Saudi Arabian Mining Company (Ma aden)

Transcription

1 Saudi Arabian Mining Company (Ma aden) Earnings Conference Call Q August 1, 2017 Earnings Call Presentation Q2,

2 Walid Al-Hakim Head Investor Relations Earnings Call Presentation Q2,

3 Forward looking statement This presentation contains statements that are, or may be deemed to be, forward looking statements, including statements about the beliefs and expectations of Saudi Arabian Mining Company (the "Company"). These statements are based on the Company's current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. As a result of these risks, uncertainties and assumptions, a prospective investor should not place undue reliance on these forward-looking statements. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. The Company is not obliged to, and does not intend to, update or revise any forward- looking statements made in this presentation whether as a result of new information, future events or otherwise. This communication has been prepared by and is the sole responsibility of the Company. It has not been reviewed, approved or endorsed by any financial advisor, lead manager, selling agent, receiving bank or underwriter retained by the Company. This communication is provided for information purposes only. In addition, because this communication is a summary only, it may not contain all material terms and this communication in and of itself should not form the basis for any investment decision. The information and opinions herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness of the information and opinions. There is no obligation to update, modify or amend this communication or to otherwise notify you if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. You are strongly advised to seek your own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. The Company disclaims liability for any loss arising out of or in connection with your use of, or reliance on, this communication. These materials may not be published, distributed or transmitted and may not be reproduced in any manner whatsoever without the explicit consent of Ma aden s management. These materials do not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. Earnings Call Presentation Q2,

4 Khalid Al-Mudaifer President & Chief Executive Officer Earnings Call Presentation Q2,

5 Ramp-up continues, delivered strong quarter performance Production 70 K ounces of gold, up 17% vs Q K tonnes of alumina, up 8% vs Q K tonnes of primary aluminium, in line with Q K tonnes of ammonia, up 85% vs Q K tonnes of ammonium phosphate fertilizer, in line with Q Outstanding cost performance Continued focus on efficiency, productivity and throughput Reduced cash cost in all our products Margins continue to increase Strong financial performance Sales SAR 2,995 mn, up 17% vs Q EBITDA SAR 1,509 mn, up 54% vs Q Net income SAR 434 mn, up 146% vs Q Net cash from operation SAR 649 mn, up 40% Growth projects underway First Ammonium Phosphate fertilizer was produced from Wa ad Al Shamal plant in July 2017 Feasibility of our new Mansourah / Massarah mines is being finalised Feasibility study for the third phosphate project is progressing well Strong operating performance, supportive market conditions, benefits of low cost operations reflecting in healthier results Earnings Call Presentation Q2,

6 SAR million Rebase to 100 as on 1 Mar 2016 Margin improvement with price and volume increase Commodity price movement Aluminium Copper Gold DAP Ammonia 50 Source: Bloomberg 40 1-Apr-16 1-Jun-16 1-Aug-16 1-Oct-16 1-Dec-16 1-Feb-17 1-Apr-17 1-Jun EBITDA and margins EBITDA EBITDA Margins % 37% 241 1,509 1,437 53% 50% Q Q Q Q % 55% 50% 45% 40% 35% 30% 25% 20% Earnings Call Presentation Q2, 2017 Restated 2016 numbers as per IFRS 6

7 Phosphate market softened in Q2 backed by growing supply from China and North Africa Ammonium phosphate fertilizer price ~US$357/t (Avg. Tampa FOB) and Ammonia price averaged ~US$ 316/t (Avg. ME FOB) Q2 Phosphate demand was low in India in Q2 mainly due to a new tax scheme (GST) and flat in South America On the supply side, China and Oceania local markets are out of season and have capacity for more exports. OCP s new project (JPH-3: ~1 million tonne) is ramping up In Q2, Phosphate producers benefitted from weaker raw material costs (Ammonia, Sulphur and Phosphoric Acid) Additional supplies expected in H from MWSPC and Morocco which may exert further pressure on prices Average DAP Price Tampa Index (US$/t) Avg. DAP Prices Q1-9% Q2-4% Q3-2% Jan-16 1-Apr-16 1-Jul-16 1-Oct-16 1-Jan Mar July-17 Q4 Q1-7% 19% Q2-8% Earnings Call Presentation Q2, 2017 % Quarterly change Source: Ma aden SBU analysis, CRU, FMB and FERTECON 7

8 Recovery of aluminium prices continued in Q Aluminum price averaged US$1,909/tonne (LME), up 32% vs Q and up 12% vs Q Japanese premiums increased in Q2 2017, due to expectations of Chinese supply regulations China appears to be heading towards a balanced market in 2017 Prices have improved partly due to Chinese announcements of production cuts due to expected implementation of new environmental policies and supply side reforms Aluminium Price Movement (US$/t) 2,200 Q1 3% Q2 7% Q3 1% Q4 Q1 1% 16% Q2 2% 2,000 1,800 1,600 1,400 1,200 1,000 2-Jan-15 2-Apr-15 2-Jul-15 2-Oct-15 2-Jan-16 2-Apr-16 2-Jul-16 2-Oct-16 2-Jan-17 2-Apr-17 Earnings Call Presentation Q2, 2017 Source: Bloomberg, Ma aden SBU analysis, CRU Mar 2017, Harbor Mar

9 Gold firm and copper is sustaining its recovery Gold prices averaged US$1,263 / ounce similar to Q2 2016; Copper prices increased by 24% in Q averaging US$ 5,754 / tonne World economic growth forecast, particularly Chinese structural reforms remain on track supporting the price outlook Production disruption at world s three largest copper mines helped to support copper prices, despite financial market weakness and industrial metals sell-off. Copper prices are expected to be driven by sustainability of Chinese demand into the second half of 2017 and US infrastructure spending Gold and copper price movement (US$/t) Cu 6,500 Copper Gold 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1-Apr-16 1-Jun-16 1-Aug-16 1-Oct-16 1-Dec-16 1-Feb-17 1-Apr-17 1-Jun-17 Au 1,500 1,400 1,300 1,200 1,100 1, Earnings Call Presentation Q2, 2017 Source: Bloomberg, CRU Mar 2017, SBU secondary analysis 9

10 Darren C. Davis Chief Financial Officer Earnings Call Presentation Q2,

11 Second quarter of 2017 showed the underlying strength of our business (All numbers are in SAR million, except as mentioned) Comparative analysis - quarterly Q2-16A vs. Q2-17A Q1-17A vs. Q2-17A Q2-16 Q1-17 Q2-17 SR % SR % Sales 2,552 2,717 2, % % Cost of sales -1,971-1,792-1, % % Gross profit , % 86 9% Gross profit margin% 23% 34% 34% Selling, marketing and logistic expenses % 5-5% General and administrative expenses % % Exploration and technical services expenses % -4 35% Write-off / impairment of plant and equipment % 15-97% Operating profit % 85 12% Operating income margin% 14% 27% 27% Share in net income of jointly controlled entity % Income from time deposits % -4-17% Finance cost % 12-3% Other income / (expense) % -6-23% Profit before zakat and income tax % 99 27% Zakat and income tax expense % -5 21% Profit / (loss) for the period % 94 28% Profit /(loss) % 7% 13% 14% Profit / (loss) attrib. to shareholders' of the parent co % 81 29% Non-cont. interest's share of the period's profit / (loss) % 13 20% EPS (SR) % % Earnings Call Presentation Q2,

12 Core of our business built on world scale competitive phosphate and aluminium businesses aluminium phosphate gold & base metals Revenues Price strength aluminium and phosphate businesses Negative price impact on the ammonia business Production driven growth for all businesses 43% SAR 2,552 mn 12% SAR % 39% SAR 2,995 mn 11% SAR 1,509 mn 50% +17% EBITDA Positive direction on prices and costs for aluminium and phosphate Ammonia price drop Margins are improving on efficiency and cost reduction 39% 15% 46% 38% 11% 51% +54% Q Q Earnings Call Presentation Q2,

13 Strong operating performance, supportive market conditions and benefits of low cost operations reflecting in stronger results Net income bridge Q vs Q SAR MN % Q IFRS Price effect Volume effect Cost effect Sales, marketing logistics G&A Write-off PPE Finance charges Others Q IFRS Earnings Call Presentation Q2,

14 Strong operating performance, supportive market conditions and benefits of low cost operations reflecting in stronger results Net income bridge Q vs Q SAR MN % Q IFRS Price effect Volume effect Cost effect Sales, marketing logistics G&A Write-off PPE Finance charges Others Q IFRS Earnings Call Presentation Q2,

15 Operational performance Earnings Call Presentation Q2,

16 Phosphate performance Operational performance During Q2, Ma aden produced 668,000 tonnes and sold 733,000 tonnes of ammonium phosphate fertilizer. Production was in line with Q2 2016, whilst sales increased by 4%. Ma aden produced and sold (external) a record 555,000 tonnes and 393,000 tonnes of ammonia, an increase of 85% and 155% respectively as compared to the same quarter last year. The increased production and sales volume is largely attributed to the start of commercial operations of Ma aden Wa ad Al Shamal ammonia plant. Cost performance During the quarter ammonium phosphate fertilizer cash cost was maintained at the same level as in the corresponding quarter of last year. Project First ammonium phosphate fertilzer was produced in July 2017 from Ma aden Wa ad Al Shamal Phosphate Company Ammonium phosphate fertilizer (Kt) Ammonia (Kt) Production Sales Avg Prices Q Q Q Production Sales Avg Prices Q Q Q US$/t US$/t Earnings Call Presentation Q2,

17 Aluminium performance Operational performance During the second quarter of 2017, Ma aden produced 219,000 tonnes of primary aluminium, in line with the same period of last year. Ma aden s bauxite mine and alumina refinery is operating well During Q2, Ma aden produced 349,000 tonnes of alumina, an increase of 8% compared to Q Cost performance During the second quarter, our aluminium cash cost decreased significantly, by decreased fixed costs through strong cost control measures, reduction in some raw material consumption, and notably lower cost of alumina However, we see some headwinds with the prices of key inputs such as caustic soda and coke prices increasing Projects Primary aluminium (Kt) Production Sales Avg LME Prices Q Q Q Alumina production (Kt) US$/t The rolling mill operation continues to ramp up production and is making steady progress in penetrating the market for can sheets in the Middle East region and beyond Q Q Q Earnings Call Presentation Q2,

18 Gold and Copper performance Operational performance During the quarter, Ma aden s production of gold increased by 17% to 70,000 ounces compared to the same quarter last year, this was mainly due to increased volumes from Ad Duwayhi mine During the quarter, we produced 10,600 tonnes and sold 10,700 tonnes of copper concentrate from the Jabal Sayid copper mine, which is operating well to reach its rated capacity Cost performance Continued focus on costs helped Ma aden to maintain its overall annual gold cash cost objectives. Although some throughput issues during the quarter impacted production which in turn translated to an increase in cash cost. Jabal Sayid s continued focus on cost has helped Jabal Sayid to reduce its C1 cash cost by almost 30% compared to the same quarter last year due to increased volumes and better efficiencies. Gold ( 000 ounces) Production Sales Avg Prices US$/oz Q Q Q Copper volumes (Kt) US$/lb 12 Production Sales Price Q Q Q Ma aden attributable production & 50% Earnings Call Presentation Q2,

19 Financial position Earnings Call Presentation Q2,

20 4,193 53,262 2,647 8,073 25,974 Financial position Balance sheet 11,457 44,805 26,738 11,149 Other non current assets Capital work in progress Plant, property & equipment Current assets All numbers are in SAR millions Equity Non controlling interest Other non current liability Long term borrowing Current Liability Long term borrowing By business By source 4% 5% 20% 33% 45% 62% 31% MPC WAS Aluminium Others Banks PIF SIDF Type of loan 5% 47% 53% Assets Liability 95% As at 30 June 2017 Floating Fixed SAR USD Earnings Call Presentation Q2,

21 Financial strategy Maintain liquidity Optimize capital structure Ensure stable foundation for future growth Cash & Cash Equivalent Long Term Borrowing Debt/Total Capital Net debt % % 54 62% % 62% 61% 60% 59% % % 57% % % 56% 55% 54% Q Q Long term borrowings / (long term borrowings + total equity) 2 Long term borrowings cash equivalents and short tern investments 3 Restated with IFRS from 2016 onwards 53% Earnings Call Presentation Q2,

22 Summary Production ramp-up continues Continued focus on volumes: ramping up new capacities and increasing throughput at existing operations Leading position in fundamentally attractive commodities Better overall price environment in Q but some concerns for the balance of the year, particularly in DAP Underpinned outstanding cost performance Strong cost performance allows us to see the full benefits of improved commodity prices Growth projects underway Wa ad Al Shamal first ammonium phosphate fertilizer produced in July 2017 Strong pipeline of attractive new projects Earnings Call Presentation Q2,

23 Q&A Earnings Call Presentation Q2,

24 Appendix Earnings Call Presentation Q2,

25 Debt repayment profile ,067 Al numbers are in US$ million MIC MGBM 1,712 1,631 WAS MBAC MRC 1500 MAC 1,132 1,269 1,198 1,321 MPC As at 31 December 2016 Earnings Call Presentation Q2,

26 Sales summary Particulars Q Q (All numbers are in 000 tonnes except as mentioned) % change q-o-q Q % change y-o-y Phosphate business Ammonium phosphate fertilizer % 703 4% Ammonia MPC % % Ammonia MWSPC % - Aluminium business Alumina % 324 8% Primary Aluminium % 219-1% Gold & base metals business Gold ( 000 ounces) % 63 9% Copper % - Earnings Call Presentation Q2,

27 Thank You! Copyright Ma aden. All rights reserved. Earnings Call Presentation Q2,