Boliden Ab · OMXSTO:BOL
Boliden Ab — Q4 2019 Earnings Presentation
44 slides from Boliden Ab's earnings presentation, Feb 13, 2020
Slide 1: Q4 Interim Report 2019
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Q4 Interim Report 2019 Mikael Staffas, President & CEO Håkan Gabrielsson, CFO
Slide 2: Q4 2019 – Expansion projects ahead of schedule
Q4 2019 – Expansion projects ahead of schedule MSEK Group EBIT ex PIR* R4Q, • Revenues 12,972 (12,543) MSEK 3,400 MSEK 10,200 3,200 9,600 • EBIT excl. PIR* 1,721 (2,001) MSEK 3,000 2,800 9,000 8,400 2,600 7,800 • Projects ahead of plan 2,400 2,200 7,200 6,600 ‒ Capex 3,255 (2,013) MSEK 2,000 6,000 1
Slide 3: Full year 2019 vs. 2018
Full year 2019 vs. 2018 • Revenues 49,936 (52,454) MSEK MSEK 10 000 EBIT excl PIR* 9 000 • EBIT excl. PIR* 7,035 (9,074) MSEK 8 000 7 000 • Free cash flow 635 (5,692) MSEK 6 000 5 000 ‒ Investments 8,826 (6,140) MSEK 4 000 3 000 • Lower volumes 2 000 ‒ Lower grades 1 000 ‒ Maintenance Smelters -745
Slide 4: Investments ahead of plan in 2019
Investments ahead of plan in 2019 • Expansion projects ahead of plan 0.5 BSEK ‒ Kevitsa 9.5 Mtonnes ‒ Investments in mill, trucks, loader, Pushback 4 ahead of plan ‒ Ramp up started ‒ Full production Q2 2020 ‒ Boliden Area – Renström mine, 50 ktonnes production increase ‒ Development Capex ahead of
Slide 5: Market Q4 2019 – Key highlights
Market Q4 2019 – Key highlights Macro • Weak development in global manufacturing industry Metals • Zn demand flat • Cu and Ni demand slightly up • Increased demand for precious metals • Low inventories Concentrate markets • Surplus in Zn and Ni ‒ More complex qualities • Balanced in Cu Kokkola, zinc
Slide 6: Base metal prices
Base metal prices Copper price, USD/tonne Copper KTonnes Zinc price, USD/tonne Zinc KTonnes 12 000 2 400 4 000 2 400 3 500 2 100 10 000 2 000 3 000 1 800 8 000 1 600 2 500 1 500 2 000 1 200 6 000 1 200 1 500 900 4 000 800 1 000 600 2 000 400 500 300 0 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 7: Gold, silver and lead prices
Gold, silver and lead prices Gold Lead Gold price, USD/troy oz. Lead price, USD/tonne 2 000 4 000 1 800 3 500 1 600 3 000 1 400 2 500 1 200 1 000 2 000 800 1 500 600 1 000 400 500 200 0 0 2008200920102011201220132014201520162017201820192020 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 8: Zn, Cu and Ni prices relative to cash cost
Zn, Cu and Ni prices relative to cash cost Zinc Copper Nickel USD/tonne USD/tonne USD/tonne 5 000 11 000 35 000 4 500 10 000 30 000 4 000 9 000 3 500 8 000 25 000 7 000 3 000 6 000 20 000 2 500 5 000 2 000 15 000 4 000 1 500 10 000 3 000 1 000 2 000 5 000 500 1 000 0 0 0 Zn average price Zn max pric
Slide 9: 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 2014 Boliden Group Q4 2019 9 2020-02-13
Slide 10: Mines
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Mines Kevitsa, northern lights over the open pit Boliden Group Q4 2019 10 2020-02-13
Slide 11: Mines Q4 2019
Mines Q4 2019 Mines EBIT R4Q, • EBIT 890 (1,384) MSEK MSEK MSEK 2 600 7 800 ‒ 1,091 MSEK in Q3 2019 2 400 7 200 2 200 6 600 2 000 6 000 • Better Prices & Terms 1 800 5 400 1 600 4 800 ‒ Stronger USD 1 400 4 200 ‒ Higher metal prices 1 200 3 600 ‒ Negative effect from higher 1 000 3 000 800 2 400 Zn
Slide 12: Full year 2019 vs. 2018
Full year 2019 vs. 2018 Aitik MSEK EBIT • Milled production 40.6 (38.5) Mtonnes 7 000 6451 • Cu 0.25% (0.29) 6 000 5 000 Boliden Area 4484 • Milled production 2.0 (1.9) Mtonnes 4 000 • Maurliden depletion 3 000 2494 2149 22252079 Garpenberg 2 000 • Milled production 2.9 (2.6) Mtonnes 1 000 756 738 9
Slide 13: Mines – Q4 Production
Mines – Q4 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 0,8 40 6 18 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 Q
Slide 14: Mineral Reserves & Mineral Resources end of 2019
Mineral Reserves & Mineral Resources end of 2019 • Exploration cost 570 (520) MSEK ‒ Drift in Tara 50% completed ‒ Drift in Rävliden 100% completed • Long life-of-mine in Aitik, Kevitsa and Garpenberg ‒ Limited new reserves ‒ Aitik remaining life-of-mine Cu reserve grade 0.23% (0.22) • Increased inf
Slide 15: Aitik and Boliden Area
Aitik and Boliden Area Mtonnes Aitik Ktonnes Boliden Area 2 500 20 000 2 000 15 000 1 500 10 000 1 000 500 5 000 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Proven/Probable Reserve Measured/Indicated Resource Proven/Probable Reser
Slide 16: Garpenberg and Kevitsa
Garpenberg and Kevitsa Mtonnes Garpenberg Mtonnes Kevitsa 90 80 70 60 50 40 30 20 10 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Proven/Probable Reserve Measured/Indicated Resource Inferred Resource Production*10 • Slightly reduced reserves • Increased reserves ‒ Zn grade: 3.1% (3.1) ‒
Slide 17: Kylylahti and Tara
Kylylahti and Tara Kylylahti Tara Ktonnes Ktonnes 30 000 9 000 8 000 25 000 7 000 6 000 20 000 5 000 15 000 4 000 3 000 10 000 2 000 5 000 1 000 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Proven/Probable Reserve Measured/Indicated Resource Prov
Slide 18: Smelters
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Smelters Rönnskär, Cu-production Boliden Group Q4 2019 18 2020-02-13
Slide 19: Smelters Q4 2019
Smelters Q4 2019 Smelters EBIT excl. PIR* • EBIT excl. PIR* 759 (575) MSEK R4Q, MSEK MSEK 1 300 3 900 ‒ 716 MSEK in Q3 2019 1 200 3 600 1 100 3 300 • Better Prices & Terms 1 000 3 000 900 2 700 ‒ Higher Zn TC´s 800 2 400 ‒ Stronger USD 700 2 100 ‒ Higher metal prices 600 1 800 500 1 500 400 1 200 •
Slide 20: Full year 2019 vs. 2018
Full year 2019 vs. 2018 Rönnskär • Cu production 201 (225) ktonnes MSEK EBIT ex PIR • Major planned maintenance stop 3 000 2716 2 500 2435 Harjavalta • Cu production 120 (139) ktonnes • Ni in matte production 2 000 26 (31) ktonnes • Major planned maintenance stop 1 500 • Ni leakage 1043 1 000 912 75
Slide 21: Smelters – Q4 Production
Smelters – Q4 Production Copper Metal Total feed, production, Ktonnes Ktonnes 400 120 • Cu production 87 (93) ktonnes 350 105 ‒ Strike in Harjavalta 300 90 ‒ Maintenance stop in Rönnskär 250 75 ‒ Some production disturbances 200 60 150 45 100 30 50 15 • Zn production 122 (120) ktonnes 0 Q1 Q2 Q3 Q4
Slide 22: Financials
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Financials Boliden, Suppliers Summit on November 19th in Stockholm, theme Sustainable business and Sustainable relations Boliden Group Q4 2019 22 2020-02-13
Slide 23: 2019 Q4 – Earnings
2019 Q4 – Earnings MSEK Q4 2019 Q4 2018 Q3 2019 Revenues 12,972 12,543 11,170 EBITDA 3,053 3,314 3,149 EBIT 1,744 2,093 1,873 EBIT excl. PIR 1,721 2,001 1,635 Investments 3,255 2,013 1,834 Free cash flow 822 1,721 -653 Earnings per share, SEK 4.97 6.82 5.14 Net debt / equity ratio, % 13 5 15 Boliden
Slide 24: EBIT excl. PIR by segment
EBIT excl. PIR by segment MSEK Q4 2019 Q4 2018 Q3 2019 Mines 890 1,384 1,091 Smelters 759 575 716 Other / eliminations 71 42 -173 The Group 1,721 2,001 1,635 Boliden Group Q4 2019 24 2020-02-13
Slide 25: Q4 2019 vs. Q4 2018
Q4 2019 vs. Q4 2018 Group EBIT excl. PIR MSEK Q4 2019 1,721 Q4 2018 2,001 Lower grades in Aitik, Garpenberg and Deviation -280 Kevitsa Specification of deviation Volumes -656 Stronger USD Prices and terms (incl. hedges) 554 Higher Zn TC’s Whereof currency 391 Costs -48 Inflation, maintenance and inc
Slide 26: Q4 2019 vs. Q3 2019
Q4 2019 vs. Q3 2019 Group EBIT excl. PIR MSEK Q4 2019 1,721 Q3 2019 1,635 Deviation 86 Specification of deviation Less maintenance in Smelters offset by • Lower grades Volumes 117 • Strikes • Some disturbances Prices and terms (incl. hedges) 131 Whereof currency 36 Most metal prices slightly up Cost
Slide 27: Full year financial development
Full year financial development MSEK FY 2019 FY 2018 Revenues 49,936 52,454 EBITDA 12,688 13,933 EBIT 7,597 9,004 EBIT excl. PIR 7,035 9,074 Investments 8,826 6,140 Free cash flow 635 5,692 Earnings per share, SEK 21.15 26.32 Net debt / equity ratio, % 13 5 Boliden Group Q4 2019 27 2020-02-13
Slide 28: EBIT excl. PIR 2019 vs. 2018
2019 vs. 2018 EBIT excl. PIR MSEK FY 2019 7,035 FY 2018 9,074 Deviation -2,039 Lower grades Specification of deviation Maintenance in Smelters Volume -2,583 Stronger USD, higher Ag and Au prices Prices and terms (incl. hedges) 1,341 Lower Cu and Zn prices Whereof currency effects 1,987 Costs -576 Ma
Slide 29: Cash flow
Cash flow MSEK Q4 2019 Q4 2018 Q3 2019 EBITDA excl. PIR 3,030 3,222 2,911 Cash flow from working capital 1,685 686 -1,267 Inventories -425 122 -1,652 Operating receivables -111 149 417 Operating liabilities 2,229 413 -75 Other -8 2 43 Cash flow from investments -3,269 -1,957 -1,821 Financial items -
Slide 30: Balance sheet
Balance sheet SEK bn 31 Dec 31 Dec 30 Sep Group Net debt & Gearing 2019 2018 2019 MSEK % Total Assets 66.4 58.7 63.5 12 000 45 Capital employed 49.8 44.4 50.0 10 000 40 35 Equity 41.4 39.0 40.6 8 000 30 25 Net debt 5.5 2.0 6.3 6 000 20 Net debt / equity ratio, %* 13 5 15 4 000 15 10 Loan duration, y
Slide 31: Dividend proposal for the full year 2019
Dividend proposal for the full year 2019 • Proposed ordinary dividend 7.00 (8.75) SEK, 33% of net profit • Total distribution to shareholders ‒ 7.00 (13.00) SEK per share ‒ 1,915 (3,556) MSEK • Financial targets ‒ Dividend shall correspond to one third of net profit ‒ The sum of the net debt and the
Slide 32: Going forward
Going forward • Aitik ‒ 2020: Cu 0.25% ‒ Lower Q4 2019 grades will carry through to Q1 2020 ‒ 2020: 45 Mtonnes milled volume • Garpenberg ‒ 2020: Zn 3.7%, Ag 100 g/tonne ‒ 2020: 3 Mtonnes milled volume • Kevitsa Boliden co-worker ‒ 2020: Slightly below reserve grade, low in Q1 ‒ 2020: 9.5 Mtonnes mi
Slide 33: 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 34: Appendix
• Click to edit Master text styles ‒ Second level ‒ Third level ‒ Fourth level ‒ Fifth level Appendix Boliden, reindeer warning system Boliden Group Q4 2019 34 2020-02-13
Slide 35: Boliden, key attractions
Boliden, key attractions • Well positioned in the metal market ‒ Mines and Smelters ‒ Base metals and precious metals ‒ High productivity/stable production ‒ High corporate responsibility ‒ Long life of key mines ‒ Stable jurisdictions • Strong balance sheet • Several growth opportunities ‒ Smelters
Slide 36: Metal prices and USD/SEK since Jan 1, 2018
Metal prices and USD/SEK since Jan 1, 2018 Source: Refinitiv Datastream, prices up to and including February 10, 2020 Boliden Group Q4 2019 36 2020-02-13
Slide 37: Zinc TC and premia
Zinc TC and premia US$/t Metal premia concentrate Treatment charges US$/t metal 250 350 300 200 250 150 200 150 100 100 50 50 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Contract TC - realized Ex-Works Premia Europe Spot TC imported concentrate to China Delivered Premia US Midwest Contract
Slide 38: Copper TC and premia
Copper TC and premia US$/t Treatment charges US$/t metal Metal premia concentrate 120 60 100 50 80 40 60 30 40 20 20 10 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Contract TC - annual and mid-year benchmark CIF Average European premia Standard grade spot TC Contract benchmark according to
Slide 39: Economic development
Economic development Industrial production, year on year % 10 8 6 4 2 0 -2 Boliden estimate in December for EU28 -4 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 2016 2017 2018 2019 EU28 USA China World Source: Refinitiv Datastream, world data calcul
Slide 40: Construction – largest segment for Cu and Zn
Construction – largest segment for Cu and Zn Activity, year on year % 25 20 15 10 5 0 -5 -10 -15 J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND J FMAMJ J A S OND 2015 2016 2017 2018 2019 EU USA China Source: Refinitiv Datastream China: CH INVESTMENT: FIXED ASSETS - URBAN ARE
Slide 41: Automotive
Automotive Car production, year on year, quarterly data 40% 30% 20% 10% 0% -10% -20% -30% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 China Germany Japan Source: Refinitiv Datastream, Boliden estimates Boliden Group Q4 2019 41 2020-02-13
Slide 42: Market balance – Zinc and Copper
Market balance – Zinc and Copper Zinc – global market Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Metals demand, kt 3 410 3 516 3 467 3 479 3 376 3 477 3 481 3 481 Year on year change -0,7% -0,4% 0,1% -0,4% -1,0% -1,1% 0,4% 0,1% Smelter production, kt 3 325 3 360 3 152 3 463 3 212 3 359 3 412 3 544 Year
Slide 43: Market balance – Nickel and Lead
Market balance – Nickel and Lead Nickel - global market Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Metals demand, kt 566 577 573 578 581 595 602 582 Year on year change 10,2% 13,6% 3,8% 0,5% 2,7% 3,2% 5,0% 0,6% Smelter production, kt 516 538 535 562 557 577 597 606 Year on year change 5,7% 11,0% 1,1% 3
Slide 44: Market balance – Nickel and Lead
Market balance – Nickel and Lead Nickel - global market Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Metals demand, kt 575 564 577 572 576 579 603 595 Year on year change 9,7% 9,8% 13,6% 3,7% 0,1% 2,5% 4,6% 3,9% Smelter production, kt 543 516 538 535 563 558 588 602 Year on year change 5,9% 6,1% 11,6% 1,