions climate 2030 reduction by 30% 2050 neutrality versus the base yea
Slide 11: Implementation of the Climate Policy of KGHM Polska Miedź S.A.
Implementation of the Climate Policy of KGHM Polska Miedź S.A. Adapting the Company’s operating principles to achieve its GHG emissions reduction targets and reflecting climate risk in its internal processes Organisational and process changes in KGHM Polska Miedź S.A. KGHM wants to be a major partic
Slide 12: Strengthening corporate governance
Strengthening corporate governance New Policies in KGHM Polska Miedź S.A. ISO 14001 ISO 37001 Environmental Policy Anti-Corruption Policy Based on continual improvement under the PN-EN ISO 14001 The senior leadership of the KGHM Group hereby declares its Environmental Management System, the Company’
Slide 13: Key issues and execution of main targets
Key issues and execution of main targets
Slide 14: Summation of the first 9 months of 2021 in the KGHM Group
Summation of the first 9 months of 2021 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to 9M 2020 Macroeconomic environment1) Production and C1 cost Financial results +57% +10% +31% Copper price Copper production Increase in revenues to +34% +1% PLN 21 735 mn Silver p
Slide 15: Macroeconomic environment: commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in Q3 2021 stabilised above 9 000 USD/t, with an Cena Price(USD/t) (USD/t) Avg. Śr. ann.(USD/t) roczna (USD/t) [PLN/t] average price of 9 371 USD/t. The Chinese economy remained [USD/t] Cena Price(PLN/t) (PLN/t) Avg. Śr. ann.(
Slide 16: Precious metals prices in Q3 2021
Precious metals prices in Q3 2021 The third quarter of 2021 saw a bearish trend in silver and consolidation of gold prices below 1 800 USD/oz The silver price fell in Q3 2021, approaching 23 USD/oz The drop in investor interest in silver was confirmed by the check on inflows of cash to ETFs Silver(U
Slide 17: Lower inventories in official copper warehouses in Shanghai
Lower inventories in official copper warehouses in Shaghai in Q3 2021 compared to previous years The energy commodities index has risen by nearly 80% since the start of 2021 Inventory movements on the Shanghai market are showing The energy commodities index just in Q3 2021 rose by more marked diverg
Slide 18: Manager sentiment in Q3 2021 returned to relative balance
More than a year after the first wave of COVID-19, manager sentiment in Q3 2021 returned to relative balance The highest PMIs were recorded in the EU, while in Asia they remain at a more muted level Industrial PMI in China for the first time since February 2020 fell below 50 Jan-19 Feb-19 Mar-19
Slide 19: Economic growth forecast of the IMF from October 2021
Economic growth forecast of the IMF from October 2021 Euro Zone Poland Canada 2020: -2.7% 2020: -5.3% 2020: -6.3% 2021F: 5.0% +0.4 %p. 2021F: 5.1% +0.5 %p. 2021F: 5.7% -1.5 %p. 2022F: 5.1% -0.1 %p. 2022F: 4.9% +0.4 %p. 2022F: 4.3% 0.0 %p. World 2020: -3.1% 2021F: 5.9% -0.1 %p. 2022F: 4
Slide 20: Payable copper production by the KGHM Group
Key production indicators 9M 2021 574 Payable copper production +10.1% 9M/9M by the KGHM Group [kt] higher by 10.1% (9M/9M) Payable copper production Payable copper production +31% 9M/9M KGHM Polska Miedź: KGHM Polska Miedź [kt] Sierra Gorda1) [kt] higher production from +6.8% 9M/9M 78 440 60 purc
Slide 21: Key financial indicators
Key financial indicators 9M 2021 Adjusted EBITDA nearly doubled Group adjusted EBITDA2) Group revenues [mn PLN] +31% 9M/9M [mn PLN] for the KGHM Group +75% 9M/9M 21 735 compared to 9M 2020 7 730 16 580 Higher adjusted EBITDA compared to 9M 2020 7 229 (+3 312 mn PLN; +75%), of which by segment: 5 632
Slide 22: The production of miners in Q3 2021
The production of miners in Q3 2021 Copper production by miners, Q3 2021 vs Q3 2020 30% 20% 10% -4% -5% -7% -9% -14% -21% 0% -10% 17% 14% 14% 12% 7% 4% -20% Freeport Rio Tinto KGHM Group KGHM Polska Antofagasta Teck Southern Anglo Codelco BHP Glencore Vale McMoran Miedź S.A. Copper American Copper p
Slide 23: The financial situation of the KGHM Group remains stable and safe
The financial situation of the KGHM Group remains stable and safe 2021 Budget Total unit production cost of electrolytic copper from own concentrate 20.9 20.2 KGHM Polska Miedź S.A.1) [k PLN/t] 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% Investments Capital expenditures 1 401 2 853 of KGHM Pols
Slide 24: Group production and sales in 9M 2021
Group production and sales in 9M 2021 Execution of annual targets 2021 Budget Production Copper in concentrate [kt] 296.1 390.0 KGHM Polska Miedź S.A. Silver in concentrate [t] 977 1 200 Electrolytic copper, total [kt] 440.1 573.0 Electrolytic copper from own concentrate [kt] 286.0 385.0 Metallic si
Slide 25: Production results of the KGHM Group by segment
Production results of the KGHM Group by segment
Slide 26: Metals production
Metals production KGHM Group Payable copper production Silver production [t] [kt] +1% 9M/9M Higher production: 997 +10.1% 9M/9M 1 008 − by KGHM Polska Miedź due to higher production from purchased copper- 9M 2020 9M 2021 bearing materials (higher availability of 574 production lines) 521 78 − by K
Slide 27: Production results
Production results KGHM Polska Miedź S.A. Ore extraction +1.8% 9M/9M Production of copper –0.2% 9M/9M Electrolytic copper +6.8% 9M/9M Metallic silver +0.7% 9M/9M [mn t dry weight] in concentrate [kt] production [kt] production [t] 440 412 22.4 22.8 297 154 296 125 From 47.9 50.3 purchased metal-bear
Slide 28: Production results – Sierra Gorda
Production results Sierra Gorda1) Payable copper production +31% 9M/9M Silver production +17% 9M/9M [kt] [t] 20.0 23.4 The volume of precious 7.6 7.9 metals production 78.4 derived from the content of these 59.9 Q3 2020 Q3 2021 9M 2020 9M 2021 metals in mined ore The increase in TPM production -
Slide 29: Production results – KGHM INTERNATIONAL
Production results KGHM INTERNATIONAL Payable copper production +13% 9M/9M Silver production +39% 9M/9M [kt] [t] 1.65 Higher silver 1.18 0.40 0.47 production by the 55.4 Sudbury Basin due to 49.2 higher silver content Q3 2020 Q3 2021 9M 2020 9M 2021 in ore Higher gold production TPM production -
Slide 30: Financial results of the Group
Financial results of the Group
Slide 31: Group sales revenue
Group sales revenue 9M 2021 Revenues from contracts with customers +31% 9M/9M Revenues from contracts with [mn PLN] customers [mn PLN] 21 735 +7 104 +200 21 735 1 473 16 580 -495 16 580 2 292 -1 489 1 194 2 026 -165 17 970 13 360 Revenues for Change in sales Change in prices Change in Adjustment of
Slide 32: C1 unit cost
C1 unit cost1) KGHM Group C1 – KGHM Polska Miedź S.A. C1 – Group [USD/lb] [USD/lb] +40% 9M/9M incl. the 2.24 minerals extraction 1.60 tax +22% 9M/9M 0.43 1.04 The increase in C1 cost in KGHM Polska 1.16 1.20 Miedź by 40% versus 9M 2020 was mainly 1.94 due to an increase in the minerals extraction
Slide 33: Operating results
Operating results KGHM Group Change in adjusted EBITDA1) Adjusted EBITDA [mn PLN] [mn PLN] +75% 9M/9M 7 730 228 +1 458 +36 7 730 +1 220 +598 2 237 4 418 4 418 192 993 779 395 9M 2020 KGHM Polska KGHM Sierra Other 9M 2021 Miedź S.A. INTERNATIONAL Gorda 4 272 3 052 Higher adjusted EBITDA versus 9M 202
Slide 34: Financial results
Financial results KGHM Group 4 762 Profit for the period +306% 9M/9M consolidated net profit for 9M 2021 [mn PLN] Higher KGHM Group profit by PLN 3 590 million (more than 4-times) mainly due to a higher net result on sales as well as a higher result [mn PLN] on the involvement in joint ventures and
Slide 35: Cash flow
Cash flow KGHM Group [mn PLN] +6 105 - 569 -2 869 2 522 -2 603 568 -1 600 - 80 - 300 - 38 Cash as at Profit/loss before Income tax paid Change in working Acquisition of Proceeds Interest paid Dividend payout Other Cash as at 01-01-2021 income tax capital property, plant from/repayments 30-09-2021 an
Slide 36: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q3 2021 Net debt / adjusted EBITDA -57% compared to 30 September 2020 Main factors affecting net debt in 9M 2021 1.4 0.9 0.8 Increases in debt 0.7 0.8 Cash expenditures on property, plant and equipment 30-09-2020 31-12-2020 31-03-2021 30-06-2021 30-09-20
Slide 37: Advancement of development initiatives
Advancement of development initiatives
Slide 38: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in 9M 2021 CAPEX execution in 9M 2021 by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development Leasing IFRS 16 Development - uncompleted 1 540 29% 1 105 *ex
Slide 39: Role of Deep Głogów (GGP) in maintaining output in Poland
Role of Deep Głogów (GGP) in maintaining output in Poland Deposit access program in KGHM’s concessioned areas Share of production from GGP in total production Active concessions and in Poland future potential Ore extraction dry weight from GGP [kt] +35% 2 982 -6% Q3/Q2 2 211 1 030 970 13.7% 12.4% 9.
Slide 40: CAPEX execution in key projects
CAPEX execution in key projects Outfitting of Other Other the mines; incl. Construction of the Deposit Deposit SW-4 shaft Tailings Division: Access exploration & Replacement assessment modernisation of machine Program (28%) Deposit Access of pumphouse Maintaining Program and piping park in mines CO2
Slide 41: Energy Development Program, including RES
Energy Development Program, including RES Actions in 2021 Development of renewable energy sources Optimisation and development of conventional sources Further permits are in the process of being obtained and design work is underway on the Obora Sandpit and HM Głogów I-III1) PV sites An analysis
Slide 42: By 2030 the increase in share of RES will lead to a substantial reduction in CO2 emissions
By 2030 the increase in share of RES will lead to a substantial reduction in CO2 emissions Share of power source in supplies to KGHM Polska Miedź S.A. 2019: 2020: 2019 Own generation sources covered 22.42% of KGHM’s 3 TWh total power needs in 2020 Natural Market Own source Gas (almost 1.5% more than
Slide 43: Key elements of the Strategy advanced in 9M 2021
Key elements of the Strategy advanced in 9M 2021 Stable copper production from domestic assets (accrued production for Production 9M 2021: mined production 335.8 kt; metallurgical production 440.1 kt) Stable copper production from international assets (accrued production Continuation of digita
Slide 44: Supporting slides
Supporting slides KGHM Polska Miedź S.A. 44
Slide 45: Sales revenue
Sales revenue KGHM Polska Miedź S.A. Revenues from contracts with customers Higher revenues from contracts with customers by [mn PLN] PLN 4 610 million (+35%) in 9M 2021 compared to +35% 9M/9M the corresponding period of 2020, mainly due to 17 970 1 111 higher metals prices (copper +57%, silver +34%
Slide 46: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. (of which PLN 3 908 mn Expenses by nature Expenses by nature higher due to purchased metal- bearing materials and the [mn PLN] 16 233 by PLN 5 143 million, 9M/9M minerals extraction tax) +46% 9M/9M Minerals extraction 2 539 tax recognised in expenses by natu
Slide 47: EBITDA and profit for the period
EBITDA and profit for the period KGHM Polska Miedź S.A. Adjusted EBITDA Profit for the period [mn PLN] [mn PLN] Higher EBITDA, +40% 9M/9M +320% 9M/9M higher net profit 4 852 4 272 EBITDA higher by 40% versus 3 052 9M 2020 1 156 Higher net profit by PLN 3 696 mn (+320%) than in 9M 2020, mainly du
Slide 48: Profit for the period
Profit for the period KGHM Polska Miedź S.A. Profit for the period [mn PLN] +320% 9M/9M +4 610 +130 +583 +79 4 852 +1 141 -547 +1 216 1 156 -3 516 Profit for Increase in Increase in cost of Fair value Impairment losses Impairment losses Impact of exchange Increase in income Other Profit for 9M 2020
Slide 49: Market risk management
Market risk management Hedged position on the copper and silver markets (as at 30 September 2021) Copper Hedged position – open as at 30 Sept 2021 At the end of the third quarter of 2021 the [kt] Parent Entity recorded a result on derivatives* 69 54 and hedges in the amount of -PLN 1 506 million: 46
Slide 50: Market risk management
Market risk management Hedged positions on the currency and interest rate markets (as at 30 September 2021) USD/PLN Hedged position implemented in Q3 2021 In the third quarter of 2021 transactions [mn USD] Hedged position – open as at 30 Sept 2021 were implemented on the forward currency market: − P
Slide 51: Revenues and EBITDA in Q3 2021
Revenues and EBITDA in Q3 2021 KGHM Group Revenues from contracts with Adjusted EBITDA Higher EBITDA of the KGHM customers [mn PLN] [mn PLN] Group by PLN 650 million (q/q) +28% Q3/Q3 +37% Q3/Q3 mainly due to more favourable 7 229 metals prices, broken down by 518 segment as follows: 5 632 885 412 2
Slide 52: Investor Relations Department
Investor Relations Department https://kghm.com/en/investors ir@kghm.com | esg@kghm.com T +48 76 74 78 280 | F +48 76 74 78 205