q4 interim and year-end report 2015 -...

Q4 Interim and Year-end

Report 2015

Lennart Evrell

President & CEO

Mikael Staffas

CFO

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2010 2011 2012 2013 2014 2015

R4Q,MSEK

MSEK

Quarterly EBIT excl PIR* Rolling 4Q EBIT Rolling 4Q EBIT excl PIR*

Profits affected by falling metal prices

2016-02-11 Boliden Group Q4 2015

* PIR=Process Inventory Revaluation

• Revenues 9,699 (9,614) MSEK

• EBIT ex PIR* 596 (1,134) MSEK

‒ EBIT 416 (1,158) MSEK

• Free Cash Flow 36 (366) MSEK

• Lower metal prices

• Higher Cu feed and higher mine

production vs Q3

• Items affecting comparability

-45 MSEK

2

FY 2015



• Revenues 40,242 (36,891) MSEK

• EBIT ex PIR* 4,010 (2,605) MSEK

‒ EBIT 3,590 (2,759) MSEK

• Free Cash Flow 2,565 (1,583) MSEK

• Lower metal prices, improved

currencies

• Favorable smelter terms

• Garpenberg ramp-up

• Full-year effect – Kylylahti acquisition

• Proposed dividend 3.25 (2.25) SEK

per share

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2010 2011 2012 2013 2014 2015

R4Q,MSEK

MSEK


Prices down, mine cutbacks – Q4 2015

Macro

• Lower global industry growth

• Low market visibility

Base metals markets

• Low demand growth

• Prices further down

• Tighter Zn concentrate market

• Mine cut backs globally

• Smelter cut backs in China

2016-02-11 Boliden Group Q4 2015 4

Low zinc and copper prices

2016-02-11 5 Boliden Group Q4 2015

Source: Wood Mackenzie January 2016, Thomson Reuters Datastream

Normal C1 – Zinc Normal C1 – Copper USD/ton USD/ton

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Zn average price Zn max price Zn min price

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Cu average price Cu max price Cu min price

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Boliden market term index

2016-02-11 Boliden Group Q4 2015 6

1,400

1,600

1,800

2,000

2,200

2,400

2,600

Oct/14 Jan/15 Apr/15 Jul/15 Oct/15 Jan/16

USD/t

Zinc price


Average price in Q4 vs period

Q3-15 Q2-15 Q1-15 Q4-14

-13% -26% -22% -28%

7

Q4 Q1 Q2 Q3

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

LME inventory Shanghai inventory Price Price Q avg

Zinc price, USD/t TonnesQ4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Copper price

2016-02-11 Boliden Group Q4 2015 8

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LME inventory COMEX inventory Shanghai inventory Price Price Q avg

Copper price, USD/t Tonnes

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okt-14 jan-15 apr-15 jul-15 okt-15 jan-16

USD/t Q4 Q1 Q2 Q3 Q4


Q3-15 Q2-15 Q1-15 Q4-14

-7% -19% -16% -26% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Gold price, USD/troy oz.

Gold, silver and lead prices


Lead Gold

Silver


Q3-15 Q2-15 Q1-15 Q4-14

Gold -2% -7% -9% -8%

Silver -1% -10% -12% -10%

Lead -2% -13% -7% -16%

9

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Lead price, USD/t

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Silver price, USD/troy oz.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mines

2016-02-11 Boliden Group Q4 2015 10

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2010 2011 2012 2013 2014 2015

R4Q, MSEK

MSEK

Quarterly EBIT Rolling 4Q EBIT

Mines – higher production, lower metal prices

• EBIT 31 (461) MSEK

‒ 260 MSEK in Q3 2015

• Capex 688 (1,458) MSEK

• Higher production

• Lower metal prices

• Higher costs

‒ Seasonality and higher volume

• Garpenberg ramp-up finalised

‒ 2.5 Mton annual pace end of Q4

2016-02-11 Boliden Group Q4 2015 11

558

188

919

7*56

1299

183**108

1452

74 95**

1429

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Aitik Boliden Garpenberg Kylylahti Tara Total

MSEK EBIT

2014 2015

* Kylylahti consolidated per 1 October 2014**Including iems affecting comparability

Mines by unit – full year

Boliden Group Q4 2015 12

Business Area

• Higher production, lower market terms

Aitik

• Milled volume 36 (39) Mton

• Cu grade 0.21 (0.20)%

• Energy tax cost (-212 MSEK**)

Boliden Area

• Good production

• Higher costs and depreciation

Garpenberg

• Expansion ramp-up – 2.4 (2.2) Mton

• Higher recoveries and silver grade

• Cost control

Kylylahti

• Solid production

Tara

• Changed pension terms (+227 MSEK**)

• Production disturbances

• EBITDA positive, also in Q4

**Items affecting comparability.

2016-02-11

Mineral Reserves &

Resources

2016-02-11 Boliden Group Q4 2015 13

2016-02-11

Mineral reserves up in Aitik, Garpenberg

and Tara

‒ Higher Cu grade in Aitik

‒ Lower grades in Garpenberg and Tara

Significant increase in mineral resources

‒ Garpenberg +9.3 Mton

Two new satellite deposits

‒ Nautanen (Aitik)

‒ Rävliden (Boliden Area)

Exploration 370 (280) MSEK in 2015

‒ 182 000 (122 000) m drilled

Mineral Reserves & Mineral Resources

Boliden Group Q4 2015 14

Aitik and Boliden Area

• Increased reserves & Cu grade (0.23%)

• New resource Nautanen

‒ 16 Mton, 1.4% Cu, 0.65 g/t Au

• 27 years reserve life

• New resource Rävliden (5,9 Mton)


2016-02-11 Boliden Group Q4 2015 15

Boliden Area Aitik Mton kton

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Proven/Probable Measured/Indicated

Inferred Production*10

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015



Garpenberg and Kylylahti

• Reserves increased but lower grades

‒ Zn grade: 3.9 (4.3) %

‒ Ag grade: 113 (120) g/t

• Significant increase in resources


• Disappointing exploration results

• Exploration continues with increased

efforts


2016-02-11 Boliden Group Q4 2015 16

Garpenberg Kylylahti kton kton

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Tara

• Reserves increased but lower grade

‒ Resources converted into reserves

‒ Zn grade: 6.3 (6.6) %

‒ Pb grade:1.5 (1.5) %

• 6 years of reserve life

2016-02-11 Boliden Group Q4 2015 17

Tara kton

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015



Smelters

2016-02-11 Boliden Group Q4 2015 18

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2010 2011 2012 2013 2014 2015

R4Q, MSEK

MSEK




19

• EBIT ex PIR* 583 (681) MSEK

‒ 825 MSEK in Q3 2015

• Capex 496 (268) MSEK

• Higher volume, lower market

terms vs Q3 15

• Lower volume, stable market

terms vs Q4 14

• Items affecting comparability

-60 MSEK

Smelters – solid profits

405279

459

209

45

1518

727 736 739

390

18

2692

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800

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1800

2300

2800

Rönnskär Harjavalta Kokkola Odda Bergsöe Total

MSEKEBIT ex PIR

2014 2015

Smelters by unit – full year

2016-02-11 Boliden Group Q4 2015 20

Business Area

• Favorable market terms

• Stable production

Rönnskär

• Improved process stability– higher

free metal

Harjavalta

• High feed of nickel concentrate

• High production

Kokkola

• Increased zinc production

Odda

• High production

Bergsöe

• Lower metal price

• Higher feed and premium

Financials

2016-02-11 Boliden Group Q4 2015 21

Profits affected by falling metal prices

2016-02-11 Boliden Group Q4 2015 22

MSEK Q4 2015 Q4 2014 Q3 2015

Revenues 9,699 9,614 9,764

EBITDA 1,339 2,044 1,746

EBIT 416 1,158 880

Process inventory revaluation (PIR) -181 24 -175

EBIT ex PIR 596 1,134 1,055

Investments 1,187 1,727 880

Free cash flow 36 366 953

Earnings per share, SEK 1.05 3.05 2.36

Net debt / equity ratio 23 35 24

Financial development

Lower market terms & higher costs vs Q3 2015

2016-02-11 Boliden Group Q4 2015 23

Seasonally higher costs

Higher Mine production

Lower metal prices

Lower smelter terms

MSEK

EBIT excl. PIR – Q3 2015 1,055

Specification of deviation

Volume 180

Prices and Terms (incl. hedges) -242

Whereof currency effects 74

Costs -338

Depreciation -61

Items affecting comparability -45

Other 47

Deviation -459

EBIT excl. PIR – Q4 2015 596

Higher Smelter feed

Higher Mine production

EBIT excl. PIR analysis Q4 2015 vs. Q3 2015

Energy tax Aitik -212 MSEK

Changed pension terms Tara +227 MSEK

Internal profit elimination Smelters -60 MSEK

Lower metal prices vs. Q4 2014

2016-02-11 Boliden Group Q4 2015 24

Lower metal prices

Stronger USD

Improved smelter terms

MSEK



Volume -100

Prices and Terms (incl. hedges) -346

Whereof currency effects 534

Costs -65

Depreciation -39


Other 57

Deviation -538

EBIT excl. PIR – Q4 2015 596

Lower feed Smelters

EBIT excl. PIR analysis Q4 2015 vs. Q4 2014

Energy tax Aitik -212 MSEK

Changed pension terms Tara +227 MSEK

Internal profit elimination Smelters -60 MSEK

Cash flow

2016-02-11 Boliden Group Q4 2015 25

MSEK Q4 2015 Q4 2014 Q3 2015

EBITDA excluding PIR 1,520 2,020 1,921

Changes in working capital -143 96 36

Inventories 462 -433 -500

Payables -873 -572 443

Receivables 265 -44 92

Other 3 0 1

Cash flow from investments -1,211 -1,716 -879

Financial items -62 -67 -51

Tax paid -72 3 -69

Other 4 31 -5

Free cash flow 36 366 953

Free cash flow

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2011 2012 2013 2014 2015

%MSEK

Net debt Gearing

Stronger balance sheet

2016-02-11 26 Boliden Group Q4 2015

SEK bn (Unless otherwise stated)

31 Dec

2015

30 Sept

2015

Total Assets 43.0 44.0

Capital employed 35.1 35.1

Shareholders' equity 25.8 25.6

Net debt 5.8 6.2

Gearing, % 23 24

Loan duration, years 2.4 2.7

Average interest rate, % 1.4 1.4

Interest duration, years 0.5 0.5

Net payment capacity 6.5 6.8

Full-year financial development – Summary

2016-02-11 Boliden Group Q4 2015 27

MSEK (Unless otherwise stated) FY 2015 FY 2014

Revenues 40,242 36,891

EBITDA 7,112 6,035

EBIT 3,590 2,759

EBIT ex PIR 4,010 2,605

Investments 3,650 4,222

Free cash flow 2,565 1,583

Earnings per share, SEK 9.65 6.94

Net debt /equity ration 23 35

Higher production & improved smelter terms vs 2014

2016-02-11 Boliden Group Q4 2015 28

MSEK

EBIT excl. PIR – FY 2015 4,010


Volume 989

Prices and Terms (incl. hedges) 1,183

Whereof currency effects 3,089

Costs -573

Depreciation -228


Other 79

Deviation 1,406


Kylylahti

Garpenberg ramp-up

Improved smelter terms

Lower metal prices

Stronger USD

Garpenberg ramp-up

Kylylathi acquisition

Aitik push-back

Kylylahti

Garpenberg ramp-up

Strong FY 2015 despite a turbulent market

• Well positioned in the metal market

‒ Mines and smelters

‒ Base metals and precious metals

‒ High productivity

2016-02-11 Boliden Group Q4 2015 29

Going forward

• Aitik

‒ Copper grade 0.21% in 2016

‒ Winter conditions in Q1 2016

• Garpenberg

‒ 2016-2017 grades: Zn 4.5%, Ag 120 g/ton

‒ Lower grade in Q1 2016 due to rock falls

• Cost control

• Capex 2016 guidance unchanged despite lower

level 2015

• Planned Smelters maintenance EBIT impact

‒ -215 MSEK, whereof Q2: -165 MSEK,

Q3: -50 MSEK

• Cu TC benchmark 2016: 97 (107) USD/ton

2016-02-11 Boliden Group Q4 2015 30

Capital Markets Day on 16-17 March 2016

• Stockholm 16 March

• Odda site visit 17 March

• Registration available on www.boliden.com

2016-02-11 Boliden Group Q4 2015 31

Disclaimer

• This presentation has been prepared by Boliden for information purposes only and as per the indicated date. Boliden does not undertake any obligation to correct or update the information or any statements made therein. Certain statements in this presentation are forward-looking and are subject to risks and uncertainties.

• Nothing contained herein shall constitute any representation or warranty as to accuracy or completeness. Boliden has not made any independent verification of the information obtained from third parties.

• Nothing in this material shall be construed as an offer or solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction.

• Boliden does not accept any liability whatsoever arising from or in connection with the use of this information.

• Save as by prior approval in writing, this material may not be copied, transmitted or disclosed, whether in print, electronic or any other format. All rights to the material are reserved.

2016-02-11 Boliden Group Q4 2015 32

Appendix

2016-02-11 Boliden Group Q4 2015 34

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015

Metal content, kt

Milled ore, mt

Zinc

Milled ore Metal content

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015

Metal content, kt

Milled ore, mt Copper

Milled ore Metal content

• Garpenberg – ramp-up, higher

grade vs Q3

• Tara – higher milled tonnage

Mines – Production

• Aitik – low milled tonnage

• Kylylahti – stable production

• Boliden Area – ore mix, lower milled tonnage

2016-02-11 Boliden Group Q4 2015 35

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2012 2013 2014 2015

Metal production,

kt

Total feed, kt

Zinc

Feed, total Metal production

0

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30

45

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75

90

105

120

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2012 2013 2014 2015

Metalproduction,

kt

Total feed, kt

Copper

Feed, total Metal production

Smelters – Production

• Rönnskär – lower process stability

• Harjavalta – high production

• Odda – maintenance

• Kokkola – fairly stable production,

lower silver grade

2016-02-11 Boliden Group Q4 2015 36

Market balance


Source: CRU January 2016, Boliden calculations

37

Zinc – global market Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415

Metals demand, kt 3 337 3 400 3 322 3 318 3 326 3 383 3 343 3 348

Year on year change 5,0% 6,1% 1,0% 1,4% -0,3% -0,5% 0,6% 0,9%

Smelter production, kt 3 126 3 253 3 345 3 523 3 367 3 512 3 414 3 432

Year on year change -3,2% 3,9% 4,6% 9,9% 7,7% 8,0% 2,1% -2,6%

Mine production, kt 2 719 3 156 3 189 3 235 2 806 3 243 3 211 2 805

Year on year change -12,2% 13,6% -2,0% 3,0% 3,2% 2,8% 0,7% -13,3%

Metal balance, kt -211 -147 23 205 41 129 71 84

Concentrate balance, kt -148 183 71 -87 -338 -35 41 -314

Copper – global market Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415

Metals demand, kt 5 043 5 468 5 470 5 543 5 020 5 493 5 505 5 615

Year on year change 2,5% 10,9% 5,2% 5,3% -0,5% 0,5% 0,6% 1,3%

Smelter production, kt 5 179 5 347 5 539 5 613 5 436 5 546 5 549 5 529

Year on year change 1,7% 5,5% 10,4% 8,9% 5,0% 3,7% 0,2% -1,5%

Mine production (concentrates), kt 3 546 3 607 3 667 3 710 3 631 3 861 3 845 3 753

Year on year change 1,9% 8,7% 7,0% 0,7% 2,4% 7,0% 4,8% 1,2%

Metal balance, kt 136 -121 69 70 416 54 43 -86

Concentrate balance, kt 1 16 -81 -64 -153 50 -88 -156

Economic development

2016-02-11

Industrial production, year on year %

Boliden Group Q4 2015

Source: Thomson Reuters Datastream, Boliden calculations for world data

38

-5

0

5

10

15

20

2011 2012 2013 2014 2015

EU28 USA China World

-15

-10

-5

0

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15

20

25

30

2011 2012 2013 2014 2015

EU USA China

Construction – largest segment for Cu and Zn

2016-02-11

Activity, year on year %

Source: Reuters Datastream


China: year on year based on cumulative investments at each point

39

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2011 2012 2013 2014 2015

Europe North America China World

2016-02-11

Source: LMC Automotive


Automotive

40

Production of light vehicles, year on year, quarterly data

China – metals demand and economic growth

Source: CRU Ltd, Thomson Reuters Datastream

2016-02-11 Boliden Group Q4 2015 41

0

2

4

6

8

10

12

14

16

18

2011 2012 2013 2014 2015

Zinc demand Copper demand GDP Industrial production

Year on year growth %

Zinc TC and premiums

• Lower metal price, lower realized TC

• Spot TC down in tighter concentrate market

• Stable premia in Europe


Source: CRU January 2016

42

0

50

100

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200

250

300

2012 2013 2014 2015

US$/t concentrate

Treatment charges

Realized TC - European contract

Spot TC, China imports

0

50

100

150

200

250

2012 2013 2014 2015

US$/t metal Metal premia

Delivered Premia US Midwest Ex-Works Premia Europe

Premia Far East - Western

Copper TC and premiums

• Spot TC declined in a tighter spot market

• Low buying activity awaiting contract levels

• Cu TC benchmark 2016: 97 (107) USD/ton

• Stable spot premia at low level


Source: CRU January 2016

43

0

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100

120

140

2012 2013 2014 2015

US$/t concentrate

Treatment charges

Contract TC - annual and mid-year benchmark

Standard grade spot TC

0

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100

120

140

160

2012 2013 2014 2015

US$/t metal Metal premia

CIF European benchmark premia

CIF Average European premia

q4 interim and year-end report 2015 -...

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