Sumitomo Metal Mining Co., Ltd. · TSE:5713
Sumitomo Metal Mining — H1 FY2006 Earnings Presentation
31 slides from Sumitomo Metal Mining's earnings presentation, Nov 2, 2006
Slide 1: Fiscal Year 2006 Mid-Term Financial Report Briefing Materials
5713 Fiscal Year 2006 Mid -Term Financial Report Briefing Materials Sumitomo Metal Mining Co., Ltd. November 2, 2006 Fiscal Year 2006 For The Year Ended March 31, 2007 1
Slide 2: Contents
Page No. Contents 3 I. Operating Results (2002-2006 Projection) 5 II. Prices and Exchange Rates 11 III. First-Half Results: FY2006 vs. FY2005 17 IV. Second Half FY2006 vs. First Half FY2006 22 V. Strategic Projects 30 VI. Key Issues 2
Slide 3: I. Operating Results
I. Operating Results (Hundred million yen) 2002 2003 2004 2005 2006 2006 2006 1st Half Projected Mid-Plan Net Sales 3,552 4,021 4,846 6,256 4,605 8500 4,800 Operating Income 166 228 479 828 797 1280 330 Recurring Profit 166 278 545 997 952 1560 350 (Equity Earnings Portion) 34 71 137 217 202 387 NA
Slide 4: I-2. Operating Results
I-2. Operating Results (Operating Income by segment, equity in earnings of affiliated companies) (Hundred million yen) (Hundred million yen) FY06 2002 2003 2004 2005 Projection 1st Half 06 Mineral Resources 27 45 100 171 265 159 Metals 83 126 277 497 847 549 Electronics/Advanced Materials 41 56 73 1
Slide 5: II. Prices, Inventory, and Exchange Rates
II. Prices, Inventory, and Exchange Rates Copper Nickel Gold Zinc Exchange Rates 5
Slide 6: II-1. Copper Prices and Inventory
II-1. Copper Prices and Inventory 2004 1st Half 05 2005 1st Half 06 2006 Projection $/t 3,000 3,574 4,097 7,440 6,720 ¢ /lb 136.1 162.1 185.9 337.5 304.8 6
Slide 7: II-2. Nickel Prices and Inventory
II-2. Nickel Prices and Inventory 2004 1st Half 05 2005 1st Half 06 2006 Projection $/Ib 6.34 7.03 6.63 11.13 9.57 7
Slide 8: II-3. Gold Prices
II-3. Gold Prices 2004 1st Half 05 2005 1st Half 06 2006 Projection $/toz 414.0 433.4 476.6 624.8 612.4 ( /Toz) 800 700 05/07 China Yuan Rounded up 05/08 Hurricane Katrina 600 Iraq Int’l. terrorism concerns US short-term rates to rise Attacks Kuwait Rothschild retires Barrick buys back 1/3 500 Berli
Slide 9: II-4. Zinc Prices and Inventory
II-4. Zinc Prices and Inventory 2004 1st Half 05 2005 1st Half 06 2006 Projection $/toz 1,109.8 1,287.2 1,614.3 3,327.7 3,013.9 (t) (US$/t) 2,000,000 LME 1,750,000 LME Cash Settlement 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0 J an-95 J an-96 J an-97 J an-98 J an-99 J an-00 J an-01 J an
Slide 10: II-5. Currency Markets
II-5. Currency Markets 2004 1st Half 05 2005 1st Half 06 2006 Projection ¥/$ 107.54 109.47 113.32 115.38 112.69 (¥/$) 350 73/02 Shift to floating exchange rate 82/10 300 277.30 85/09 Plaza Accord 250 First Oil Shock 200 87/02 Louvre Accord 01/09 Terrorist Attacks Second Oil Shock 98/08 150 147.64 78
Slide 11: III. Comparison: First Half FY2006 vs. First Half FY2005
III. Comparison: First Half FY2006 vs. First Half FY2005 1. Consolidated Results 2. Recurring Profit 3. Operating Income by Segment 4. Financial Position 5. Cash Flow Position 11
Slide 12: III-1. Consolidated Results
III-1. Consolidated Results (Hundred Million Yen) 1st Half 05 2005 1st Half 06 2006 2006 Projection Mid-Term Plan Net Sales 2,720 6,256 4,605 8500 4,800 Operating Income 293 828 797 1280 330 Recurring Profit 367 997 952 1560 350 Net Income 236 628 614 980 250 Copper (¢/lb) 162.1 185.8 337.5 304.8 90
Slide 13: III-2. Recurring Profit
III-2. Recurring Profit (1 half 2006 vs. 1 half 2005) st st Recurring Profit +58.5 billion yen (952←367) 1. Market factors +46.2 billion yen 1) Increase in non-ferrous metals market +33.4B 2) Impact of Inventory Valuation +11.5B 3) Exchange rate + 3.2B 4) Others -1.9B 2. Effects of mineral resource/
Slide 14: III-3. Operating Income by Segment
III-3. Operating Income by Segment (1 half 2006 vs. 1 half 2005) st st Hundred Million Yen Mineral SMM Gross Margin (unconsolidated) +27 (due to increase in gold price, etc.) Resources Foreign mines, particularly Morenci +78 (due to rise in metals prices; some increase +104 in costs but offset by st
Slide 15: III-4. Financial Position
III-4. Financial Position (Hundred Million Yen) 2004 2005 1st Half 06 Mid-Term Plan 06 Total Assets 5,739 7,726 8,624 5,850 Interest-bearing Debt 1,605 1,909 2,237 1,650 Interest-bearing Debt 28.0 24.7 25.9 30.0 Ratio (%) Equity Ratio (%) 49.5 48.4 48.6 40.0 Debt-Equity Ratio 0.57 0.51 0.52 Inventor
Slide 16: III-5. Cash Flow Position
III-5. Cash Flow Position (Hundred million yen) 2000 Net Income 1500 Variation in inventory assets(-) 1000 Investments/Capital Investments 500 Depreciation Expense 0 Ending Inventory 2002 2003 2004 2005 1st Half 2006 FCF -500 -1000 -1500 (Hundred million yen) 2002 2003 2004 2005 1st Half 2006 2006 P
Slide 17: IV. Forecast for 2nd Half 2006 vs. 1st Half 2006 Results
IV. Forecast for 2nd Half 2006 vs. 1st Half 2006 Results 1. 2nd Half Projected Results 2. Comparison of Recurring Profit 3. Comparison of Operating Income by Segment 4. Price and Other Dependencies 17
Slide 18: IV-1. FY06 Consolidated Earnings Forecast
IV-1. FY06 Consolidated Earnings Forecast Hundred Million Yen 1st Half 06 2nd Half 06 2006 2006 Projection Projection Mid-Term Plan Net Sales 4,605 3,895 8500 4,800 Operating Income 797 483 1280 330 Recurring Profit 952 608 1560 350 Mid-Term Net Income 614 366 980 250 Copper (¢/Ib) 337.5 272.2 304.8
Slide 19: IV-2. Recurring Profit (2nd Half projection vs. 1st Half actual)
IV-2. Recurring Profit (2 Half 06 projection vs. 1 Half 06 actual) nd st Recurring Profit -34.4 billion yen (60.8 95.2) 1. Market factors -30.9 billion yen 1) Impact of inventory valuation -25.1 billion yen Effects of drop in metals prices using first-in-first-out inventory method 2) Price differenc
Slide 20: IV-3. Operating Income by Segment
IV-3. Operating Income by Segment (Projection for 2nd Half 2006 vs. 1st half 2006 actual) Hundred Million Yen Mineral SMM Gross Margin (unconsolidated) -4 resources -53 Worsening of results from foreign mines, particularly Arizona -49 Metals Drop in SMM Gross Profit on Sales (Including Coral Bay/Nic
Slide 21: IV-4. Pricing and Other Dependencies
IV-4. Pricing and other Dependencies (Hundred Million Yen) FY2005 FY2006 Copper +10¢/Ib 21/30 25/35 Nickel +10¢/Ib 6/8 6/8 Gold +30$/toz 8/8 10/10 Exchange +1¥/$ 5/5 5.5/5.5 Rate (Yen lower) Figures shown are for Operating Income/Recurring Profit Gold in 2006 shows some tightening compared to the be
Slide 22: V. Status of Strategic Projects
V. Status of Strategic Projects 1. Copper to 450,000 tons 2. Cerro Verde Copper Mine 3. Coral Bay Nickel Project 4. Goro Nickel Project 5. Pogo Gold Mine Development 6. Copper-Clad Polyimide Film 22
Slide 23: 1. Toyo Smelter & Refinery
1. Toyo Smelter & Refinery (Copper Smelting Plant, Ehime Prefecture) FY 2003 (when this mid-term plan was developed) 300 kt/year capacity, FY2005 365 kt/year capacity Increased capacity during 2006 hiatus (10/30-11/27) 410 kt/year capacity Beyond FY2007, will increase again to 450 kt/year (Total inv
Slide 24: 2. Cerro Verde Copper Mine (Peru)
2. Cerro Verde Copper Mine (Peru) Signed agreement w/Phelps Dodge in March 2005. Sumitomo has 21% interest (of which SMM has 16.8%) Primary sulfide ore development project moving ahead as planned Total Investment USD 850 million (265 million from Japan) Production Volume = 180 kt/year (copper conten
Slide 25: 3. Coral Bay Nickel Project (Philippines)
3. Coral Bay Nickel Project (Philippines) Successfully recovering nickel from ample supplies of low-grade oxidized ore. SMM interest 54%. Total Investment USD180 mil. Capacity 10kt/year April 2005 began commercial production November 2005 achieved designed production 2006 planned product 10kt/year F
Slide 26: 4. Goro Nickel Project (New Caledonia)
4. Goro Nickel Project (New Caledonia) Signed agreement w/Inco in April 2005. Japan side interest 21% (11% for SMM, 10% for Mitsui & Co.) Total Investment USD1.878 bil. Production Capacity approx. 60 kt/year Production Start Oct-Dec 2007 Current Status While strikes locally have affected work somewh
Slide 27: 5. Pogo Gold Mine
5. Pogo Gold Mine (U.S./Alaska/SMM interest 51%) Development Cost USD 378 mil. (including additional filter press) Total estimated gold deposits 152t Start of operations February 2006 Production Volume 12t/year (average during production span) Current Status Currently adding additional tailings filt
Slide 28: Securing Resources
FY05 FY06 Securing Resources Exploration 1.5 B Yen 2.2 B yen Costs Some of our exploration projects Stone Boy (Au) Victor ia J V (Ni-PGM) Solomon (Ni) Andina Belt J V(Cu) Ojos del Salado J V(Cu) Hor se Head(Cu) Fier y Cr eek(Cu) Huckitta J V(Cu) NW QLD J V(Cu) 28
Slide 29: 6. Strengthening copper-clad polyimide film operation
6. Strengthening copper-clad polyimide film operation Inventory adjustments in the market for COF raw materials for large LCD hit at the end of the first half of the fiscal year. Those adjustments in the LCD market have ended, but may continue in parts of the etcher market through the end of the yea
Slide 30: VI. Issues Going Forward
VI. Issues Going Forward Complete FY03 Mid-Term Plan Strategic Projects Increase Production Bring Down Costs Mineral Resources: (Raw Materials) Response to Monopolization Electronics/Advanced Materials: Further promotion of new product development Secure free cash flow 30
Slide 31: Note
Note The materials provided herein are not intended as disclosure under the Securities Law, and no warranty is made as to their completeness or accuracy. Any projections included in these materials are based solely on information available at the time of this briefing, and are subject to change base
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