Aurubis AG Metals for Progress

Transcription

1 Aurubis AG Metals for Progress Live event on the occasion of the publication of the 2016/17 Annual Report & ONE Aurubis update on December 13, 2017 Jürgen Schachler CEO

2 Agenda 1. Financial data 2. Market 3. New organization 4. Outlook 5. ONE Aurubis strategy & business improvement 2

3 Aurubis holds a leading position in the copper value-added chain FY 2016/17 Change vs. prior year Position Concentrate processing* 2,424,000 t +12 % No. 1 worldwide Copper scrap input 272,000 t +8 % No. 1 worldwide Cathode output 1,156,000 t +7 % No. 2 worldwide Wire rod output 719,000 t -5 % No. 1 worldwide Copper shapes output 190,000 t +11 % No. 1 in Europe Flat rolled products and specialty wire output 230,000 t +6 % No. 1 worldwide Sulfuric acid output 2,364,000 t +14 % Gold output 42 t 0 % Silver output 1,071 t +11 % *Custom smelter production 3

4 Aurubis result significantly higher than previous year, as expected FY 2016/17 FY 2015/16 Operating EBT ( million) Net cash flow ( million) Operating ROCE (%) (operating EBIT last 4 quarters)

5 Strong performance at our plants and good recycling markets lead to significantly higher result EBT FY 2016/17 (in million, rounded) FY 16/17 FY 15/16 Significant factors influencing the results 456» Very high concentrate throughput, despite Q1 maintenance shutdown in Hamburg -- prior year large-scale shutdown in Pirdop» Capacity optimization in Pirdop has a positive effect, » advantageous input mix and good availability of copper concentrates,» significantly higher refining charges for copper scrap with a good supply,» slightly improved sulfuric acid revenues» higher metal yield with increased metal prices,» lower copper premium,» higher sales of shapes and flat rolled products,» weaker sales of wire rod,» positive contributions from our efficiency improvement program, EBT IFRS Adjustments Operating EBT Operating EBT» the strong US dollar. 5

6 All Aurubis Group key figures significantly higher than previous year FY FY Change (operating IFRS) 2016/ /16 Absolute Relative Revenues m 11,040 9,475 1, % Gross results m 1,169 1, % EBITDA m % EBIT m % EBT m % Consolidated net income m % Net cash flow m > 100 % Return on capital employed (ROCE) %

7 Reconciliation of balance sheet/income statement from IFRS (average cost method) to IFRS (operating) (in million) IFRS using average cost method Adjustments IFRS based on operating Balance sheet 9/30/2017 Total assets 4, ,975 Assets Fixed assets Deferred tax assets inventories 1, , , ,386 Equity and liabilities Equity Deferred tax assets 2, , Income statement 10/01/2016 9/30/2017 Change in inventories Cost of materials -9, ,862 Gross results 1, ,169 Depreciation of intangible and intangible assets Result from investments measured using the equity method Earnings before taxes Tax expense Consolidated net income December

8 Very strong Aurubis Group key figures (operating IFRS) 9/30/2017 operating 9/30/2016 operating Target Profitability ROCE* 15.1 % 10.9 % 15 % Capital structure - Equity ratio (equity / total liabilities) 52.5 % 47.8 % > 40 % - Fixed asset cover (equity / fixed assets) % % > 120 % - Intensity of investments (fixed assets / total assets) 36.3 % 36.7 % < 40 % Debt and interest coverage - Net debt / EBITDA** - EBITDA / interest result < 3 > 5 Liquidity - Quick ratio (current assets + finished products + credit lines / current liabilities) % % > 100 % * Rolling EBIT last 4 quarters ** Rolling EBITDA last 4 quarters 8

9 Aurubis with a very strong balance sheet (operating IFRS in million) Assets Equity and liabilities 3,975 3,823 3,975 3,823 Fixed assets (36%) (37%) Equity* (53%) (48%) Inventories (35%) (39%) Provisions (11%) (14%) Receivables etc. Cash and cash equivalents 574 (14%) (14%) 472 (12%) (12%) Financial liabilities Other liabilities 351 (9%) 495 (13%) (27%) (25%) * incl. Group profit, interests in other companies 9

10 BU Primary Copper: higher throughputs in Pirdop and favorable scrap markets Operating results in BU Primary Copper (FY 2016/17) BU Primary Copper FY 16/17 FY 15/16 EBIT ( m) EBT ( m) ROCE (%) (Quantities in 1,000 t) Concentrates 2,424 2,156 Copper scrap / blister copper Cathodes Sulfuric acid 2,364 2,068 Gold (t) Silver (t) 1, » Higher throughputs despite Q1 maintenance shutdown in Hamburg (impact on earnings 15 million), prior year shutdown in Pirdop (impact on earnings 29 million)» Advantageous input mix and good availability of copper concentrates» Significantly higher refining charges for copper scrap with a good supply» Weaker sulfuric acid prices due to oversupply on the global markets, especially in the first half-year» High metal gain due to higher metal prices» High silver output due to higher level of precious metals in input mix» Strong US dollar. 10

11 BU Copper Products: Favorable scrap markets compensate for weaker rod markets and Copper Premium Operating results in BU Copper Products (FY 2016/17) BU Copper Products FY 16/17 FY 15/16 EBIT ( m) EBT ( m) ROCE (%) (Quantities in 1,000 t) Copper scrap / blister copper KRS throughput Cathodes Wire rod » Significantly higher refining charges for copper scrap with a good supply» Lower copper premium on the cathode markets» Weaker sales volume for wire rod due to lower demand» Rising demand for flat rolled products and their intermediate product, cast shapes» Supply of other recycling materials sufficient for increasing competitive intensity Shapes Flat rolled and wire products

12 Executive Board and Supervisory Board suggest significantly higher dividend payout of 1.45 Aurubis dividends (in per share) Dividend yield (in %) 1,10 1,00 1,35 1,25 1,45 2,5 2,6 2,4 2,5 2,1 12/13 13/14 14/15 15/16 16/17* 12/13 13/14 14/15 15/16 16/17* * suggestion 12

13 New basis for dividend payout: consolidated operating net income Payout ratio (in %) calculation Aurubis AG unappropriated earnings Payout ratio (in %) calculation Aurubis Group op.ifrs cnsolidated net income /08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17* 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17* * suggestion 13

14 Aurubis shareholder structure Shareholder structure as at September 30, 2017» Reduction of the Salzgitter percentage to 16 % on 10/27/2017 Institutional investors Private investors ~50 % ~25 % Listed in the following indices:» MDAX index» Global Challenges Index (GCX) ~16 %» STOXX Euro 600 (since 09/18/2017) ~25 % Salzgitter Overview share ownership > 3 %» Dimensional Holdings Inc. (USA)» UBS AG (Switzerland)» Allianz Global Investors GmbH» BlackRock, Inc., (USA)» Salzgitter AG (16 %) 14

15 Agenda 1. Financial data 2. Market 3. New organization 4. Outlook 5. ONE Aurubis strategy & business improvement 15

16 Global copper demand continues to increase Global demand for refined copper (in million t) China: (Share in %) 22,5 23,0 23,4 23,9 24,2 21,9 47 % 47 % 48 % 48 % 48 % 48 % e 2018e 2019e 2020e Source: Wood Mackenzie, 09/2017 December 2017» Despite slowed economic growth, China continues to be the most important source of global copper demand (approx. 48 % share) and major net importer» Growth potential for copper use is primarily in the expansion of the electricity grid, in machinery and plant engineering as well as in construction and transportation» Further momentum from the One Belt, One Road initiative» The development in emerging countries as well as the use of new technologies increases the long-term need for copper, also outside of China 16

17 The European copper market traditionally shows a cathode deficit Expected copper demand according to region 2017 (in million t) Expected copper surplus / deficit (in million t) Total demand 2017e: 23.0 million t Global production 2017e: 23.3 million t Source: Wood Mackenzie, 09/

18 Expected copper prices will support mining projects Size of deposits (in million t of copper content) Copper price (in US$/t 3-month quotation) Collahuasi (CL) Oyu Tolgoi (MN) Los Pelambres (CL) Antamina (PE) Batu Hijau (ID) Los Pelambres Expansion (CL) Los Bronces Expansion (CL) Antamina Expansion (PE) Caserones/ Regalito (CL) Salobo I (BR) Esperanza (CL) Toromocho (PE) Las Bambas Mina Ministro Halees (CL) Cobre Panana El Teniente (CL) Chuquicamata underground (CL) Andina Expansion (CL) Quellaveco (PE) Corredor (CL) Source: company data 18

19 Expansion of Chinese smelter capacity loses momentum Production of refined copper in China (in million t) 10,3 10,6 10,9 11,1 7,0 7,8 8,4 9,4» Expected production increases will primarily take place at a multitude of existing smelters and accrue modestly, for the most part» For 2018, planned projects will be strained by difficult financing options Source: Wood Mackenzie, 09/

20 Trend in most important earnings drivers Trend in significant market prices and refining charges 350% 100 % = Oct % 250% 200% 150% 100% TC/RCs für Kupferkonzentrate (kontrakt) Schwefelsäurepreis (Spot CFR Brasil) Europäischer Raffinierlohn für Altkupfer Kupferprämie 50% Okt 15 Jan 16 Apr 16 Jul 16 Okt 16 Jan 17 Apr 17 Jul 17 Okt 17 20

21 Agenda 1. Financial data 2. Market 3. New organization 4. Outlook 5. ONE Aurubis strategy & business improvement 21

22 Multi-layered processes, more added value 22

23 Organizational change on October 1, 2017 Operating EBT (in million) Old structure New structure FY 16/17 FY 16/17 FY 15/16 FY 15/16 Diff. 16/17 15/16 Primary Copper Copper Products (1) Other/cons. (38) (31) (7) Consolidated earnings before taxes Diff. 16/17 15/16 Metal Refining & Processing Flat Rolled Products Other/cons. (38) (31) (7) Consolidated earnings before taxes » Segment Metal Refining & Processing recovers metals from primary and secondary raw materials and markets these in various forms. Raw material purchasing, the processing into pure metals as well as metal sales of standard products with lower depth of added value also belong to this.» Approach Utilization of production capacities with optimization of input mix, marketing of standard products in large production batches» Segment Flat Rolled Products produces and markets a variety of copper alloys in the form of rolled and wire products in smaller production batches. Differentiated, rather small product portfolio with well-developed distribution network.» Approach: Products are oriented to customer wishes; production facilities will be optimally utilized due to the product mix optimization 23

24 Agenda 1. Financial data 2. Market 3. New organization 4. Outlook 5. ONE Aurubis strategy & business improvement 24

25 Forecast for 2017/18» The average 2018 copper price is at US$ 6,315/t in a Reuters poll from the beginning of November 2017» The supply of copper concentrates is expected to allow for satisfactory TC/RCs» High capacity utilization at our primary copper smelters» Sulfuric acid markets are currently signaling a stable situation, unchanged short-term visibility makes a forecast difficult» Copper premium at prior year level» Expected high metal prices may keep the supply with good refining charges at a high level» The current level of demand in copper product business is expected to continue» Efficiency-improvement targets for 2017/18 will be reached» US$ effects significantly weaker than 2016/17 25

26 Forecast for 2017/18: Very good prior year level is expected to be maintained We expect operating EBT at the very good prior year level and a slightly lower operating ROCE for the Aurubis Group in fiscal year 2017/18 compared to the reporting year.» In Segment Metal Refining & Processing, we expect an operating EBT at prior year level for FY 2017/18 and a slightly lower operating ROCE compared to the previous year.» In Segment Flat Rolled Products, we anticipate significantly higher EBT for FY 2017/18 and a slightly higher operating ROCE compared to the previous year. Aurubis definition for a qualified comparative forecast Change in operating EBT ± 0 to 5 % At prior-year level ± 5.1 to15 % Moderate > ±15 % Significant Operating ROCE delta percentage points ± 0 to 1 At prior-year level ± 1 to 4 Slight > ± 4 Significant 26

27 Agenda 1. Financial data 2. Market 3. New organization 4. Outlook 5. ONE Aurubis strategy & business improvement 27

28 Our mission and vision: purpose and ambition for the future 28

29 Our business model: expertise and capabilities to fulfill purpose Complex raw material markets Smelting & Refining Processing synergies Technology applications markets Standard copper raw material markets enabling Metal recovery Copper semi-finished markets 29

30 Our metals for an innovative world: our copper will enable the trends of the future green energy e-mobility Sustainable growth in copper demand expected digitization urbanization 30

31 Our carrier metal copper: Aurubis best positioned for multi-metal strategy Base Metals and their by-metals Differentiation by capabilities Strong metallurgical know-how Broad experience in realizing synergies between process steps and copper & lead metallurgy International plant network: leveraging existing infrastructure for investments Based on our strong capabilities, Aurubis is well positioned to utilize full multi-metal potential of copper as carrier metal 31

32 Our market environment: opportunities and challenges for further development Standard copper raw material markets Complex raw material markets Products markets Society trends Expansion of mine supply and copper scrap generation Increasing metal prices foster attractiveness of complex raw materials Postponed mine supply could lead to deficit in refined copper UN sustainable development goals Increasing global smelting capacities Mine-specific complex concentrate profiles Copper products demand supported by mega trends Global knowledge society Competition for standard raw materials Rising global e-scrap generation, still low collection rates Growing application markets drive copperrelated by-metals demand Change & disruption Cyclical treatment and refining charges Increasing generation of high-value industrial waste Sulfuric acid markets to stay volatile Balanced use of resources 32

33 Our strategic focus: strengthening of copper business Complex raw material markets Smelting & Refining Processing synergies Technology applications markets Standard copper raw material markets enabling Metal recovery Copper semi-finished markets Strengthening leading position: cost competitiveness & structural optimization 33

34 Our strategic focus: development of multi-metal business Expanding multi-metal business: strong capabilities & innovative industry solutions Smelting & Refining Complex raw material markets Processing synergies Technology applications markets Standard copper raw material markets enabling Metal recovery Copper semi-finished markets 34

35 Our strategy: Growth, Efficiency and Responsibility 35

36 Our strategic focus Growth: development of strong multi-metal capabilities Approach» Consequent development of multi-metal processing capabilities based on copper as main carrier metal» Development of mine specific solutions for primary raw materials in close cooperation with suppliers» Development of recycling solutions for industrial and end-of-life scrap together with industrial partners» Establishing new sales channels for non copper metals in high-growth application markets Targets 100 % sales volume growth of non copper metals until FY 2022/23* 100 % volume growth in direct supply of complex recycling raw materials until FY 2022/23* Establishing new sales channels for highgrowth application markets * Baseline: FY 2016/17 36

37 Our strategic focus Growth: examples for optimized sales channels Minor Metals Nickel Selenium & Tellurium: Successful examples of value maximization from recovered minor metals Aurubis Selenium Leading supplier of Selenium products to:» Industrial applications (i.e. glass, solar cells)» Pharmaceutical & food industry» Animal feed & fertilizer industry Aurubis Tellurium Offering metal for a wide range of applications:» Thermoelectric devices» Metallurgy (i.e. Cu Pb alloys)» Rubber industry Nickel use in automotive batteries expected to strongly increase (in kt Ni)* (in kt Ni)* Primary raw materials Recycling » Aurubis is well positioned to benefit from good nickel demand outlook triggered by growing battery industry * Source: Roskill, April

38 Our strategic focus Growth: broad metal portfolio reflected in future reporting Copper Gold Silver Lead Nickel PGM Tin Minor Metals Platinum Osmium Iridium Ruthenium Rhodium Palladium Selenium Tellurium Rhenium Antimony Bismuth 38

39 Project Future Complex Metallurgy (FCM): substantial step for Growth with multi-metal expansion New facilities in Hamburg and Olen / > 180 workplaces: bath smelting furnace, as well as leaching and electrowinning plant engineering & construction approx. 4 years Production start in FY 2020/21 Capex: around 320 m Additional use of raw materials: 270,000 t of concentrates, recycling raw materials and smelter intermediates EBITDA improvement: As of FY 2022/23: 80 m Financials as per pre-feasibility study» Expands processing of complex raw materials» Establishes new and optimizes existing processes» Realizes synergies» Shortens throughput times for precious metals» Recovers numerous metals» Reduces intermediate product sales 39

40 Our strategic focus Efficiency: optimization and continuous improvement in all areas Approach» Continuous improvement of cost competitiveness is key in standard copper raw materials and copper products markets» Excellence in metal recovery» Optimization of sales channels for copper products and sulfuric acid» Standardization of core processes across all sites and functions» Automation of production and support processes and digitization along value chain Targets Sustainable EBITDA improvement of 200 m from FY 2019/20 40

41 Aurubis Operating System (AOS): group-wide standardization driving Efficiency» AOS is a methodology for continuous and sustainable process optimization» With AOS, procedures in all areas will be optimized, performance data will be standardized and process losses will be eliminated in alignment with goals» AOS has been started in Hamburg, and will be transferred to other sites and other administrative functions» Improves workplace safety» Enhances performance and efficiency» Increases results 41

42 Our strategic focus Flat Rolled Products (FRP) Segment: result improvement after strategic milestone achievement» Internal consolidation and relocation of thin copper strip production from Sweden to Zutphen and Buffalo completed» FRP sites specialized according to plant capabilities and market requirements» Extended product portfolio in Buffalo» Equipment and processes upgraded in all sites» Sales organization restructured in line with global and regional customer needs» Detailed result improvement plan as integral part of the Aurubis Group Business Improvement Program» Clearly defined actions, milestones and assigned responsibilities» Focus on operational improvement complemented by commercial optimization and sales growth 42

43 Our strategic focus Responsibility: guiding in everything we do Approach» Sustainability is an integral part of Aurubis Group Strategy with focus on economy, environment and people» Our expertise of smelting, refining & recycling as well as the trusting cooperation with business partners and stakeholders secure our sustainable business success» The use of resources, recycling, energy, water and air is linked to set targets of higher efficiency and lower emissions» Leadership and entrepreneurship drive our business responsibly and value based Targets & Cornerstones Aurubis Sustainability Strategy : 87% of all targets achieved so far Leadership and People Development are key areas of activity on our way to reach our vision & strategy PRIMA * Aurubis corporate values oblige us all to take care of a responsible business * Performance, Responsibility, Integrity, Mutability, Appreciation 43

44 Our strategic business triad: realizing our purpose 44

45 Our financial goal: m sustainable EBITDA improvement EBITDA improvement potential (in million) /17 17/18 18/19 19/20 22/23 Business improvement* Internal & external growth * Base year for business improvement potential is FY 2014/15 45

46 Thank you for your attention and happy holidays

47 Your IR Contacts: Financial calendar Angela Seidler Director Dieter Birkholz Senior Manager Quarterly report First 3 Months 2017/18 02/13/2018» Annual General Meeting 03/01/2018» Interim Report First 6 Months 2017/18 05/15/2018» Quarterly report First 9 Months 2017/18 08/09/2018» Annual Report 2017/18 12/11/2018 Christoph Tesch Senior Manager c.tesch@aurubis.com Elke Brinkmann Senior Manager e.brinkmann@aurubis.com 47

48 Legal 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. 48

49 Annex 1: Aurubis AG s sources of earnings TC/RC RC Metal prices Cathode premium Shape surcharge 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 Refining charge = Fee for processing copper scrap, blister and recycling materials into cathodes; primarily influenced by the situation on the European scrap markets Price risks fundamentally eliminated at Aurubis by hedging; strong influence on revenues and working capital, also for our customers Surcharge for high-quality cathodes (Grade A), premium for cathode delivery, paid by the customer; expresses the scarcity in structurally undersupplied markets Processing prices for converting cathodes into copper products (wire rod, shapes, flat rolled products, etc.), paid by the customer Sulfuric acid Sulfuric acid (H 2 SO 4 ) is a by-product of concentrate processing; 1 t of sulfuric acid is generally produced per t of concentrate treated 49