Boliden AB Q3 2024 Results

Boliden AB (BOL.ST), a prominent metal mining company, released its third-quarter results for 2024, reflecting a notable rise in production alongside improved metal prices. CEO Mikael Staffas emphasized the record mill output at the Garpenberg mine and ongoing progress with key projects.

Despite high investments leading to a negative cash flow, the company reported significant operating profit and marked increases in earnings per share. The quarter also witnessed higher CO2 emissions and difficulties in lowering sick leave rates.

Key Takeaways

• Record production at Garpenberg mine with mill output hitting new highs.
• Operating profit just below SEK 3 billion, with negative cash flow of SEK 0.5 billion due to substantial investments.
• Earnings per share increased to SEK 8.34, a nearly 70% year-over-year rise.
• Base metal prices improved; precious metals reached all-time highs.
• Total production rose with strong outputs in copper cathodes and nickel.
• Capital expenditure guidance remains at SEK 15.5 billion for 2023 and SEK 13.5 billion for 2024.

Company Outlook

• Kristineberg Rävliden project set to start commissioning in early 2025.
• Tara mine reopening is on track, with production ramping up.
• Odda expansion expected to achieve 200,000 tons annually by Q1 2025.
• No planned maintenance stops in Q4, but a negative €25 million result from the Tara project is expected.
• Environmental permit at Garpenberg poses a bottleneck, limiting Q4 production to approximately 780,000 tons.

Bearish Highlights

• Negative cash flow of SEK 0.5 billion due to high investments.
• Increased CO2 emissions attributed to the Aitik project.
• Challenges reducing sick leave rates.
• Sustainability issues in nickel production.

Bullish Highlights

• Year-over-year improvements in prices and production.
• Precious metals at record high prices.
• Strong outputs in copper cathodes and nickel.
• Mines generating over EUR 2 billion, with significant increases in prices and volumes.

Misses

• Quarter performance affected by maintenance stops and minor disturbances at the Bergsoe project.
• Costs rose by SEK 287 million due to higher variable costs linked to increased production volumes.

Q&A Highlights

• Aitik projected to see the lowest grades in 2025 before improving.
• Garpenberg's permit application expected within the current quarter for 2024 approval.
• Review of the Kevitsa mine is ongoing; a plan is expected late this year or early next year.
• Annual contracts for copper and zinc pricing will be negotiated in late 2023 for 2024, with current spot market for TCs low.
• SEK935 million in insurance income anticipated for Q4.

The earnings call highlighted Boliden's strong operational performance and strategic advancements in key mining projects. Financial results reflect the positive impact of increased production volumes and higher metal prices despite challenges with rising costs and sustainability issues. Boliden's outlook for the upcoming quarters remains cautiously optimistic, with several projects in the pipeline anticipated to contribute to future growth.

InvestingPro Insights

Boliden AB's solid operational performance and strategic advancements are evident in its financial metrics. The company maintains a market capitalization of $8.86 billion, emphasizing its significant presence in the metals and mining industry. Its P/E ratio of 12.05 suggests reasonable pricing for earnings, aligning with a reported EPS increase to SEK 8.34.

Boliden has consistently paid dividends for 19 consecutive years, with a current yield of 4.51%, attracting income-focused investors. With revenue for the last year at $7.68 billion and a 23.35% quarterly growth in Q2 2024, Boliden's growth trajectory remains consistent. While facing challenges such as increasing CO2 emissions and sustainability issues, Boliden typically trades with low price volatility, appealing to investors seeking stability in the cyclical mining sector.

For a deeper analysis, InvestingPro provides additional insights into Boliden AB's financial health and market position.

Full Transcript of Boliden AB ADR (BDNNY) Q3 2024:

Olof Grenmark: Ladies and gentlemen, welcome to Boliden's Q3 2024 Results Presentation. I am Olof Grenmark, Head of Investor Relations. Today, we will have a results presentation led by our President and CEO, Mikael Staffas, and our CFO, Håkan Gabrielsson. We will also have a Q&A session.

Mikael Staffas: Thank you, Olof, and good morning, everyone. We have improved prices and terms compared to last year. Production has also risen, particularly in our mining operations. The Garpenberg mill has experienced record output for two consecutive quarters.

The environmental permit is now a limiting factor for Garpenberg, and we are focused on progressing various key projects. Our operational performance remains robust, with significant efforts put into our capital expenditure plan.

The market side has shown favorable developments with base metal prices improving. However, we continue facing challenges regarding increased costs, particularly related to CO2 emissions and healthcare aspects, where we'd like to see more improvement.

With that, I’ll hand over to Håkan for the financial summary.

Håkan Gabrielsson: Thank you, Mikael. We report an EBIT of nearly SEK3 billion, a solid quarter with significant increases across various metrics, despite some negative cash flow impacts due to high investments. Overall, strong production is key, and looking ahead, we remain optimistic about our prospects and continued growth in the forthcoming quarters.

Mikael Staffas: Thank you for your attention, and let’s open the floor for questions.

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