aurubis ag the leading integrated copper producer · 2015. 3. 26. · february 2015 improved kpis...
TRANSCRIPT
February 2015 1 1 1
Dr. Bernd Drouven
CEO
Erwin Faust
CFO
DVFA Analyst Conference
on February 13, 2015
Aurubis AG
The Leading Integrated
Copper Producer
February 2015
February 2015
Agenda
2
1.
Current situation and
trends on the main
markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 2015
Improved KPIs at Aurubis during the first quarter
3
3 months
FY 2014/15
3 months
FY 2013/14
Operating EBT (€m) 39 (3)
Operating ROCE (%) 11.0 0.3
Certain prior-year figures have been adjusted.
February 2015
33
6 39
-3
Considerable profit increase due to improved
concentrate markets and previous year’s large-scale
shutdown
4
EBT 1st quarter 2014/15 (in €m, rounded)
3 mo.
FY 14/15
Operating
EBT
Adjust-
ments
Operating
EBT
EBT
IFRS
3 mo.
FY 13/14 Significant factors influencing the results
» Considerably higher treatment and refining charges for
copper concentrates with higher concentrate throughput at
the same time
» Slight increase in sales prices for sulfuric acid
» Increased cathode premium
» Recovery in copper scrap markets with refining charges at
the level of Q1 2013/14
» Higher metal yield with a constant metal price level in euros
» Throughput and production figures impacted by shutdowns
» Better Rod & Shapes results
February 2015
Our market environment improved compared to
previous year
5
60%
80%
100%
120%
140%
160%
180%
200%
Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15
TC/RCs for copperconcentrates (contract)
Sulfuric acid price (pentasulTampa)
European refining chargefor copper scrap
Cathode premium
Trend in significant earnings drivers
100 % = Oct 2013
February 2015
Flat rolled products
Aurubis, an integrated copper producer
RECYCLING MATERIALS
CONCENTRATES
BU Primary Copper
BU Recycling /
Precious Metals
SULFURIC
ACID
Iron silicate
Other
metals
PRECIOUS
METALS
BU Copper Products
WIRE ROD
SHAPES
Other semi- finished products
CATHODES
6
Copper production Mines and
recycling markets Copper processing
Processors and
end users
February 2015 7
Global copper demand continues to grow
Global copper demand (in million t) » Development in emerging countries and the
use of new technologies will continue to
push copper demand.
» The main driver is the infrastructure sector,
followed by consumer goods.
» Central applications include construction,
energy production and distribution,
electronics, cars and air conditioning.
» China is the key driver of copper demand
growth; share of global demand expected to
increase from 44 % (2013) to 48 % (2020) –
CAGR = 7 % p.a.
China
0.7 1.8
9.2
12.3 10.2
13.5
11.4
13.2
10.9
15.3
20.6
25.5
1990 2000 2013 2020e
Source: Wood Mackenzie 09/2014
February 2015 8
The European copper market traditionally
exhibits a cathode deficit
2.3
13.6
0.1 0.2
Total demand 2014e: 21.8 million t
Global output 2014e: 20.8 million t
-0.4
-2.9
+1.1 +0.4 0.6
+2.7
Source: Wood Mackenzie 09/2014
3.6
0.7
-0.6
-0.4
0.7
+0.6
• Copper demand by region in 2014e (in million t)
• Copper surplus/deficit before adjustment (in million t)
February 2015
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
A number of new projects will start up production
before 2020
Size of deposits
(in million t of copper content)
Copper price
(in US$/t – 3-month quotation)
Source: CRU 01/2014, company data
9
Escondida (CL)
Collahuasi (CL)
Batu Hijau (ID)
Los Pelambres (CL)
Antamina (PE)
Esperanza (CL)
Los Pelambres Expansion (CL)
Antamina Expansion (PE)
Los Bronces Expansion (CL)
Salobo I (BR)
Toromocho (PE)
Caserones/Regalito (CL)
Oyu Tolgoi
(MN)
Salobo II (BR)
Mina Ministro Halees (MMH)Las Bambas
El Teniente (CL)
Quellaveco (PE)
Andina Expansion -
Phase II
Chuquicamata
underground (CL)
0
20
40
60
80
100
120
140
1990 1995 2000 2005 2010 2015 2020
Existing projects
New projects
February 2015
2000
3000
4000
5000
6000
7000
8000
9000
10000
0
250
500
750
1000
1250
1500
1750
2000
10
/09
04
/10
10
/10
04
/11
10
/11
04
/12
10
/12
04
/13
10
/13
04
/14
10
/14
10
in US$/t in 1,000 t Metal exchange inventories LME copper price
Copper price and metal exchange inventories
Exchange inventories in days of usage (end of January 2015): world 4 days
Copper price
2/11/2015:
5,695
Copper price declined significantly in January
2015
February 2015
Agenda
11
1.
Current situation and
trends on the main
markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 2015
Aurubis is the largest buyer on the free
concentrate market
International custom smelter output (2013; in 1,000 t of Cu content; primary*)
Source: Wood Mackenzie 12/2013, Aurubis Annual Report 13/14 * Copper production from concentrates from non-controlled mines
12
570
460
430
420
420
370
360
340
240
230
Aurubis
JX Holdings (JP)
Mitsubishi Materials (JP)
Glencore Xstrata (CH)
Sumitomo Metal Mining (JP)
Jinchuan (CN)
Tongling (CN)
Jiangxi Copper Co. (CN)
Birla Copper (IN)
Sterlite Industries (IN)
Aurubis
February 2015
660
350
210
160
100
1,200
230
Aurubis
Metallo Chimique (BE)
Boliden (SE)
MW Brixlegg (AT)
KGHM (PL)
Chinese smelters
Japanese smelters
Aurubis is the world market leader in copper
recycling
Throughput of recycling material worldwide (in 1,000 t)
Copper scrap
Other recycling materials
Aurubis
Source: Wood Mackenzie, competitor’s homepage, Aurubis estimates
13
Aurubis Annual Report 13/14, copper content for Chinese and Japanese smelters
* Fiscal year 2013/14
February 2015
1,407
1,193
1,126
1,120
1,114
1,038
658
654
602
591
Codelco (CL)
Freeport McMoran (US)
Aurubis
Glencore Xstrata (CH)
Jiangxi (CN)
Tongling (CN)
Southern Copper (PE)
JX Holdings (JP)
Sumitomo (JP)
KGHM (PL)
14
Aurubis is one of the world’s leading cathode
producers
International cathode output (in 1,000 t)
Aurubis
Source: Wood Mackenzie 09/2014, Aurubis Annual Report 13/14
February 2015
Aurubis is the leading rod producer with
expertise and customer proximity
Copper rod output (in 1,000 t, excl. oxygen-free rod)
15
742
545
490
380
315
290
275
270
270
255
Aurubis
Freeport McMoRan (US)
Jiangxi Copper (CN)
Jiangsu Jinhui (CN)
Southwire (US)
Nanjing Walsin (CN)
Nexans (FR)
Changzhou Jinyuan (CN)
LS-Cable (KR)
CCI/CCP (IT)
Aurubis
Source: 2013 basis, Aurubis estimates, Aurubis Annual Report 13/14
February 2015
218
215
195
170
145
130
125
115
Aurubis
Poongsan (KR)
Wieland (DE)
Chinalco (CN)
Mitsubishi Shindo (JP)
KME (DE)
Global Brass andCopper (US)
Anhui Jingcheng (CN)
Aurubis produced more than 200,000 t of copper and
alloy strip for industrial applications in 2013/14
Copper and copper alloy strip output from producers
worldwide in 2013/14 (in 1,000 t)
16
Aurubis
Source: Aurubis information and estimates, Aurubis Annual Report 13/14
February 2015
Agenda
17
1.
Current situation and
trends on the main
markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 2015
Aurubis’ key financial indicators benefited from positive
market environment and exceeded Q1 of previous year,
which was affected by large-scale shutdown
18
3 months 3 months Change
2014/15 2013/14 Absolute Relative
Revenues €m 2,635 2,793 -158 -6 %
Gross profit €m 242 195 +47 +24 %
EBITDA €m 82 33 +49 >100 %
EBIT €m 49 4 +45 >100 %
EBT €m 39 (3) +42 >100 %
Consolidated net result €m 29 (2) +31 >100 %
Net cash flow €m 102 300 -198 -66 %
Return on capital employed (ROCE) % 11.0 0.3 - -
(on the basis of operating IFRS)
Certain prior-year figures have been adjusted.
February 2015
Reconciliation of statement of financial position and
income statement from IFRS (operating) to IFRS
(average cost method)
19
In € million
IFRS based on
operating
IFRS using
average Adjustments
Statement of financial position
12/31/2014
Total assets and liabilities 3,978 3,506 (472)
Assets
Fixed assets
Inventories
1,442
1,931
1,385
1,516
(57)
(415)
Equity and liabilities
Equity
Deferred tax liabilities
1,866
209
1,544
59
(322)
(150)
Income statement 10/1/2014 – 12/31/2014
Change in inventories 138 128 (10)
Other operating income 15 15 0
Cost of materials (2,551) (2,537) 14
Gross profit 238 242 4
Earnings before taxes 33 39 6
Tax expense (8) (10) (2)
Net result 25 29 4
February 2015
12/31/2014
operating
12/31/2013
operating Target
Profitability
ROCE*
11.0 %
0.3 %
15 %
Capital structure:
- Equity ratio (equity / total liabilities)
- Fixed asset cover (equity / fixed assets)
- Intensity of investments (fixed assets /
total assets)
44.0 %
111.4 %
39.5 %
44.4 %
110.8 %
40.1 %
> 40 %
> 120 %
< 40 %
Debt and interest coverage
- Net debt / EBITDA
- EBITDA / net interest expense
0.5
10.6
1.6
3.8
< 3
> 5
Liquidity
- Quick ratio (current assets - inventories
+ finished products + credit lines / current
liabilities)
107.1
109.3 %
> 100 %
Certain prior-year figures have been adjusted.
Development of Aurubis Group financial ratios reflects
solid statement of financial position and improved
results of operations
20
(on the basis of operating IFRS)
* EBIT rolling over the last four quarters
February 2015
BU Primary Copper: Higher throughputs and
better market environment than the prior year
21
Operating results in BU Primary Copper (1st quarter of fiscal year 2014/15)
BU Primary
Copper
Q1
14/15
Q1
13/14
EBIT (in €m) 44.8 8.8
EBT (in €m) 42.7 5.8
ROCE (in %) 26.7 4.1
(Quantities in 1,000 t)
Concentrates 576 509
Copper scrap 59 48
Cathodes 238 222
Sulfuric acid 551 492
» The previous year’s results were strongly impacted by the
extensive maintenance and repair shutdown at the
Hamburg site and delays in restarting production
» High copper concentrate supply led to higher TC/RCs
» Good cathode demand from Europe and China positively
affected cathode premium
» Improved supply of copper scrap; refining charges back up
to the level of Q1 2013/14
» Increased sulfuric acid prices due to tight supply worldwide
» Concentrate throughput not as expected due to repairs in
Hamburg (boiler and converter damage) and Pirdop
(maintenance of the anode furnace)
» ROCE above target and notably improved compared to
previous year
February 2015
BU Recycling/Precious Metals: Improved quarterly
results despite throughput losses
22
Operating results in BU Recycling/Precious Metals (1st quarter of fiscal year 2014/15)
BU Recycling/
Precious Metals
Q1
13/14
Q1
12/13
EBIT (in €m) 8.0 6.1
EBT (in €m) 5.5 4.9
ROCE (in %) 5.0 -3.3
(Quantities in 1,000 t)
KRS throughput 70 84
Copper scrap 32 32
Cathodes 47 47
» Copper scrap supply recovered well, with refining
charges returning to the level of Q1 2013/14
» Maintenance shutdown in the KRS and anode furnace
repairs strained earnings
» Cathode output at prior-year level due to flexibility of
supply within Aurubis Group
» Gold output increased to 12 t (previous year: 10 t) due to
full operation of new anode slime treatment facility
» ROCE still considerably below target
February 2015
BU Copper Products: Positive trend in Business Line
Rod & Shapes
23
Operating results in BU Copper Products (1st quarter of fiscal year 2014/15)
» Weaker product markets overall due to seasonal effects
» The increase in the results was primarily supported by
Business Line Rod & Shapes
» In northern Europe the mild winter supported the
implementation of infrastructural and housing projects
» Following a period of good market development for FRP
during the previous year, European demand remained
weak in Q1
» Reduced production at the Buffalo plant resulting from a
snowstorm in November
» Lower restructuring expenses overall
BU Copper
Products
Q1
13/14
Q1
12/13
EBIT (in €m) 4.8 (2.6)
EBT (in €m) 2.1 (4.7)
ROCE (in %) 6.4 (0.1)
(Quantities in 1,000 t)
Rod 163 156
Shapes 38 39
Strip and wire
products 48 50
February 2015 24
Stable shareholder structure
Shareholder structure as of Dec 2014
» IPO in 1998
» Aurubis shares are in the Prime
Standard Segment of the Deutsche
Börse
» Shares are listed in the MDAX and in
the Global Challenges Index (GCX)
~25 %
~40 %
~35 %
Salzgitter AG
Institutional investors
Retail investors
February 2015
5 €
10 €
15 €
20 €
25 €
30 €
35 €
40 €
45 €
50 €
55 €
1/0
4
1/0
5
1/0
6
1/0
7
1/0
8
1/0
9
1/1
0
1/1
1
1/1
2
1/1
3
1/1
4
1/1
5
70%
80%
90%
100%
110%
120%
130%
140%
10/1
4
11/1
4
12/1
4
1/1
5
2/1
5
3/1
5
Aurubis
DAX
MDAX
Closing prices of Aurubis shares (Xetra)
Development of Aurubis share price
200 days average
Comparison of Aurubis shares with indices (September 30, 2013 = 100 %)
Market capitalization
February 11, 2015:
about € 2.2 billion
25
February 2015
Agenda
26
1.
Current situation and
trends on the main
markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 2015
Demand for refined copper determined by global
trends in the long term
Changes in energy
transmission and distribution
Decentralization of
energy production
Growing energy demand
New engine
technologies
Uncertain trend in
production relocation
Copper substitution and
emerging new materials
Continued
urbanization
Growing global middle
class
Balance in financial
markets and global
economy
Energy Society
Economy Technology
27
February 2015
A big step forward – Aurubis’ strategy
28
Markets
Solutions for
customers &
suppliers
Full synergy
potential of
value chain
Multi-metal
supply and
recovery
Internation-
alization
Sustainability Core metal
copper
Production
capability
& innovation
» The core metal, copper, is decisive for success
» Expand multi-metal supply and recovery by
increasing production expertise
» Better understand the needs of customers and
suppliers and develop new solutions
» Broaden the activities in the value chain – closer
internal and external cooperation to achieve this
objective
» More investments outside of Germany in order to
enhance proximity to supply and sales markets
» Sustainability plays a central role in our activities
» Production capability is a strength and driving force
of our success – innovation is the key factor
We will strengthen our leading market position and add more value for
our suppliers and customers
February 2015 29
The “Step Up” program defines all of the projects that
have to be implemented across the Group and
introduces strict monitoring
Identification
and definition
of projects
in all BUs/BLs
Establishment
of project
monitoring &
controlling
Strategy implementation
» Potential: growth, production expertise/innovation, increasing efficiency, reducing
costs, improving net working capital
» The main projects involve expertise in processing complex raw materials,
optimizing supply chain management, closing the loop, expanding capacities and
enhancing operating efficiency
» Projects are scheduled to be implemented until 2018/19
29
Strategy
definition
February 2015
Project target: Sustainable increase in results by
improving our business processes
» The focus is on analyzing our
business processes in Hamburg and
Lünen with the objective of
improving margins and reducing
costs.
» The goal is to reduce complexity
and make Aurubis fit for the future
by modernizing these processes.
» Structures will be developed based
on the optimized processes (e.g.
supply chain management, HR,
etc.).
» The plan is to introduce value
stream management to improve
data quality and availability.
30
Change
Aurubis AG
Support
functions
Management
functions Central functions
Structures & costs
Processes
February 2015
Large-scale shutdown in Pirdop scheduled for
Q3 2015/2016
31
» Primary copper and sulfuric acid production facilities will be renovated in Bulgaria
» The last shutdown of this kind in Pirdop was in 2007
» Scheduled shutdown period: about 50 days
» Capital expenditure volume: approx. € 44 million
» Expected EBT effect: about € 25 million
February 2015
Considerably higher earnings level expected for
fiscal year 2014/15
» Compared to the Reuters survey from October 2014, which indicated a copper price
forecast of over US$ 6,500/t for 2015, the copper price is currently much lower
» Aurubis increased the cathode premium for European customers from US$ 105/t to
US$ 110/t
» Good copper concentrate supply situation led to an additional increase in benchmark
TC/RCs (US$ 107/t / US¢ 10.7/lb)
» A recovery trend is expected in the sulfuric acid markets in spring. The short-term visibility
in these markets still makes a forecast difficult
» The copper scrap markets have recovered well; a temporary tightening is expected due to
strong copper price declines
» Overall, a stable sales trend is expected for BU Copper Products
32
We expect a considerably higher operating EBT and a slightly higher
ROCE for fiscal year 2014/15
February 2015 33 33 33
Aurubis AG
The Leading Integrated
Copper Producer
December 2014
February 2015 34
IR contacts
Dieter Birkholz
Senior Investor Relations Manager
+49 40 7883-3969
Angela Seidler
Head of Investor Relations
+49 40 7883-3178
February 2015
Financial calendar
Financial calendar
» Annual General Meeting 2015 March 19, 2015
» Interim Report First 6 Months 2014/15 May 12, 2015
» Interim Report First 9 Months 2014/15 August 13, 2015
» Annual Report 2014/15 December 11, 2015
35
February 2015 36
Annex 1: Company profile
» Founded in 1866 as Norddeutsche Affinerie AG in Hamburg
» IPO in 1998
» Renamed in 2009 after the acquisition of Cumerio
» Production sites in European countries and North America with about
6,500 employees
» Third largest producer of copper cathodes in the world with an annual
output of about 1.1 million t of copper cathodes
» No. 1 copper recycler in the world
» Largest rod producer in the world
» One of the world’s leading copper foil and flat rolled product
manufacturers
» Production capacities for approx. 1.3 million t of different copper
products
» Global leader in environmental protection
Aurum + Rubrum = the red gold = Aurubis
February 2015
Annex 2: Primary copper production process
37
Copper
concentrates
Flash smelter
Off-gas cleaning
Sulfuric acid plant
Anode furnace
Copper scrap
Copper matte
(64 % Cu)
Blister copper
(98 % Cu)
Converter
Copper
(99.5 % Cu)
Anode
casting wheel
Anode
Nickel sulfate
Precious metal
refining
Anode slime
Tankhouse
Cathode
February 2015 38
Annex 3: Aurubis AG’s sources of earnings
TC/RC
Treatment and refining charge = Mines’ payments to smelters for processing
copper concentrates into cathodes. Smelters’ central profit driver – primarily
influenced by concentrate supply and demand
RC
Refining charge = Fee for processing copper scrap, blister and recycling
materials into cathodes; primarily influenced by the situation on the European
scrap markets
Metal prices Price risks fundamentally eliminated at Aurubis by hedging; strong influence on
revenues and working capital, also for our customers
Cathode premium
Surcharge for high-quality cathodes (Grade A), premium for cathode delivery,
paid by the customer; expresses the scarcity in structurally undersupplied
markets
Shape surcharge Processing prices for converting cathodes into copper products (wire rod,
shapes, flat rolled products, etc.), paid by the customer
Sulfuric acid Sulfuric acid (H2SO4) is a by-product of concentrate processing; 1 t of sulfuric
acid is generally produced per t of concentrate treated
February 2015
Annex 4: European cathode premium
110
0
20
40
60
80
100
120
140
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
*2012
201
3
201
4
201
5
(in US$/t; from June 1, 2012: Aurubis cathode premium )
* from June 1: US$ 86/t 39
February 2015 40
Disclaimer
Forward-looking statements
This document contains forward-looking statements that involve risks and
uncertainties, including statements about Aurubis’ plans, objectives, expectations
and intentions. Readers are cautioned that forward-looking statements include
known and unknown risks and are subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
control of Aurubis. Should one or more of these risks, uncertainties or
contingencies materialize, or should any underlying assumptions prove incorrect,
actual results could vary materially from those anticipated, expected, estimated or
projected.