Interim Report - Bolideninvestors.boliden.com/afw/files/press/boliden/Boliden-Q3... · 2010-01-08 · Boliden AB 3 2009-10-26 Third quarter 2009 Boliden Revenues MSEK 6,960 (7,513)

Boliden AB 2009-10-261

Bildplatshållare

Interim ReportJanuary – September 2009

Lennart EvrellPresident & CEO

Johan FantCFO


Third quarter 2009

MarketStrong Chinese demandGlobal demand:*

– Zinc: -7% YoY and +5% from Q2-09– Copper: -9% YoY and -3% from Q2-09

High copper and zinc pricesRe-starts of zinc smelter and mine capacityTight supply of copper concentrates – pressure on TC/RCHigher prices for by-productsStronger SEK

* Source: CRU, Boliden calculations


Third quarter 2009

BolidenRevenues MSEK 6,960 (7,513)Operating profit MSEK 949 (-142)Operating profit excl. process inventory revaluation MSEK 734 (125)Higher than average grades – lower towards end of periodIndustrial zinc sales increased Q3 vs Q2Zinc smelters on full production: +13% Q3 vs Q2Copper smelters on reduced productionAitik expansion on planCash flow MSEK 610 (-117)


Group EBIT development

-500

0

500

1000

1500

2000

2500

Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309

MSEK

Quarterly EBIT

Quarterly EBIT excl PIR*

* EBIT excl Process Inventory Revaluation


The Market


Global IP slowly improving

Global IP

-15.0

-10.0

-5.0

0.0

5.0

10.0

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

Yea

r ove

r yea

r %

Source: Reuters Ecowin, Boliden calculations

*

Based on: USA, Eurozone, China and Japan, GDP (PPP) weighted


IP – China grows, mature countries slowly improving

Eurozone (Seas. adj.) - Manufacturing Japan (Seas. adj.) - Manufacturing USA (Seas. adj.) - Manufacturing China (value added) - total industry

Source: Reuters EcoWin

Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul06 07 08 09

Year

ove

r yea

r %

-40

-30

-20

-10

0

10

20


China dominates base metals demand

China42%

Other Asia22%

Europe19%

North America10%

Other7%

Source: Cru

China34%

Other Asia23%

Europe23%

North America12%

Other8%

Source: Cru

Q2 20092008

China27%

Other Asia28%

Europe26%

North America13%

Other6%

Source: Cru

Copper

Zinc

China34%

Other Asia27%

Europe22%

North America11%

Other6%

Source: esimtates by CRU


Zinc – positive trend continues

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

Tonnes

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

USD/Tonne

Zinc price (LME average)

USD/tQ3-09 vs period

Q3 08 1,773 - 1%

Q4 08 1,189 + 48%

Q1 09 1,174 + 50%

Q2 09 1,476 + 19%

Q3 09 1,757 -

Zinc price over 2,000 USD/tonne in OctoberInventories increasingPrice development leads to supply increase

Quarterly average

2003 2004 2005 2006 2007 2008 2009

Boliden AB 2009-10-2610

Zinc TCs up and premiums flat

Zinc metal price premium

0

50

100

150

200

250

300

350

400

USD per tonneof metal

US Midwest Delivered Europe ex-works Far East (Western)Source: CRU, Brook Hunt

2005 2006 2007 2008 2009

Zinc treatment charge (TC)

0

100

200

300

400

500

600

USD/ t of concentrate

Realised TC (including price participation) Spot TC - AsiaSource: Brook Hunt, CRU

2006 2007 2008 2009

Realised in Q3 based on quarter to date zinc price

Concentrate availability higher – spot TC higherRealised TC up as the zinc price increasedPremiums flat, sales to industrial buyers higher

Boliden AB 2009-10-2611

Copper – continued price increases

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

Tonnes

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

USD/Tonne

Copper price (LME average)

USD/tQ3-09 vs period

Q3 08 7,693 - 24%

Q4 08 3,940 + 48%

Q1 09 3,435 + 70%

Q2 09 4,676 + 25%

Q3 09 5,840 -

Boliden copper price hedge contracts:– Coverage rate approximately 65%*– USD prices 5,757 and 7,606 in 2009 and 2010 respectively

* Of outstanding metal positions in 2009-2010 based on forecasted production

Quarterly average

2003 2004 2005 2006 2007 2008 2009

Boliden AB 2009-10-2612

Copper - continued pressure on spot TC/RC

Copper treatment charge

0

20

40

60

80

100

120

USD/t of concentrate

TC spot China buying terms TC benchmark

Benchmark 2009

Source: CRU

2006 2007 2008 2009

Copper metal price premium

0

40

80

120

160

200

USD per tonneof metal

Spot Copper premium CIF W. Europe Benchmark CIF Europe

Source: CRU, Brook Hunt

2005 2006 2007 2008 2009

Tight market for copper concentrate put pressure on TC/RCScrap market remained tightMine production unchanged - smelter output reducedLess tight metals market - premiums slightly lower

Boliden AB 2009-10-2613

By-products

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

jan-03apr-03jul-03okt-03jan-04apr-04jul-04okt-04jan-05apr-05jul-05okt-05jan-06apr-06jul-06okt-06jan-07apr-07jul-07okt-07jan-08apr-08jul-08okt-08jan-09apr-09jul-09

Tonnes

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

USD/Tonne

0

100

200

300

400

500

600

700

800

900

1 000

1 100

1 200


USD/oz

0

5

10

15

20

25


USD/oz

Lead Gold Silver

Substantially higher pricesBut only lead higher in SEK

Boliden AB 2009-10-2614

SEK further strengthened vs the USD

5

6

7

8

9

10

11

12

13

2003 2004 2005 2006 2007 2008 2009

USD/SEKEURO/SEK

EUR/SEK EURO/SEK Q average USD/SEK USD/SEK Q average

USD/SEK (quarterly average)

USD/SEKQ3-09 vsperiod

Q3 08 6.31 + 16%

Q4 08 7.79 - 6%

Q1 09 8.40 - 13%

Q2 09 7.92 - 8%

Q3 09 7.29 -

USD/SEK hedge contracts (forward)– Rates are 8.42 and 8.26 for 2009 and 2010 respectively– Sold volumes 112 and 688 MSEK for 2009 and 2010 respectively

Boliden AB 2009-10-2615

Business area Mines

Boliden AB 2009-10-2616

Mines EBIT development

Higher than averagehead grades, peaking in Q3Higher metal pricesLower zinc and leadvolumes but higher for other metals

0

200

400

600

800

1000

1200

Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309

MSEK

Quarterly EBIT

Boliden AB 2009-10-2617

Mines’ zinc production

Comments on Q3 2009 versus Q2 2009

0

200

400

600

800

1,000

1,200

1,400

1,600

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

Milled ore, ktonnes

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Zinc metal content, tonnes

Milled ore Zinc metal content

Tara– High grades compensated for

lower milled production– Start-up problems with new mill.

Will also impact Q4

Garpenberg– High grades compensated for

lower milled production– Lower grades and hard ore at

end of quarter

Boliden area– Metal content down, lower

grades and milled production

Boliden AB 2009-10-2618

Mines - Production and grades

TARA

0

10 000

20 000

30 000

40 000

50 000

60 000

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09

tonnes

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

10,0%

Metal content, Zn (t) Ore grades, Zn act. Ore reserve grade, Zn ave.

GARPENBERG

0

5 000

10 000

15 000

20 000

25 000

30 000

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09

tonnes

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%


BOLIDEN AREA

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09

tonnes

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%


AITIK

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09

tonnes

0,00%

0,05%

0,10%

0,15%

0,20%

0,25%

0,30%

0,35%

Metal content, Cu (t) Ore grades, Cu act. Ore reserve grade, Cu ave.

Boliden AB 2009-10-2619

Mines’ copper production

Comments on Q3 2009 versus Q2 2009Aitik

– High grades, peaked in Q3– Metal content increased from a

strong Q2 2009

Boliden area– Mill production from inventory,

metal content lower

0

1,000

2,000

3,000

4,000

5,000

6,000

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

Milled ore, ktonnes

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Copper metal content, tonnes

Milled ore (Aitik) Copper metal content

Boliden AB 2009-10-2620

AITIK production areas

S2

Boliden AB 2009-10-2621

AITIK production areas

67

Boliden AB 2009-10-2622

AITIK copper mine expansion

Project is on planIn operation from April 1, 2010Mined ore – from 18 to 36 Mtonnes in 2014Copper volumes +50%Life of mine extended to 2026

22

Boliden AB 2009-10-2623

Business area Smelters

Boliden AB 2009-10-2624

Smelters EBIT development

-500

0

500

1000

1500

2000

Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309

MSEK

Quarterly EBIT

Quarterly EBIT excl PIR*

Increased zinc productionLower cost YTD Improved metal prices for zinc smeltersDifficult market conditions affecting copper smelters

* EBIT excl Process Inventory Revaluation

Boliden AB 2009-10-2625

Zinc metal production up


0

50,000

100,000

150,000

200,000

250,000

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

Zinc feed, tonnes

0

20,000

40,000

60,000

80,000

100,000

120,000

Zinc metal prod, tonnes

Zinc feed, total Zinc metal production

Odda– Metal production +14%– Back to full capacity in

September

Kokkola– Metal production +12%– Back to full capacity in August

Boliden AB 2009-10-2626

Copper Smelters on reduced production


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

Copper feed, tonnes

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Copper cathode prod, tonnes

Copper feed, total Copper cathode production

Rönnskär– Stable production

Harjavalta– Reduced production– Extended maintenance stop

Bergsöe (lead)– Maintenance stop

Shortage of all feeds

Boliden AB 2009-10-2627

Financials

Boliden AB 2009-10-2628

Financial summary

MSEK Q3 09 Q3 08 YTD 09 YTD 08Revenues 6,960 7,513 19,279 24,700Operating profit (EBIT) 949 -142 2,391 1,495

EBIT excl Process Inventory Revaluation 734 125 1,480 1,582

EBIT Margin % * 11% 2% 8% 6%

Free cash flow 610 -117 -1,298 1,371

Earnings per share, SEK 2.50 -0.49 6.14 5.07

Gearing 48% 37%

* EBIT Margin excl Process Inventory Revaluation

Boliden AB 2009-10-2629

Group EBIT Q3 2009versus Q3 2008 and Q2 2009

MSEK Q3 2009 Q3 2008 Q2 2009EBIT 949 -142 654Process Inventory Revaluation 215 -267 177EBIT excl Process Inventory Revaluation 734 125 477

Deviation 609 257Specification of deviation:Volume 91 153Costs 6 -53Prices & Terms 361 424

Metal prices and terms 198 487

Realised Metal- Currency hedge 173 -61

TC/RC terms 41 32

Premiums -51 -18

Definitive pricing (MAMA) 0 -16

Currency effects 163 -261whereof translation effects 14 -1

Others -12 -6Deviation 609 257

Effect in each quarterRealised Metal-, Currency hedge 32 -141 93Definitive pricing (MAMA) 14 14 30

Increased Productionin zinc smelters and high production and grades in Aitik

Average Cu up 25%

Average Zn up 19%

Average USD/SEK down -8%

Boliden AB 2009-10-2630

Group EBIT YTD 2009versus YTD 2008

MSEK 2009 2008EBIT 2,391 1,495Process Inventory revaluation 911 -87EBIT excl Process Inventory Revaluation

1,480 1,582

Deviation -102Specification of deviation:Volume 8Costs 236Prices & Terms -1,549

Metal prices and terms -2,200

Realised Metal- Currency hedge 839

TC/RC terms 47

Premiums -246

Definitive pricing (MAMA) 11

Currency effects 1,238whereof translation effects 100

Others -35Deviation -102

Effect in each quarterRealised Metal-, Currency hedge 315 -524Definitive pricing (MAMA) 30 19

Costs in localcurrency down -3%

Average Cu down - 41%

Average Zn down -30%

Higher spot sales

Average USD/SEK up 27%

Boliden AB 2009-10-2631

EBIT per Business Area

MSEK Q3 09 Q3 08 YTD 09 YTD 08Smelters excl ProcessInventory Revaluation 101 150 95 873

Mines 727 74 1,618 731

Other -94 -99 -232 -22

EBIT excl Process Inventory Revaluation 734 125 1,480 1,582

EBIT 949 -142 2,391 1,495

Higher value in Others YTD due to profit elimination in internal sales

Boliden AB 2009-10-2632

Operating costs impacted by weaker SEK

Total MSEK 7,759 YTD

Share of total operating costs YTDChange in operating costs, local currencies

YTD 2009 vs 2008

Energy -3%Consumables -0%Personnel expenses -0%Transport costs -15%External services -13%Depreciation & other +10%

Total operating costin local currency

-3%

Total operating costin SEK

+3%

Energy; 18%

Transport; 5%

Consumables; 18%

Depreciation & other

; 13%

External services; 17%

Personnel; 29%

Boliden AB 2009-10-2633

Cash flow

MSEK Q3 09 Q3 08 YTD 09 YTD 08Op profit before depreciation (EBITDA)* 1,340 208 3,565 2,553

Changes in working capital* 211 1,085 -1,163 2,370

Capital expenditure -1,081 -1,157 -3,646 -3,091whereof Aitik 36 -565 -678 -2,317 -1,736

Free cash flow 610 -117 -1,298 1,371*Includes Process Inventory Revaluation

Inventory value decreased by 124 MSEK from Q2 2009Aitik 36 capital expenditure of 565 MSEK in Q3 2009 (1,105 MSEK in Q2 2009)

Boliden AB 2009-10-2634

Capital structure

GearingSEK bnUnless otherwise stated

30Sept2009

30 Sept 2008

Total Asset 32.2 27.0

Capital employed 26.0 21.3

Shareholders' equity1 16.0 14.2

Net debt 7.6 5.3

Gearing % 48 37

Equity/asset ratio, % 50 53

Average maturity in years 4.0 5.1

Average interest rate, % 2.18 5.76

Interest duration, years 2.2 0.1

Liquidity reserves2 6.5 8.4

37% 39%

52%55%

48%

0%

10%

20%

30%

40%

50%

60%

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009

1. Shareholders’ equity includes the value of outstanding hedge contracts

2. Defined as unutilised credit lines and cash less outstanding commercial papers

Boliden AB 2009-10-2635

Sensitivity analysis

Changein metalprices,+10%

EBITeffect, SEK m

Change inUSD, +10%

EBITeffect, SEK m

Change inTC/RC,+10%

EBITeffect,SEK m

Zinc 485 USD/SEK 700 TC Zn 70

Copper 335 EUR/USD 420 TC/RC Cu 60

Lead 105 USD/NOK 95 TC Pb -15

Gold 90

Silver 85

Estimate of the 12-month effect on Group EBIT on September 30 2009, based on planned production volumes. Effects of hedging, contracted TC/RC or stock exposures are not taken into account.

35

Boliden AB 2009-10-2636

To summarize Q3 2009

MarketStrong Chinese demandHigh pricesTight market for copper concentrates – TC/RC under pressureZinc re-starts

BolidenStrong EBIT and Cash FlowHigher than average head grades – peaked in Q3Stable productionAitik on plan

Boliden AB 2009-10-2637

Going forward

Head grades average or below at end of periodIncreasing exploration activitiesCommissioning problems with mill in Tara

Boliden AB 2009-10-2638

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 effecton 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.

Boliden produces metals that make modern life work

Documents

Interim Report - Bolideninvestors.boliden.com/afw/files/press/boliden/Boliden-Q3... · 2010-01-08 · Boliden AB 3 2009-10-26 Third quarter 2009 Boliden Revenues MSEK 6,960 (7,513)