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Boliden Capital Markets Day 2007 Jan Johansson, President and CEO - PDF document

Jun 19, 2023 •138 likes •1.04k views

Boliden Capital Markets Day 2007 Jan Johansson, President and CEO 2007-06-05 1 Boliden AB Bolidens Production Entities Aitik (Sweden) Rnnskr (Sweden) Boliden g Copper mine g Copper smelter Harjavalta/Pori (Finland) Boliden Area

  1. Boliden Capital Markets Day 2007 Jan Johansson, President and CEO 2007-06-05 1 Boliden AB

  2. Boliden’s Production Entities Aitik (Sweden) Rönnskär (Sweden) Boliden g Copper mine g Copper smelter Harjavalta/Pori (Finland) Boliden Area (Sweden) g Copper smelter g Zinc mines Garpenberg (Sweden) g Zinc mines Kokkola (Finland) Tara (Ireland) g Zinc smelter g Zinc mine Odda (Norway) g Zinc smelter Bergsöe (Sweden) Smelters g Lead smelter Mines Boliden AB 2 2007-06-05

  3. Boliden’s goals • To be Europe’s leading supplier of copper and zinc • To be the world leader in the recycling of electronic scrap • To be one of the world’s most cost-effective metal producers • To generate a return on capital employed exceeding 10 per cent over a business cycle • To achieve a net debt/equity ratio of approximately 40 per cent • To pay a dividend corresponding to approximately one third of the net profit over a business cycle Boliden AB 3 2007-06-05

  4. Integrated value chain – from mining and smelting to metal sales Mines Smelters Sales EXPLORATION MINING RECYCLING SMELTING & MARKET OPERATIONS REFINING & SALES Advantages: � Full process control ensures a high and � Supply reliability consistent quality � One single point of contact for � High guaranteed capacity utilisation customers (Boliden mines/smelters, logistics, � Process and logistics integration customers’ capacity) � Customized products Boliden AB 4 2007-06-05

  5. The Metals Market 2007-06-05 5 Boliden AB

  6. Continued strong demand for zinc and copper Industrial Production Industrial Production 20 20 18 18 16 16 14 14 Growth % Growth % 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2004 2004 2005 2005 2006 2006 Q3 Q3 2007 2007 USA USA W Europe W Europe Japan Japan China China Boliden AB 6 2007-06-05

  7. Zinc price and stock levels (LME) USD/tonne Tonnes 5 000 1 000 000 4 500 875 000 4 000 750 000 3 500 625 000 3 000 500 000 2 500 375 000 2 000 250 000 1 500 125 000 1 000 0 5 5 5 5 5 6 6 6 6 6 7 7 5 5 5 5 5 5 6 6 6 6 6 6 7 5 6 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - n b - n l n b - n l n b - r y g p t v c r y g p t v c r r u r u r c c a e p a u a e p a u a e p a u e o e a u e o e a J J A O A O A J F M M J N J F M M J N J F M A S D A S D Boliden AB 7 2007-06-05

  8. 2007-06-05 apr-07 jan-07 okt-06 Chinese Net Imports of Zinc 2004-2007 jul-06 apr-06 jan-06 okt-05 jul-05 apr-05 8 jan-05 okt-04 China’s net imports jul-04 apr-04 jan-04 60 000 40 000 20 000 0 -20 000 -40 000 -60 000 Source: Metals Insider Tonnes Boliden AB

  9. LME Copper Price and Stocks Tonnes USD/tonne 9 000 1 000 000 8 220 900 000 7 440 800 000 6 660 700 000 5 880 600 000 5 100 500 000 4 320 400 000 3 540 300 000 2 760 200 000 1 980 100 000 1 200 0 5 5 5 5 6 6 6 6 7 7 5 5 5 5 5 5 6 6 6 6 6 6 7 5 6 5 6 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - n b - r y n l g t n b - r y n l g t n b - r u p v c u p v c r c r c r a e p a u a e p a u a e p a u o e a u o e a J e J e O O J F A M J J F A M J J F A M A S N D M A S N D M Boliden AB 9 2007-06-05

  10. 2007-06-05 April 07 Chinas’ import of copper 10 Source: Metals Insider Boliden AB

  11. 2007-06-05 Global zinc consumption exceeds total 11 production Boliden AB

  12. 2007-06-05 … and larger copper consumption than production in many regions 12 Boliden AB

  13. Global zinc production and smelter demand kt Zn ~ 5 % 18000 16000 Probable B Projects ~3 % Probable A Projects 14000 Base Case Production Capability Smelter demand ~3% grow th Smelter demand ~5% grow th 12000 10000 8000 6000 4000 2000 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 Boliden AB 13 2007-06-05

  14. Global copper production and smelter demand kt Possible Expansions 35000 Probable Expansions 30000 Highly Probable Expansions ~ 5 % 25000 Mine Production ~3 % Smelter Demand ~3% grow th 20000 Smelter Demand ~5% grow th 15000 10000 5000 0 1990 1995 2000 2005 2010 2015 Boliden AB 14 2007-06-05

  15. Potential for continued growth for metals 2006 Copper consumption vs. GDP per capita 12,0 Japan 11,0 High increase in metal demand 10,0 W Europe 9,0 Canada Saudi 8,0 USA Australia 7,0 Malaysia Kg per capita 6,0 5,0 Russia Top 5 population 2006 Brazil 48% of world population Kazakhstan 4,0 Indonesia Thailand USA 3,0 China World India 2,0 Latin America Brazil China 1,0 Indonesia Vietnam 0 200 400 600 800 1000 1200 1400 India Philippines Million Africa 0,0 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 GDP per capita PPP adjusted 2005 Boliden AB 15 2007-06-05

  16. Potential for continued growth for metals 12,0 11,0 Large populations Brazil 10,0 Potential * 9 kg per capita Indonesia 9,0 = 28 M tonnes China copper 8,0 India Russia 7,0 + 60% from today’s global Kg per capita 6,0 copper consumption 17,5 M tonnes (2006) 5,0 4,0 3,0 2,0 1,0 0,0 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 GDP per capita PPP adjusted 2005 Boliden AB 16 2007-06-05

  17. Focus on value creation • Boliden is operational and financial reconstructed • Cost efficient operations • Strong cash flow • Leading edge treatment technology • World leading with patent technology for metal recycling • Intensified exploration activities, tripled ore reserves in Q1 2007 • Organic growth projects • Continue to evaluate possible acquisitions of project and companies to grow mine assets Boliden AB 17 2007-06-05

  18. 2007-06-05 Financials 18 Boliden AB

  19. Result first quarter 2007 Quarter 1 Change SEK m 2007 2006 % Revenues 8 455 7 337 15 Operating profit (EBIT) 1 286 1 750 - 27 Profit before tax 1 261 1 698 - 26 Earnings per share, SEK 3.18 4.28 - 26 Cash flow from operating activities 1 490 999 49 Return on capital employed (%) 28 44 Net debt (%) - 8 45 • Higher metal prices, increased revenues • Reduced operating profit mainly due to lower grades of copper and gold, poorer USD exchange rate and lower TC/RC Boliden AB 19 2007-06-05

  20. Result first quarter 2007, deviations compared with fourth quarter 2006 Quarter 1 / Quarter 4 SEK m 2007 2006 Diff. Operating profit (EBIT) 1 286 2 225 - 939 Net price deviation - 894 of which, Currencies - 88 Hedges 138 Definite prices (MAMA) - 310 Stock results 132 Treatment charges - 197 Price decreases - 569 Net volume deviations - 288 Net cost deviations 262 Other - net - 19 Boliden AB 20 2007-06-05

  21. Operating profit per segment Quarter 1 Change SEK m 2007 2006 % Mines 787 732 8 Smelters 544 1 029 - 47 Others - 45 - 11 - 309 The Boliden Group 1 286 1 750 - 27 • Mines: Prices and terms improved operating profit by SEK 444 million but volume decreases, mainly due to planned lower grades at the Aitik mine, had negative effect of SEK -336 million. Costs increased by SEK -53 million compared to first quarter 2006 • Smelters: Decreased operating profit by SEK -487 million mainly due to lower TC/RC, lower USD exchange rate and increased costs by SEK -112 million. Boliden AB 21 2007-06-05

  22. Cash Flow First Quarter Operating profit before depreciation • Cash flow from operating (EBITDA), SEK m activities SEK 1 490 million (SEK 999 m) 3 000 2 779 2 551 • Cash flow from investment 2 421 2 500 activities SEK -373 million 2 079 (SEK -441 m) 2 000 1 637 • Free cash flow SEK 1 117 1 500 million (SEK 558 m) 1 000 • Net loan amortisation SEK 26 million (SEK 1 220 m) 500 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Boliden AB 22 2007-06-05

  23. Cost Structure of the Boliden Group Q 1 2007 Energy Depreciations and others 16% 18% External services Consumables 16% 17% Transports 5% Personnel 28% Boliden AB 23 2007-06-05

  24. Production Mines Zinc (metal content) Copper (metal content) Tonnes Tonnes 100 000 100 000 89 031 89 225 82 040 80 090 76 288 80 000 80 000 60 000 60 000 40 000 40 000 25 617 21 835 19 515 19 858 20 000 14 703 20 000 0 0 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2006 2006 2006 2006 2007 2006 2006 2006 2006 2007 • Production of milled tonnage is higher or at the same level during first quarter 2007 than in corresponding period 2006 in all mining areas. • Production of zinc concentrate during the first quarter remained largely on a par with levels during the corresponding period in 2006. Boliden AB 24 2007-06-05

  25. Aitik Milled production, head grades, metal content Cu tonnes 25 000 0.60% 0.50% 20 000 0.40% 15 000 0.30% 10 000 0.20% 5 000 0.10% 0 0.00% Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 4 342 4 823 4 611 4 705 4 678 Milled prod (ktonnes) 19 190 16 964 15 132 14 847 11 116 Metal content, Cu (t) 0.50% 0.39% 0.36% 0.35% 0.28% Ore grades, Cu act. 0.31% 0.31% 0.31% 0.31% 0.28% Ore reserve, Cu grade Boliden AB 25 2007-06-05

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