Interim Report January September 2 Lennart Evrell President & CEO Mikael Staffas CFO
Summary Market Financial turmoil - low visibility Price drop end of period Low growth in construction and automotive markets China develops well Stable metal demand Signs of weaker market in Europe Stronger USD vs Base metal prices down from Increase in SEK China determines length and depth of downturn Boliden Revenues MSEK,553 (9,373) EBIT ex PIR* MSEK 1,397 (1,213) Operating profit MSEK 1,18 (1,348) Free Cash Flow MSEK 82 (1,23) Limited effect of downturn Stable production in all units Expansion projects on plan * PIR=Process Inventory Revaluation Boliden Group 2 2--25
Group EBIT Development MSEK 2 5 2 Quarterly EBIT Quarterly EBIT excl PIR* 1 5 1 5 8 8 Q9 9 9 9-5 *Process Inventory Revaluation Boliden Group 3 2--25
The Market Boliden Group 4 2--25
Metal markets 2 Demand China high activity in construction and industry Mature economies higher vehicle production, construction markets remained weak, generally lower growth in metal demand Metal supply Zinc metal production flat vs Copper production lower than Concentrate supply Higher Zn mine production, lower Cu mine production Zn concentrate market in balance from deficit beginning of 2 Cu concentrate market in deficit Prices Stable Zn premium, Cu premium down below benchmark Boliden Group 5 2--25
Construction year on year % 4 3 Monthly data China strong Low activity in USA and Europe 2 - -2-3 26 27 28 29 2 2 China - investments residential building (cum.value) EU27 - Construction IP SA USA - Construction spending, total value SA, AR Source: Reuters Datastream Boliden Group 6 2--25
Automotive Year on year % 15 3 months moving average data Higher growth in all key regions 5 USA* China Germany Japan -5-2 2 2 6 7 8 * Light vehicle assemblies 2 9 21 21 1 Source: Reuters, VDA Boliden Group 7 2--25
Zinc price and inventories USD/t 5 4 5 4 3 5 3 2 5 2 1 5 LME Inventory Shanghai Inventory Price Price Quarter avg Tonnes 1 4 1 2 1 8 6 4 Zinc price (LME average) USD/t - vs period 2,13 + % 2,315-4% 2,393-7% 2,25-1% 2,224-1 5 23 24 25 26 27 28 29 2 2 Price down by 18% in the quarter Inventories down 3% in 2 USD/tonne 2 4 2 2 2 1 8 1 6 1 4 1 2 1 15-sep 22-sep 29-sep 6-okt 13-okt 2-okt Boliden Group 8 2--25
Zinc TC and premiums USD/t concentrate Zinc treatment charge (TC) USD/t metal Zinc metal price premium 6 4 5 35 3 4 25 3 2 2 15 5 26 27 28 29 2 2 Realised TC (including price participation) Spot TC - outturn Source: CRU (www.crugroup.com) 26 27 28 29 2 2 Europe ex-works US Midwest Delivered Far East (Western) Source: CRU (www.crugroup.com) Stable realized TC but lower than 2 Spot TC down more volume traded in spot market gap to realized widens Stable European premium higher than 2 Boliden Group 9 2--25
Copper price and inventories USD/t LME Inventory Shanghai Inventory COMEX Inventory Price Price Quarter avg 9 8 7 6 5 4 3 2 1 Tonnes 1 6 1 4 1 2 1 8 6 4 2 Copper price (LME average) USD/t - vs period 7,242 + 24% 8,634 + 4% 9,646 + 7% 9,137-2% 8,982-23 24 25 26 27 28 29 2 2 Price decreased in the quarter by 23% Inventories up 4% in 9 8 7 6 5 4 3 2 1 15-sep 22-sep 29-sep 6-okt 13-okt 2-okt Boliden Group 2--25
Copper TC and premiums USD/t concentrate 16 Copper treatment charge (TC) USD/t metal 18 Copper metal price premium 14 16 12 8 6 4 14 12 8 6 4 2 2 26 27 28 29 2 2 26 27 28 29 2 2 Source: CRU (www.crugroup.com) Standard grade TC Cif spot mine/trader USD/t TC Annual contract benchmark Spot Copper premium CIF W. Europe Source: CRU (www.crugroup.com) Benchmark CIF Europe Weaker spot TC China becoming more active Lower mine production concentrate deficit Spot premium down weaker demand in Europe Below benchmark level Boliden Group 2--25
Gold, Silver and Lead prices USD/oz 2 Gold USD/oz 6 Silver 1 8 1 6 5 1 4 4 1 2 1 3 8 6 2 4 2 23 24 25 26 27 28 29 2 2 USD/t 5 4 5 4 3 5 3 2 5 2 1 5 1 5 Lead Inventory Price Price Quarter avg 23 24 25 26 27 28 29 2 2 23 24 25 26 27 28 29 2 2 Tonnes 45 4 35 3 25 2 15 5 Average prices 2 vs period - - Gold + 39% + 13% Silver + 5% + 2% Lead + 21% - 4% Boliden Group 12 2--25
Mines Boliden Group 13 2--25
Mines - Summary MSEK 1 4 1 2 1 8 6 4 2 Quarterly EBIT EBIT MSEK 1,47 (1,61) in MSEK 1,64 in Lower USD prices vs Sold volumes lower vs Stable production Lower grades in Aitik Final pricing impact, Aug-Sep Sharp drop end of period Lower costs vs Garpenberg expansion on plan start up 214 Kankberg gold mine on plan start up mid 212 Boliden Group 14 2--25
Mines - Production Milled ore, ktonnes Copper Metal content, tonnes 24 Milled ore, ktonnes 1 5 Zinc Metal content, tonnes 8 2 1 2 8 6 4 16 12 8 9 6 6 4 2 4 3 2 8 8 9 9 9 9 8 8 9 9 9 9 Milled ore (Aitik) Metal content Milled ore Zinc metal content Aitik Production 34 mtonnes annulized rate Grades:,22% in vs,24% in Boliden area, higher metal production Garpenberg Higher grades 6,5% vs 5,4% in Increased silver production Boliden area, lower metal production Boliden Group 15 2--25
Aitik development Ore, Head Grade & Metal 22 2 18 16 14 12 8 6 4 2 26 27 28 29 2 2 Milled production, ktonnes Metal content, tonnes Head grade,55%,5%,45%,4%,35%,3%,25%,2%,15%,%,5%,% Boliden Group 16 2--25
Smelters Boliden Group 17 2--25
Smelters Summary MSEK 1 5 1 3 1 9 7 5 3 - -3-5 Quarterly EBIT Quarterly EBIT excl PIR* R12 EBIT excl PIR* EBIT excl. PIR* MSEK 356 (238) in MSEK 143 in Positive volume effect Higher copper TC/RCs Lower zinc TCs Maintenance stops in and 45 vs 18 MSEK EBIT impact, E-scrap expansion on plan from 212 * Process Inventory Revaluation Boliden Group 18 2--25
Smelters - Production Total feed, tonnes Copper Cathode production, tonnes Total feed, tonnes Zinc Metal production, tonnes 4 25 14 35 3 25 2 15 8 6 4 2 15 12 8 6 5 2 5 4 2 8 8 9 9 9 9 8 8 9 9 9 9 Copper feed, total Copper cathode production Zinc feed, total Zinc metal production Cathode production +9% vs 2 Major maintenance stops in Lead alloys -4% compared to Maintenance stop in Bergsöe Kokkola +6% vs 2 Odda +% vs 2 Boliden Group 19 2--25
E-scrap expansion 212 Largest electronics recycling capacity in the world 45, to 12, tonnes/year Capex MSEK 1,3 Start early 212 Boliden Group 2 2--25
Financials Boliden Group 21 2--25
Financial Summary MSEK 2 2 YTD YTD Revenues 553 9 373 3 67 26 596 Operating profit (EBIT) 1 18 1 348 3 673 3 71 EBIT excl Process Inventory Revaluation 1 397 1 213 4 17 3 385 EBIT excl PIR margin, % 13 13 13 13 Free cash flow 82 1 23 479 1 352 Capex 965 566 2 649 1 971 Earnings per share, SEK 3,6 3,33 9,51 9,3 Gearing 27% 37% 27% 37% ROCE, % 17 2 18 18 Boliden Group 22 2--25
Group EBIT 2 versus 2 MSEK 2 2 2 EBIT 1 18 1 348 1 134 Process Inventory revaluation -216 136 14 EBIT excl Process Inventory 1 397 1 213 1 12 Revaluation Deviation 184 277 Specification of deviation Volume 2-19 Costs -239 17 Prices & Terms 44-123 Metal prices and terms 555-2 Realised Metal- & Currency hedge* -136-38 TC/RC terms -42 36 Premiums 27-9 Currency effects -192 195 w hereof translation effects -4-3 Internal profit elimination 87 63 Others 12 - Deviation 184 277 *Result for respective period Realised Metal- & Currency hedge 43 178 81 Higher production Lower grades Higher production Cost inflation Zinc +% Copper +24% Silver +5% USD/SEK - % Boliden Group 23 2--25
Cost development 2 vs 2 MSEK 3 25 2 15 83 3 2 19 239 MSEK 2 vs 2 5 7 45 Volume + 14 Depreciation + 2 Other + 8 Total cost increase + 239 Total operating costs in equals 3,27 MSEK Boliden Group 24 2--25
Group EBIT 2 versus 2 MSEK 2 2 2 EBIT 1 18 1 348 1 134 Process Inventory revaluation -216 136 14 EBIT excl Process Inventory 1 397 1 213 1 12 Revaluation Deviation 184 277 Specification of deviation Volume 2-19 Costs -239 17 Prices & Terms 44-123 Metal prices and terms 555-2 Realised Metal- & Currency hedge* -136-38 TC/RC terms -42 36 Premiums 27-9 Currency effects -192 195 w hereof translation effects -4-3 Internal profit elimination 87 63 Others 12 - Deviation 184 277 Aitik Higher production Lower grades Reduced cost, maintenance stops in Smelters in Zinc -1 % Copper -2 % Precious metals positive USD/SEK +3 % *Result for respective period Realised Metal- & Currency hedge 43 178 81 Boliden Group 25 2--25
Cash Flow MSEK YTD YTD Op profit before depreciation (EBITDA)* 1 672 1 827 5 122 5 48 Change in inventories 86 661 857-1 419 Change in receivables 232 97-4 54 Change in liabilities -516-1 88-1 297-438 Other change in working capital -35 148-185 -155 Changes in working capital* 217-182 -665-1 958 Investment activities -968-566 -2 673-1 974 Financial net -5-85 -159-246 Paid tax -7-34 -1 57-168 Other 19 243-89 649 Free cash flow 82 1 23 479 1 352 *Includes Process Inventory Revaluation Boliden Group 26 2--25
Balance sheet MSEK Net debt & Gearing % 5% 45% 46% Gearing 8 6 Net debt Gearing 8% 6% 4% 35% 37% 33% 4 4% 3% 25% 2% 24% 21% 27% 2 2% 15% % % 5% -2 7 7 8 8 9 9-2% % Boliden Group 27 2--25
Sensitivity Analysis Change in metal prices, +% EBIT effect, SEK m Change in USD, +% EBIT effect, SEK m Change in TC/RC, +% Copper 4 USD/SEK 98 TC/RC Cu 5 EBIT effect, SEK m Zinc 425 EUR/USD 35 TC Zn 45 Lead 9 USD/NOK 7 TC Pb - Gold 15 Silver 16 Boliden Group 28 2--25
Boliden summary Comparing 2 and 27 Profit trend Committed capex Cost/capex reduction potential Similar 2-27 Debt and debt structure 27% 43% Hedge portfolio, MUSD -mid 213 1,36 9 Hedge prices, until mid 213 Copper, USD/tonne 9,72 6,145 Improved Zinc, USD/tonne 2,223 - Gold, USD/troz 1,38 69 USD/SEK 6.77 6.8 Boliden Group 29 2--25
Summary Decline in global economy Good demand, low growth Continued high activity in China Boliden Good production compensated for lower grades Underlying cost increase Lower costs vs due to maintenance stops in Prices and USD combined on similar level as 2 and 2 Aitik ramp-up: Higher ore production, lower grades Crusher availability still low Boliden Group 3 2--25
Going forward Expansion projects: E-scrap expansion 212 Kankberg gold mine 2H 212 Garpenberg expansion 214 Aitik below reserve grade (,25%) Capex Approx SEK 4 billion 2 and 212 Boliden Group 31 2--25
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Boliden - metals for modern society Boliden Group 33 2--25
Appendix Boliden Group 34 2--25
Mines - Production Gold metal content, kg Gold & silver Silver metal content, kg Metal content, tonnes Lead 1 2 2 1 8 6 4 2 8 6 4 2 15 5 8 8 9 9 9 9 8 8 9 9 9 9 Gold metal content Silver metal content Lead metal content Gold Higher production in Aitik vs - Higher grades in Boliden area vs - Silver Higher production in Garpenberg Higher metal content in vs - and - Higher volume and grades in Garpenberg Improved recovery in Tara vs - Boliden Group 35 2--25
Smelters - Production Gold production, kg 5 Gold & silver Silver production, kg 16 Production, tonnes 16 Lead 4 12 12 3 2 8 8 1 4 4 8 8 9 9 9 9 8 8 9 9 9 9 Gold production Silver production Lead alloys production Gold Higher production vs - due to higher grades in raw material Production varies due to production cycle of lead in Rönnskär Boliden Group 36 2--25
Capital Structure SEK bn 3 Sep 31 Dec Unless otherwise stated 2 2 Total Asset 37, 35,1 Capital employed 29,7 27,2 Shareholders' equity 1 2,4 18,8 Net debt 5,6 4,6 Gearing % 27 24 Equity/asset ratio, % 55 54 Duration of committed credit facilities, years 3,4 4,2 Average interest rate, % 3,5 3,29 Interest duration, years 1,1 2, Net payment capacity 9,6,7 1. Shareholders equity includes the value of outstanding hedge contracts Boliden Group 37 2--25