Nyrstar NV · EURONEXT:NYR
Nyrstar NV — H1 2013 Earnings Presentation
38 slides from Nyrstar NV's earnings presentation, Jul 25, 2013
Slide 1: Half Year Results 2013
Half Year Results 2013 25 JULY 2013 Half Year Results 2013
Slide 2: Introduction & highlights
Half Year Results 2013 > Introduction & highlights Market review Group financial results Mining segment Metals Processing segment Safety, health & environment Outlook Roland Junck Chief Executive Officer 2
Slide 3: Nyrstar Management Committee
Half Year Results 2013 Nyrstar Management Committee Corporate Functions Heinz Eigner Michael Morley Russell Murphy Chief Financial Chief Corporate and Chief Human Resources, Officer Development Officer Safety and Environment Officer Business Segments Roland Junck Chief Executive Officer Graham Butte
Slide 4: HY 2013 Highlights
Half Year Results 2013 HY 2013 Highlights Challenging trading environment with downward movements in base and precious metal prices; strategic price hedges put in place for H2 2013 - Average silver and gold prices declined by 15% and 10% respectively, impacting mining C1 cash costs and to a lesser e
Slide 5: Market review
Half Year Results 2013 Introduction & highlights > Market review Group financial results Mining segment Metals Processing segment Safety, health & environment Outlook Bob Katsiouleris Senior Vice President, Marketing, Sourcing and Sales 5
Slide 6: Zinc transitioning from super-cycle dynamics to stand alone fundamentals
Half Year Results 2013 Zinc transitioning from super-cycle dynamics to stand alone fundamentals, with different regional opportunities Europe: Green shoots emerge European truck book / bill leads auto production by one quarter - Demand weak in H1 2013; although premiums strong - Growth concerns as e
Slide 7: Key events in H1 2013: zinc treatment charges and European zinc metal
Half Year Results 2013 Key events in H1 2013: 2013 zinc treatment charges and European zinc metal Settlement of 2013 zinc and lead treatment charges (TCs) ‒ Zinc smelting sector achieved 10% improvement from 2012 benchmark TC terms ‒ Nyrstar negotiated higher base TC and improved de-escalator terms
Slide 8: Group financial results
Half Year Results 2013 Introduction & highlights Market review > Group financial results Mining segment Metals Processing segment Safety, health & environment Outlook Heinz Eigner Chief Financial Officer 8
Slide 9: Zinc price declined sharply and remained depressed during Q2
Half Year Results 2013 Following strong start to 2013, the zinc price declined sharply and remained depressed during Q2 LME Zinc Price USD 2,323 USD 2,063 USD 1,977 USD 1,916 USD 1,937 EUR 1,659 EUR 1,463 EUR 1,524 EUR 1,504 EUR 1,475 USD 2,188 USD 1,823 Zinc price is average of LME daily cash settl
Slide 10: Silver and gold prices fell significantly during H1 2013
Half Year Results 2013 Silver and gold prices fell significantly during H1 2013 LBMA Silver Price (USD per troy ounce) USD 34.84 USD 35.39 USD 31.06 USD 31.24 USD 26.63 USD 32.23 USD 18.86 LBMA Gold Price (USD per troy ounce) USD 1,445 USD 1,694 USD 1,651 USD 1,687 USD 1,523 USD 1,694 USD 1,192 Base
Slide 11: Group underlying EBITDA and PAT adversely impacted
Half Year Results 2013 Group underlying EBITDA and PAT adversely impacted by lower production volumes and metal price environment ‒ Group underlying EBITDA of EUR 87m, down 20 % on H2 2012 (EUR 109m) ‒ Mining EUR 33m, down 55%, due to lower metal prices (particularly silver and gold) and lower produ
Slide 12: Project Lean cost savings increased to EUR 75m
Half Year Results 2013 Continued to deliver cost savings through Project Lean; now identified EUR 75m (up from EUR 50m) of incremental annualised sustainable savings to be realised by end of 2014 Expected project outcome ‒ Detailed and comprehensive group wide programme to sustainably reduce operati
Slide 13: Reduced capital expenditure and on track to meet full year guidance
Half Year Results 2013 Reduced capital expenditure and on track to meet full year guidance Capital Expenditure decreased by 14% on H2 2012 ‒ EUR 50m for mining, down 19%, included: ‒ EUR 24m for sustaining & compliance and EUR 25m for exploration & development ‒ EUR 1m for growth projects, including
Slide 14: Solid financial position; high quality portfolio of long-term debt
Half Year Results 2013 Solid financial position; high quality portfolio of long-term debt with limited covenants Net Debt (EURm) Gearing¹ Quality of debt Type Due Financial Covenants − Cash inflow from operating activities due EUR 120m Convertible to working capital initiatives 2014 None Bonds EUR 2
Slide 15: Strategic price hedging
Half Year Results 2013 Strategic price hedging Zinc ‒ Hedges for Q3 and Q4 2013 guarantee a zinc price between USD 2,100 - 2,200/t for 120kt metal; exposure to upside if price exceeds USD 2,400/t ‒ No intention to enter into medium to long term structural hedges, thereby reducing exposure to changes
Slide 16: Mining segment
Half Year Results 2013 Introduction & highlights Market review Group financial results > Mining segment Metals Processing segment Safety, health & environment Outlook Graham Buttenshaw Senior Vice President, Mining 16
Slide 17: Decline in underlying EBITDA; gross profit impacted
Half Year Results 2013 Decline in underlying EBITDA; gross profit impacted by operational events, lower precious metal prices & higher treatment charges Mining segment: key figures Underlying gross profit2 decreased 13% 259 EURm H2 2012 H1 2013 Variation 226 Gross Profit 259 226 (13)% Underlying Sil
Slide 18: Production volumes lower due to planned and unplanned operational events
Half Year Results 2013 Production volumes lower due to planned and unplanned operational events Zinc in Concentrate Production (kt) Other Metal in Concentrate Production 1 Talvivaara deliveries H1 2012 H2 2012 H1 2013 Nyrstar mine production ‒ Own mine zinc in concentrate production down 6% on H2 20
Slide 19: Average C1 cash cost impacted by precious metal prices and lower volumes
Half Year Results 2013 Average C1 cash cost impacted by decline in precious metal prices, lower production volumes, higher TCs and production mix Average Zinc mines (USD / payable tonne zinc in concentrate) 1,2 ‒ Average zinc C1 cash cost up 36% Operating ‒ Operating cost/t impacted by incurring cos
Slide 20: Metals Processing segment
Half Year Results 2013 Introduction & highlights Market review Group financial results Mining segment > Metals Processing segment Safety, health & environment Outlook Michel Morley Chief Corporate and Development Officer (acting Senior Vice President, Metals Processing) 20
Slide 21: Increase in underlying EBITDA; gross profit impacted
Half Year Results 2013 Increase in underlying EBITDA; gross profit impacted by planned maintenance shutdowns, lower metal prices and improved TC terms Metals Processing segment: key figures Underlying gross profit decreased 5% 419 398 EURm H2 2012 H1 2013 Variation Higher volumes & unlocking untappe
Slide 22: Zinc metal production in-line given planned maintenance shuts
Half Year Results 2013 Zinc metal production in-line given planned maintenance shuts; on track to meet full year 2013 guidance Metals Processing segment production H1 2013 ‒ Zinc metal production in line with management expectations given (previously announced) planned maintenance shuts; on track to
Slide 23: Operating cost per tonne improved due to off-take termination fee
Half Year Results 2013 Operating cost per tonne improved due to recognition of commodity grade metal off-take termination fee Average Metals Processing cost (EUR/tonne)1 By site (EUR/tonne) H2 2012 H1 2013 − Without termination fee, in absolute terms costs remained relatively stable in H1 2013; intr
Slide 24: Safety, health & environment
Half Year Results 2013 Introduction & highlights Market review Group financial results Mining segment Metals Processing segment > Safety, health & environment Outlook Russell Murphy Chief Human Resources, Safety and Environment Officer 24
Slide 25: Safety, Health and Environment
Half Year Results 2013 Safety, Health and Environment Recordable Environmental Lost Time Injury Rate (LTIR) 1 Recordable Injury Rate (RIR) 1 Incidents 1 World World class2 class2 Safety ‒ Tragically, despite a strong focus on safety, an employee was fatally injured at Campo Morado mine in March ‒ RI
Slide 26: Outlook
Half Year Results 2013 Introduction & highlights Market review Group financial results Mining segment Metals Processing segment Safety, health & environment > Outlook Roland Junck Chief Executive Officer 26
Slide 27: Outlook for H2 2013
Half Year Results 2013 Outlook for H2 2013 Executing our strategy ‒ Remain focused on delivering a number of commitments to drive profitability and free cash performance: ‒ Achieve full year production guidance for all metals ‒ Improve cost base through implementation of Project Lean ‒ Achieve capit
Slide 28: Questions
Half Year Results 2013 Questions 28
Slide 29: Appendix
Half Year Results 2013 Appendix 29
Slide 30: Executing on our Strategy
Half Year Results 2013 Executing on our Strategy During H1 2013 Nyrstar continued to execute on its strategy, Nyrstar2020, supported by Strategy into Action, a disciplined approach to take the strategy into every part of the business, and engaging the entire workforce to achieve Nyrstar’s vision of
Slide 31: Group gross profit
Half Year Results 2013 Group gross profit H2 2012 H1 2013 EUR 673m 1 EUR 622m 1 Treatment Charges By-Products By-Products Treatment EUR 108m EUR 226m EUR 190m Charge EUR 125m Premiums Premiums EUR 58m Payable and EUR 61m Payable and Free Metal Free Metal EUR 325m EUR 299m − Gross profit decreased 8%
Slide 32: Mining gross profit by metal
Half Year Results 2013 Mining gross profit by metal H2 2012 H1 2013 EUR 259m 1 EUR 226m 1 Gold Gold EUR 26m EUR 52m Silver1 EUR 27 m Silver1 EUR 30m Copper EUR 28m Copper Zinc Lead Zinc EUR 28m EUR 136m EUR 9m EUR 137m Lead EUR 12m − Gross profit declined 13% in H1 2013 due to lower production and f
Slide 33: Metals Processing gross profit by metal
Half Year Results 2013 Metals Processing gross profit by metal H2 2012 H1 2013 EUR 419m 1 EUR 398m 1 Gold Gold EUR 1m Other3 Silver bearing material2 Other3 EUR8m EUR30m EUR 16m EUR17m Silver EUR 7m Silver EUR 17m Copper EUR 5m Copper EUR 9m Leach product Leach product EUR 27m EUR 21m Sulphuric Acid
Slide 34: Operating expenses
Half Year Results 2013 Operating expenses Underlying operating costs down 5% in H1 2013 Employee Expenses ‒ 3% decrease with improvements made through Project Lean and organisational restructuring Energy Expenses ‒ Increased slightly, 4%, due to introduction of carbon tax on Australian electricity p
Slide 35: H1 2013 mining C1 cash costs
Half Year Results 2013 H1 2013 mining C1 cash costs 1 2 1 C1 cash costs are the net direct cash costs incurred from mining through to refined metal (including operating costs, treatment charges, concentrate freight costs), less by-products credits. 2 Including deliveries from Talvivaara under the zi
Slide 36: EBITDA and EPS reconciliation
Half Year Results 2013 EBITDA and EPS reconciliation EURm H2 2012 H1 2013 EBITDA 91 66 Add back Underlying adjustments: Restructuring expenses 15 11 M&A related transaction expenses 2 1 Net loss / (gain) on disposal of subsidiaries - - Net loss / (gain) on Hobart Smelter embedded derivatives 1 10 Un
Slide 37: EBITDA Sensitivities
Half Year Results 2013 EBITDA Sensitivities Estimated Estimated annual Parameter Variable annualised EBITDA EBITDA impact impact (EURm) (EURm) H1 2013 FY 2012 Zinc price +/- USD100/t +29 / -28 +35 / -34 Lead price +/- USD100/t +1 / -1 +2 / -2 Copper price +/- USD500/t +6 / -6 +6 / -6 Silver Price +/
Slide 38: Important Notice
Half Year Results 2013 Important Notice ‒ This presentation has been prepared by the management of Nyrstar NV (the "Company"). It does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securitie