Interim Report. January June Lennart Evrell. Johan Fant. Bildplatshållare. President & CEO CFO

Transkript

1 Interim Report January June 29 Bildplatshållare Lennart Evrell President & CEO Johan Fant CFO

2 2 Second quarter 29 Market Global Copper and Zinc demand down 13-16%* Up 5-7% from Q19 Chinese demand continued to push prices higher Copper and Zinc prices significantly higher Stronger SEK Zinc mines and smelting restarts Copper smelting production restrained Sulphuric acid - weak demand and low prices * Source: CRU data

3 3 Second Quarter 29 Boliden Revenues MSEK 6,439 (7,885) Operating profit MSEK 654 (46) Operating profit excl. process inventory MSEK 477 (531) Stable mine production Reduced smelter production continued in Q2 Aitik expansion on plan Improved cash flow MSEK -97 Gearing 55% (52% in Q1)

4 4 Group EBIT development 2 5 MSEK EBIT EBIT excl. Process inventory Q1-7 Q2-7 Q3-7 Q4-7 Q1-8 Q2-8 Q3-8 Q4-8 Q1-9 Q2-9

5 5 The Market

6 Q29 5 Global metals demand up from Q19 Global 15 Europe USA Thousand tonnes Q16 Q26 Q36 Q46 Q17 Q27 Q37 Q47 Q18 Q28 Q38 Q48 Q19 Refined copper consumption Zinc demand Refined copper consumption Zinc demand Source: CRU Source: CRU Thousand tonnes Q16 Q26 Q36 Q46 Q17 Q27 Q37 Q47 Q18 Q28 Q38 Q48 Q19 Q China Refined copper consumption Zinc demand Source: CRU Thousand tonnes Thousand tonnes Q16 Q26 Q36 Q46 Q17 Q27 Q37 Q47 Q18 Q16 Q28 Q26 Q38 Q36 Q48 Q46 Q19 Q17 Q29 Q27 Q37 Q47 Q18 Q28 Q38 Q48 Q19 Q29 Refined copper consumption Zinc demand Source: CRU 6

7 7 China's importance has grown further Refined Copper - Global demand Q29 USA 1% Refined Copper - Global demand 28 USA 11% Other 34% Europe 22% Other 35% Europe 26% China 34% China 28% 34% of global demand in Q2 9 28% of global demand in 28

8 8 Zinc prices significantly higher from Q1 Tonnes USD/Tonne Quarterly average Zinc price (LME average) USD/t Q2-9 vs period Q2 8 2,115-3% Q3 8 1,773-17% Q4 8 1, % Q1 9 1, % Q2 9 1, Recent increases has pushed zinc price above level where more than 9% of producers are cash positive (9th percentile at 1,296 USD/tonne)

9 9 Zinc TCs up and premiums flat USD/ t of concentrate Zinc treatment charge (TC) Indicative Asian benchmark level of (3) according to CRU USD per tonne of metal Zinc metal price premium Source: Brook Hunt, CRU Realised TC (including price participation) Spot TC - Asia Source: CRU, Brook Hunt US Midwest Delivered Europe ex-works Far East (Western) Concentrate availability higher spot TC higher Realised TC up as the zinc price increased Premiums flat to slightly down, sales to industrial buyers low

10 1 Tonnes Copper sharp price increases USD/Tonne Copper price (LME average) USD/t Q2-9 vs period 7 7 Q2 8 8,448-45% 6 6 Q3 8 7,693-39% 5 4 Quarterly average 5 4 Q4 8 3, % Q1 9 3, % 3 3 Q2 9 4, Boliden copper metal price hedge contracts Coverage rate approx. 65%* USD prices 5,864 and 7,66 in 29 and 21 respectively Copper price well above level where more than 9% of producers are cash positive * Of outstanding metal positions in based on forecasted production

11 11 Copper - More pressure on spot TC/RC USD/t of concentrate 12 Copper treatment charge USD per tonne of metal 2 Copper metal price premium Benchmark TC spot China buying terms TC benchmark Spot Copper premium CIF W. Europe Benchmark CIF Europe Source: CRU Source: CRU, Brook Hunt Strong demand for concentrate in China put pressure on TC/RC Scrap market remained tight Mine production unchanged - Smelter output reduced

12 12 USD/SEK EURO/SEK SEK has recently strengthened vs USD from a weak position EUR/SEK EURO/SEK yearly average USD/SEK USD/SEK yearly average USD/SEK (quarterly average) USD/SEK Q2-9 vs period Q % Q % Q % Q % Q USD/SEK hedge contracts (forward) 29 and 21

13 13 Business area Smelters

14 14 Smelters EBIT-development Reduced production Lower cost Operating result driven by prices, premiums and TC/RC improvement Higher demand towards end of quarter Few signs of fundamental improvement in demand MSEK EBIT EBIT excl. inventory revaluation -2 Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q

15 15 Zinc metal production down 2% Comments on Q2 9 versus Q1 9 Odda Metal production up 1% Efficient production with reduced capacity Kokkola Metal production down 3% Reduced production, somewhat higher production towards end of period Zinc feed, tonnes Zinc metal prod, tonnes Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Zinc feed, total Zinc metal production

16 16 Copper Smelters production down 5 % Comments on Q2 9 versus Q1 9 Rönnskär Cathode production down 8% Maintenance stop in Q2 Harjavalta Cathode production up 1% Production in line with Q1 Bergsöe (lead) Lead alloys up 6 % Copper feed, tonnes Copper cathode prod, tonnes Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Copper feed, total Copper cathode production

17 17 Business area Mines

18 18 Mines EBIT-development Higher prices main contributor to increased operating result Reduced cost Stable production All units show positive results MSEK EBIT Q1 7 Q2 7 Q3 7 Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9

19 19 Mines zinc production increased Comments on Q2 9 versus Q1 9 Tara Higher milled production, metal content +16% Garpenberg Production levels just over Q1 9 Boliden area Metal content -16%, lower grades and milled production Milled ore, ktonnes Zinc metal content, tonnes Q2 28 Q3 28 Q4-8 Q1 29 Q2 29 Milled ore Zinc metal content

20 2 Mines copper production rebound Comments on Q2 29 versus Q1 29 Aitik Milled production down due to lower grainability Metal content +6%, higher grades compensate Boliden area Milled production lower but higher grades compensate. Metal content in line with Q Milled ore, ktonnes Copper metal content, tonnes Q2 28 Q3 28 Q4-8 Q1 29 Q2 29 Milled ore (Aitik) Copper metal content

21 21 Aitik expansion Project according to plan Learn more: Boliden Capital markets day in Aitik 1st of September through the 2nd Program to follow Aitik bild

22 22 Financials

23 23 Financial summary MSEK Q2 9 Q2 8 YTD 9 YTD 8 Revenues 6,439 7,885 12,318 17,187 Operating profit (EBIT) ,442 1,637 EBIT margin, % Free cash flow ,98 1,488 (before financing activities) Earnings per share, SEK Gearing 55% 39%

24 24 Group EBIT Q2 9 versus Q2 8 and Q1 9 MSEK Q2 29 Q2 28 Q1 29 EBIT Process Inventory revaluation EBIT excl Process Inventory Q2 vs Q2 28 Q2 vs Q1 29 Deviation Specification of deviations: Volume Costs 25 7 Prices & Terms Metal prices and terms Metal- Currency hedge TC/RC terms Premiums Definitive pricing (MAMA) 1-7 Currency effects whereof translation effects 23 1 Others Deviation

25 25 Group EBIT YTD 29 versus YTD 28 MSEK EBIT Process Inventory revaluation EBIT excl Process Inventory Deviation -711 Specification of deviations: Volume -97 Costs 233 Prices & Terms Metal prices and terms Metal- Currency hedge 666 TC/RC terms -9 Premiums -36 Definitive pricing (MAMA) 11 Currency effects 1 11 whereof translation effects 91 Others -23 Deviation -711

26 26 EBIT per Business Area MSEK Q2 9 Q1 9 Smelters Mines Other Group Smelters excl process inventory

27 27 Operating costs impacted by weaker SEK Change in operating costs, local currencies YTD 29 vs. YTD 28 Energy -3% Share of total operating costs Depreciation & other; 12% Energy; 18% Consumables -1% Personnel -3% Transports +2% External services -15% Depreciation & other +2% Exte r nal services; 17% Transport costs; 6% Consumables; 18% Total operating cost In local currency Total operating cost In SEK -4% +2% Personnel expenses; 3% Total MSEK 5,195

28 28 Cash flow MSEK Q2 9 Q2 8 YTD 9 YTD 8 Op profit before depreciation (EBITDA)* 1, ,225 2,345 Cash flow from changes in working capital* 371 1,72-1,374 1,285 Capital expenditure 1,546 1,316 2,565 1,934 Free cash flow (before financing activities) ,98 1,488 Net debt 8,544 5,137 * Includes valuation of process inventory Inventory value decreased by 382 MSEK from Q1 29 Aitik 36 capital expenditure of 1,15 MSEK in Q2 29 Process inventory re-valuation included in EBITDA and working capital

29 29 Capital structure on June 3 29 SEK bn Unless otherwise stated 3 June 29 3 June 28 Balance sheet turnover Gearing Capital employed % 52% 55% Shareholders equity % Net debt % 39% 37% 39% Gearing, % % Equity/assets ratio, % % Average maturity in years % Average interest rate, % Interest duration, years 2,2,2 Liquidity reserves % Q2 28 Q3 28 Q4 28 Q1 29 Q Shareholders equity includes the value of outstanding hedge contracts 2. Defined as unutilised credit lines and cash less outstanding commercial papers

30 3 Sensitivity analysis on June 3 29 Change in metal prices, +1% EBIT effect, SEK m Change in USD, +1% EBIT effect, SEK m Change in TC/RC, +1% EBIT effect, SEK m Zinc 42 USD/SEK 69 TC Zn 5 Copper 295 EUR/USD 345 TC/RC Cu 55 Lead 85 USD/NOK 85 TC Pb -1 Gold 95 Silver 75 Estimate of the 12-month effect on Group EBIT on June 3 29, based on planned production volumes. Effects of hedging, contracted TC/RC or stock exposures are not taken into account.

31 31 To summarize Q2 29 Market End-user segments remained very weak in Europe Chinese demand continued to push prices higher Sulphuric acid - still major negative impact on copper production Boliden EBIT excluding inventory revaluation continued to increase Cash flow improved Stable production and results from Mines Smelters still at reduced production through Q2 Operating costs lower but impacted by weak SEK

32 32 Going forward Zinc smelters to increase production Maintenance shut downs in Q3 approx MSEK on EBIT Long term energy contract in Norway Increased energy cost stability Spot energy prices currently lower than contracted prices Normalised exploration activities Final stage of Aitik expansion

33 33 Forward-looking statements Certain statements in this presentation are forward-looking, and the actual outcome could be materially different. Such forward-looking statements are based on Boliden s present plans, estimates, assumptions, projections and expectations and are subject to risks and uncertainties. In addition to the factors explicitly discussed, other could have a material effect on the actual outcome. Such factors include, but are not limited to, general economic or political conditions, fluctuations in exchange rates, interest rates and in metal prices, production disruptions, technological issues, interruptions in supply, actions of courts, regulators, government agencies, competitors, customers, suppliers, employees and other third parties.

34 Boliden produces metals that make modern life work