Saudi Arabian Mining Company (Ma'aden) - Tadawul
Saudi Arabian Mining Company (Ma’aden) Earnings Conference Call YE 2017 February 1, 2017 1
Earnings Call Presentation YE 2017
Reem Asaad
Manager of Investor Relations
2
Earnings Call Presentation YE 2017
Forward looking statement This presentation contains statements that are, or may be deemed to be, forward looking statements, including statements about the beliefs and expectations of Saudi Arabian Mining Company (the "Company"). These statements are based on the Company's current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. As a result of these risks, uncertainties and assumptions, a prospective investor should not place undue reliance on these forward-looking statements. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. The Company is not obliged to, and does not intend to, update or revise any forward- looking statements made in this presentation whether as a result of new information, future events or otherwise. This communication has been prepared by and is the sole responsibility of the Company. It has not been reviewed, approved or endorsed by any financial advisor, lead manager, selling agent, receiving bank or underwriter retained by the Company. This communication is provided for information purposes only. In addition, because this communication is a summary only, it may not contain all material terms and this communication in and of itself should not form the basis for any investment decision. The information and opinions herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness of the information and opinions. There is no obligation to update, modify or amend this communication or to otherwise notify you if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. You are strongly advised to seek your own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. The Company disclaims liability for any loss arising out of or in connection with your use of, or reliance on, this communication. These materials may not be published, distributed or transmitted and may not be reproduced in any manner whatsoever without the explicit consent of Ma’aden’s management. These materials do not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. Non-IFRS Financial Measures Some of the financial information included in this presentation is derived from Ma’aden consolidated financial statements but are not terms defined within the International Financial Reporting Standards (IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided as the Company believes they are useful measures for investors. A reconciliation of this information with the consolidated financial statements is included in the presentation.
3
Earnings Call Presentation YE 2017
Khalid Al-Mudaifer
President & Chief Executive Officer
4
Earnings Call Presentation YE 2017
Continued growth in production delivers strong results
PRODUCTION
■ ■ ■ ■ ■
332K ounces of gold, up 47% vs. 2016 916K tonnes of primary aluminium, up 5% vs. 2016 2,343K tonnes of ammonia, up 91% vs. 2016 2,859K tonnes of ammonium phosphate fertilizer, up 5% vs. 2016 1,484K tonnes of alumina, up 4% vs. 2016
STRONG COST PERFORMANCE
■ ■ ■ ■
Focus on increasing production from established and new facilities Downward momentum maintained in gold and fertilisers Aluminium benefiting from full integration with alumina production Underlying EBITDA Margin1 increased to 48%
STRONG FINANCIAL PERFORMANCE
■ ■ ■ ■
Sales SAR 12.1 billion, up 28% vs. 2016 Underlying EBITDA1 SAR 5.8 billion, up 56% vs 2016 Net income SAR 0.8 billlion, vs. net loss of SAR0.15 billion in 2016 Operating Cashflow1 SAR 3 billion, up 55% vs. 2016
■
Ammonium Phosphate fertilizer production from Wa’ad Al Shamal plant ramping up rapidly Development of new gold and phosphate projects progressing well International opportunities remain a target
GROWTH REMAINS A FOCUS
1 see appendix for details 5
Earnings Call Presentation YE 2017
■ ■
Rising markets and sustained profit margins Commodity price movement Ma’aden Maaden
Aluminium
Copper
Gold
DAP
Ammonia
Rebase to 100 as on 1 June 2017
160 140 120 100 80 60 40
1-Jan-17 1-Feb-17 1-Mar-17 1-Apr-17 1-May-17 1-Jun-17
1-Jul-17
1-Aug-17 1-Sep-17 1-Oct-17 1-Nov-17 1-Dec-17 Source: Bloomberg
1,800
Underlying EBITDA and margins
EBITDA
1,700 SAR million
1,600
52%
EBITDA Margin
70%
47%
49%
50%
43%
1,500
40%
1,400
30%
1,300 1,200
1,416
1,475
1,521 1,360
20% 10%
1,100
0% Q1 2017
6
60%
Earnings Call Presentation YE 2017
Q2 2017
Q3 2017
Q4 2017
Phosphate market firmed in Q4 after a mixed year ■
After a weak start to the year, DAP prices recorded an average price around US$20/t higher than in 2016
■
Overall demand was healthy through the year with Q4 being supported by rising demand in the Indian sub-continent
■
Plant closures and delays in project ramp-ups impacted supply and China exports slowed due to a buoyant local market
■
Production input prices for phosphate fertilisers, notably Sulphur and ammonia, also increased late in the year which also impacted prices positively
Average DAP Price Tampa Index (US$/t)
%
Quarterly change
Avg. DAP Prices 2016 500
450
2017
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
-10%
-4%
-2%
-6%
+15%
-7%
0%
+11%
400
350
300
250
200 7
Earnings Call Presentation YE 2017
Source: Ma’aden SBU analysis, CRU , FMB and FERTECON
Aluminium prices recovered steadily during 2017 ■
Aluminium prices (LME) continued their recovery in 2017, showing an increase of around 25% over the course of the year
■
Robust demand growth continued with estimates for 2017 of 4-5%
■
Further rationalization in the industry, particularly with the impact of reforms in China towards the end of the year, supported the price recovery
■
In addition, raw material costs helped push up the price of alumina and aluminium
Aluminium Price Movement (US$/t)
%
2016 2600
Quarterly change
2017
Q1
Q2
Q3
Q4
Q1
Q2
+3%
+7%
+1%
+1%
+16%
+0.4%
Q3
Q4
+9%
+8%
2400
2200
2000
1800
1600
1400
1200
8
5-Jan-16
5-Feb-16
5-Mar-16
5-Apr-16
5-May-16
5-Jun-16
Earnings Call Presentation YE 2017
5-Jul-16
5-Aug-16
5-Sep-16
5-Oct-16
5-Nov-16
5-Dec-16
5-Jan-17
5-Feb-17
5-Mar-17
5-Apr-17
5-May-17
5-Jun-17
5-Jul-17
5-Aug-17
5-Sep-17
5-Oct-17
Source: Bloomberg, Ma’aden SBU analysis, CRU June 2017
5-Nov-17
5-Dec-17
Gold remained stable and copper made a strong recovery ■
Gold prices remained in the range US$1,162 –1,349/oz for the year with no major change in sentiment
■
Copper, however, staged a strong recovery, continuing the trend seen in Q4 2016
■
Although still volatile, the outlook for copper remains positive on the back of robust demand and supply growth constraints
Gold and copper price movement (US$/t)
%
2016
Cu
Quarterly change
2017
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
+5%
+0.2%
-1%
+15%
+6%
+3%
+9%
+12%
+16%
+6%
-1%
-12%
+7%
-1%
+5%
+2%
Au
8000
1600
7500
1400
7000 1200
6500 6000
1000
5500
800
5000
600
4500 400 4000 Copper
3500 3000 Jan-16 9
200
Gold Feb-16
Mar-16
Apr-16
May-16
Jun-16
Earnings Call Presentation YE 2017
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Source: Bloomberg, CRU June 2017, SBU secondary analysis
Dec-17
0
Darren C. Davis Chief Financial Officer
10
Earnings Call Presentation YE 2017
2017 continued a strong year for Ma’aden (All numbers are in SAR million, except as mentioned)
Comparative analysis - year-to-date For the year ended Dec. 31
2016*
2017
SR
9,464
12,086
2,622
28%
Cos t of s ales
-7,443
-8,154
-710
10%
Gross profit
2,021
3,932
1,912
95%
Gross profit m argin%
21%
33%
Selling, m arketing and logis tic expens es
-410
-531
-121
29%
General and adm inis trative expens es
-325
-382
-57
18%
-49
-62
-13
26%
-624
-522
102
-16%
613
2,435
1,822
298%
6%
20%
Sales
Exploration & technical s ervices expens es Write-off of plant and equipm ent + Im pairm ent Operating profit Operating incom e m argin% Share in net incom e of s ubs idiaries . Share in net incom e / (los s ) of jointly controlled entity Incom e from s hort-term inves tm ents
0%
0 4
102
%
0%
98
2628% -49%
152
77
-74
-890
-1,616
-726
33
-65
-98
-296%
Profit before zakat and income tax
-89
933
1,023
114 5 %
Zakat and incom e tax expens e
-59
-149
-90
154%
-148
784
932
630%
-2%
6%
-11
715
726
6756%
-137
70
207
151%
-0.01
0.61
0.6
6756%
Financial charges Other incom e / (expens e)
Profit / (loss) for the period Profit /(loss) % Profit / (loss) attrib. to shareholders' of the parent co. Non-cont. interes t's s hare of the period's profit / (los s ) EPS (SR)
* 2016 comparative figures have been restated to comply with the implementation of IFRS reporting.
11
2016A vs. 2017A
Earnings Call Presentation YE 2017
81%
All of our businesses grew profitability in 2017
Consolidated
Phosphate FY2017
vs. Prev. Yr.
Revenue (SRmn)
12,086
28%
EBITDA* (SRmn)
5,762
56%
EBITDA margin
48%
FY2017
vs. Prev. Yr.
Revenue (SRmn)
5,461
31%
EBITDA* (SRmn)
2,465
58%
EBITDA margin
45%
43% of Group EBITDA
Aluminium FY2017
vs. Prev. Yr.
Revenue (SRmn)
5,032
18%
EBITDA* (SRmn)
2,499
42%
EBITDA margin
50%
43% of Group EBITDA
12
Gold
Earnings Call Presentation YE 2017
FY2017
vs. Prev. Yr.
Revenue (SRmn)
1,593
52%
EBITDA* (SRmn)
798
112%
EBITDA margin
50%
14% of Group EBITDA
Growing production and improved prices driving earnings Net income bridge 2017 vs. 2016 SAR MN
Key factors Ammonia APF Gold
Key factors
↑ ↑ ↑
MRC & MBAC MAC Refinance MWSPC
↑ ↑ ↑
Key factor All products ↑ -45
-121
-57
888
-726 102
-177
784
Others
2017 IFRS
1,068
-148 2016 IFRS
13
Price effect
Earnings Call Presentation YE 2017
Volume effect
Cost effect
Sales, marketing logistics
G&A
Finance charges
Write-off & impair.
Operational performance
14
Earnings Call Presentation YE 2017
Phosphate Performance Operational performance ■
Record 2,859K tonnes produced and 2,808K tonnes sold of ammonium phosphate fertilizer in 2017. Both production and sales increased by 5% compared to 2016.
Ammonium phosphate fertilizer (Kt) Production
Record 2,343K tonnes of ammonia produced, an increase of 91% compared to 2016 with sales of 1,660K tonnes, an increase of 132% compared to last year.
Avg Prices US$/t
750
363
700 ■
Sales
341
650 600 550
297 668
700
744
770
726 667
500 ■
Ammonia volumes reflecting the start of commercial operations of the Ma’aden Wa’ad Al Shamal Phosphate Company ammonia plant.
Cost performance
450 400 Q4 2016
Q3 2017
During the year, ammonium phosphate fertilizer average cash cost reduced by nearly 10% compared to previous year primarily driven by the reduction in fixed cash costs and the increase in production
Q4 2017
Ammonia (Kt)
US$/t
Production ■
Sales
Avg Prices
700
500
600
450 400
500 400
327
313 100
250
470
200
210
549
311
173 204
200
150
0
100 Q4 2016
Earnings Call Presentation YE 2017
350 300
620
300
15
380 360 340 320 300 280 260 240 220 200
Q3 2017
Q4 2017
Aluminium Performance Operational performance ■
During the year 2017, 916K tonnes of primary aluminium produced, an increase of 5% compared to last year.
Primary aluminium (Kt) Production
■
Record 1,484K tonnes of alumina produced, an increase of 4% compared to last year with the first export of 30K tonnes made during the year. Ma’aden continues to focus on increasing production from the alumina refinery which will help us optimize our cash costs and allow us to benefit from increased sales of excess alumina production.
Cost performance ■
■
■
2200
2171
2000
1972
220
1800 1715
210 200
1600
240 239 229 229 219 216
190
1000 Q4 2016
Q3 2017
Q4 2017
Alumina production (Kt) US$/t
Alumina cash cost also increased due to the increase in key inputs, notably caustic soda.
340
Production
Sales
442
390
290 240
Avg Prices (API)
282 403
375
309 363
363
374
362
190 140 90 Q4 2016
16
Earnings Call Presentation YE 2017
1400 1200
180
440
The rolling mill operation continues to ramp up production
US$/t 2400
240
During year, aluminium cash cost increased due to higher input costs.
Projects
Avg LME Prices
250
230 ■
Sales
Q3 2017
Q4 2017
500 450 400 350 300 250 200 150 100 50 0
Gold and Copper Performance Operational performance ■
■
Gold production reached a new record for Ma’aden, at 332k ounces, a 47% increase compared to last year Production growth reflects the continued ramping up of the Ad Duwayhi mine
Gold (‘000 ounces) Production
Copper production reached 38,600 tonnes of copper concentrate from the Jabal Sayid copper mine, an increase of 34%.
■
■
Due to the continuous focus on costs and the increase in production, gold cash costs decreased by 11% compared to last year. Copper cash costs fell by 28% as production increased
US$/oz 1500
120
1400
100
1308
80
40
1281 114 115
1182 64
64
1300 1200
79
78
1100
20 0
1000 Q4 2016
Cost performance
Avg Prices
140
60 ■
Sales
Q3 2017
Q4 2017
Copper volumes (Kt)¹ $/t Production
12
Sales
Price
8000
10 6922
7000
8 5754
6 9.9
9.9
4
6000 10.5
10.5
9.5
7.8 5000
2
4762
0
4000 Q4 2016
17
Q3 2017
Q4 2017
¹ Ma’aden attributable production & sales @ 50% Earnings Call Presentation YE 2017
Financial position
18
Earnings Call Presentation YE 2017
Financial position All numbers are in SAR millions
Long term borrowing By business
26,098
Other non current assets
4%
Equity
50,701
Mine, plant, property & equipment
Non controlling interest
32% 44%
60%
Other non current liability
33%
WAS
Aluminium
Others
PIF
SIDF
Type of loan
Total Debt
49% Current assets
Assets
51%
Current Liability
Equity and liabilities
95%
As at 31 December 2017 Floating 19
Banks
5%
7,730
44,451
7% 19%
MPC
12,184
By source
Capital work in progress 2,156 8,432
26,409
12,073
Balance sheet
Earnings Call Presentation YE 2017
Fixed
SAR
USD
Capital Structure ■
We continue to improve our debt structure and successfully refinanced the debt of Ma’aden Aluminium Company in 2017 with better terms including lower margins
■
Maintaining an appropriate liquidity cushion and successfully renewed our corporate revolver in 2017
■
Reviewing options to optimize our debt structure
Cash & Cash Equivalent
SRbn
29
60
33
Debt/Total Capital 1
Long Term Borrowing
40
47 62%
47
Net debt
47
48
47
62%
62%
50
63%
61%
61%
60%
60%
40
61%
59% 30 54 57%
54
53
57%
20
45
33
57
53
57% 56%
56% 45
55%
10 12 0
4 2013
5
7
2015
2016
7
6
5
7
54% 53%
2014
1 see appendix 2 2016 restated as per IFRS 20
58%
Earnings Call Presentation YE 2017
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Summary Fundamentally attractive commodities now recovering from recent weakness ▪ Our belief in the long term fundamentals of our core products remains and the outlook is
▪
now more positive than a year ago 2017 showed signs of recovery and we are optimistic that this can be sustained
Growing production ▪ Growth in production from established assets and ramping up our new facilities remains a priority and will help to ensure we optimise our cash costs per unit
Maintaining pressure on costs ▪ Controlling our costs has helped to ensure that better commodity prices translate directly to higher profitability notwithstanding pressure on input costs
Outlook for growth is positive ▪ Wa’ad Al Shamal ramping up fertiliser production steadily ▪ Development of new gold and phosphate projects progressing well ▪ International opportunities remain a target
21
Earnings Call Presentation YE 2017
Q&A
22
Earnings Call Presentation YE 2017
Appendix
23
Earnings Call Presentation YE 2017
Debt repayment profile 3,000
USD Millions MIC MGBM
2,500
MWSPC 2,226
MBAC MRC MAC
2,000
MPC
1,752
1,717
1,500 1,210
1,294
1,258
1,227 1,004
1,000
755
788
721
715
588 500
390
-
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
As at 31 December 2017
24
Earnings Call Presentation YE 2017
Sales summary (All numbers are in ‘000 tonnes except as mentioned)
2017
2016
% change
2808
2676
5%
591
715
-17%
1070
-
-
30
-
-
653
871
-25%
Gold (‘000 ounces)
333
225
48%
Copper
38.6
24.8
43%
Particulars
Phosphate business Ammonium phosphate fertilizer Ammonia MPC Ammonia MWSPC Aluminium business Alumina Primary Aluminium Precious and base metals business
25
Earnings Call Presentation YE 2017
Non-IFRS Financial Measures Non-IFRS Financial Measures Some of the financial information included in this presentation is derived from Ma’aden consolidated financial statements but are not terms defined within the International Financial Reporting Standards (IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided as the Company believes they are useful measures for investors. An explanation of these terms is provided below.
26
■
Debt: Total Capital = (Long-term borrowings + Current portion long-term borrowings) / (Long-term borrowings + Current portion of long-term borrowings + Total equity)
■
Operating Cashflow = Net cash generated from operating activities
■
Underlying EBITDA: Earnings before interest, tax, depreciation and amortization, impairment and asset write offs.
■
Underlying EBITDA Margin: Underlying EBITDA / Sales
Earnings Call Presentation YE 2017
Thank You! Copyright © 2016. Ma’aden . All rights reserved.
27
Earnings Call Presentation YE 2017
Earnings Call Presentation YE 2017
Reem Asaad
Manager of Investor Relations
2
Earnings Call Presentation YE 2017
Forward looking statement This presentation contains statements that are, or may be deemed to be, forward looking statements, including statements about the beliefs and expectations of Saudi Arabian Mining Company (the "Company"). These statements are based on the Company's current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. As a result of these risks, uncertainties and assumptions, a prospective investor should not place undue reliance on these forward-looking statements. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. The Company is not obliged to, and does not intend to, update or revise any forward- looking statements made in this presentation whether as a result of new information, future events or otherwise. This communication has been prepared by and is the sole responsibility of the Company. It has not been reviewed, approved or endorsed by any financial advisor, lead manager, selling agent, receiving bank or underwriter retained by the Company. This communication is provided for information purposes only. In addition, because this communication is a summary only, it may not contain all material terms and this communication in and of itself should not form the basis for any investment decision. The information and opinions herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness of the information and opinions. There is no obligation to update, modify or amend this communication or to otherwise notify you if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. You are strongly advised to seek your own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. The Company disclaims liability for any loss arising out of or in connection with your use of, or reliance on, this communication. These materials may not be published, distributed or transmitted and may not be reproduced in any manner whatsoever without the explicit consent of Ma’aden’s management. These materials do not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. Non-IFRS Financial Measures Some of the financial information included in this presentation is derived from Ma’aden consolidated financial statements but are not terms defined within the International Financial Reporting Standards (IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided as the Company believes they are useful measures for investors. A reconciliation of this information with the consolidated financial statements is included in the presentation.
3
Earnings Call Presentation YE 2017
Khalid Al-Mudaifer
President & Chief Executive Officer
4
Earnings Call Presentation YE 2017
Continued growth in production delivers strong results
PRODUCTION
■ ■ ■ ■ ■
332K ounces of gold, up 47% vs. 2016 916K tonnes of primary aluminium, up 5% vs. 2016 2,343K tonnes of ammonia, up 91% vs. 2016 2,859K tonnes of ammonium phosphate fertilizer, up 5% vs. 2016 1,484K tonnes of alumina, up 4% vs. 2016
STRONG COST PERFORMANCE
■ ■ ■ ■
Focus on increasing production from established and new facilities Downward momentum maintained in gold and fertilisers Aluminium benefiting from full integration with alumina production Underlying EBITDA Margin1 increased to 48%
STRONG FINANCIAL PERFORMANCE
■ ■ ■ ■
Sales SAR 12.1 billion, up 28% vs. 2016 Underlying EBITDA1 SAR 5.8 billion, up 56% vs 2016 Net income SAR 0.8 billlion, vs. net loss of SAR0.15 billion in 2016 Operating Cashflow1 SAR 3 billion, up 55% vs. 2016
■
Ammonium Phosphate fertilizer production from Wa’ad Al Shamal plant ramping up rapidly Development of new gold and phosphate projects progressing well International opportunities remain a target
GROWTH REMAINS A FOCUS
1 see appendix for details 5
Earnings Call Presentation YE 2017
■ ■
Rising markets and sustained profit margins Commodity price movement Ma’aden Maaden
Aluminium
Copper
Gold
DAP
Ammonia
Rebase to 100 as on 1 June 2017
160 140 120 100 80 60 40
1-Jan-17 1-Feb-17 1-Mar-17 1-Apr-17 1-May-17 1-Jun-17
1-Jul-17
1-Aug-17 1-Sep-17 1-Oct-17 1-Nov-17 1-Dec-17 Source: Bloomberg
1,800
Underlying EBITDA and margins
EBITDA
1,700 SAR million
1,600
52%
EBITDA Margin
70%
47%
49%
50%
43%
1,500
40%
1,400
30%
1,300 1,200
1,416
1,475
1,521 1,360
20% 10%
1,100
0% Q1 2017
6
60%
Earnings Call Presentation YE 2017
Q2 2017
Q3 2017
Q4 2017
Phosphate market firmed in Q4 after a mixed year ■
After a weak start to the year, DAP prices recorded an average price around US$20/t higher than in 2016
■
Overall demand was healthy through the year with Q4 being supported by rising demand in the Indian sub-continent
■
Plant closures and delays in project ramp-ups impacted supply and China exports slowed due to a buoyant local market
■
Production input prices for phosphate fertilisers, notably Sulphur and ammonia, also increased late in the year which also impacted prices positively
Average DAP Price Tampa Index (US$/t)
%
Quarterly change
Avg. DAP Prices 2016 500
450
2017
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
-10%
-4%
-2%
-6%
+15%
-7%
0%
+11%
400
350
300
250
200 7
Earnings Call Presentation YE 2017
Source: Ma’aden SBU analysis, CRU , FMB and FERTECON
Aluminium prices recovered steadily during 2017 ■
Aluminium prices (LME) continued their recovery in 2017, showing an increase of around 25% over the course of the year
■
Robust demand growth continued with estimates for 2017 of 4-5%
■
Further rationalization in the industry, particularly with the impact of reforms in China towards the end of the year, supported the price recovery
■
In addition, raw material costs helped push up the price of alumina and aluminium
Aluminium Price Movement (US$/t)
%
2016 2600
Quarterly change
2017
Q1
Q2
Q3
Q4
Q1
Q2
+3%
+7%
+1%
+1%
+16%
+0.4%
Q3
Q4
+9%
+8%
2400
2200
2000
1800
1600
1400
1200
8
5-Jan-16
5-Feb-16
5-Mar-16
5-Apr-16
5-May-16
5-Jun-16
Earnings Call Presentation YE 2017
5-Jul-16
5-Aug-16
5-Sep-16
5-Oct-16
5-Nov-16
5-Dec-16
5-Jan-17
5-Feb-17
5-Mar-17
5-Apr-17
5-May-17
5-Jun-17
5-Jul-17
5-Aug-17
5-Sep-17
5-Oct-17
Source: Bloomberg, Ma’aden SBU analysis, CRU June 2017
5-Nov-17
5-Dec-17
Gold remained stable and copper made a strong recovery ■
Gold prices remained in the range US$1,162 –1,349/oz for the year with no major change in sentiment
■
Copper, however, staged a strong recovery, continuing the trend seen in Q4 2016
■
Although still volatile, the outlook for copper remains positive on the back of robust demand and supply growth constraints
Gold and copper price movement (US$/t)
%
2016
Cu
Quarterly change
2017
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
+5%
+0.2%
-1%
+15%
+6%
+3%
+9%
+12%
+16%
+6%
-1%
-12%
+7%
-1%
+5%
+2%
Au
8000
1600
7500
1400
7000 1200
6500 6000
1000
5500
800
5000
600
4500 400 4000 Copper
3500 3000 Jan-16 9
200
Gold Feb-16
Mar-16
Apr-16
May-16
Jun-16
Earnings Call Presentation YE 2017
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Source: Bloomberg, CRU June 2017, SBU secondary analysis
Dec-17
0
Darren C. Davis Chief Financial Officer
10
Earnings Call Presentation YE 2017
2017 continued a strong year for Ma’aden (All numbers are in SAR million, except as mentioned)
Comparative analysis - year-to-date For the year ended Dec. 31
2016*
2017
SR
9,464
12,086
2,622
28%
Cos t of s ales
-7,443
-8,154
-710
10%
Gross profit
2,021
3,932
1,912
95%
Gross profit m argin%
21%
33%
Selling, m arketing and logis tic expens es
-410
-531
-121
29%
General and adm inis trative expens es
-325
-382
-57
18%
-49
-62
-13
26%
-624
-522
102
-16%
613
2,435
1,822
298%
6%
20%
Sales
Exploration & technical s ervices expens es Write-off of plant and equipm ent + Im pairm ent Operating profit Operating incom e m argin% Share in net incom e of s ubs idiaries . Share in net incom e / (los s ) of jointly controlled entity Incom e from s hort-term inves tm ents
0%
0 4
102
%
0%
98
2628% -49%
152
77
-74
-890
-1,616
-726
33
-65
-98
-296%
Profit before zakat and income tax
-89
933
1,023
114 5 %
Zakat and incom e tax expens e
-59
-149
-90
154%
-148
784
932
630%
-2%
6%
-11
715
726
6756%
-137
70
207
151%
-0.01
0.61
0.6
6756%
Financial charges Other incom e / (expens e)
Profit / (loss) for the period Profit /(loss) % Profit / (loss) attrib. to shareholders' of the parent co. Non-cont. interes t's s hare of the period's profit / (los s ) EPS (SR)
* 2016 comparative figures have been restated to comply with the implementation of IFRS reporting.
11
2016A vs. 2017A
Earnings Call Presentation YE 2017
81%
All of our businesses grew profitability in 2017
Consolidated
Phosphate FY2017
vs. Prev. Yr.
Revenue (SRmn)
12,086
28%
EBITDA* (SRmn)
5,762
56%
EBITDA margin
48%
FY2017
vs. Prev. Yr.
Revenue (SRmn)
5,461
31%
EBITDA* (SRmn)
2,465
58%
EBITDA margin
45%
43% of Group EBITDA
Aluminium FY2017
vs. Prev. Yr.
Revenue (SRmn)
5,032
18%
EBITDA* (SRmn)
2,499
42%
EBITDA margin
50%
43% of Group EBITDA
12
Gold
Earnings Call Presentation YE 2017
FY2017
vs. Prev. Yr.
Revenue (SRmn)
1,593
52%
EBITDA* (SRmn)
798
112%
EBITDA margin
50%
14% of Group EBITDA
Growing production and improved prices driving earnings Net income bridge 2017 vs. 2016 SAR MN
Key factors Ammonia APF Gold
Key factors
↑ ↑ ↑
MRC & MBAC MAC Refinance MWSPC
↑ ↑ ↑
Key factor All products ↑ -45
-121
-57
888
-726 102
-177
784
Others
2017 IFRS
1,068
-148 2016 IFRS
13
Price effect
Earnings Call Presentation YE 2017
Volume effect
Cost effect
Sales, marketing logistics
G&A
Finance charges
Write-off & impair.
Operational performance
14
Earnings Call Presentation YE 2017
Phosphate Performance Operational performance ■
Record 2,859K tonnes produced and 2,808K tonnes sold of ammonium phosphate fertilizer in 2017. Both production and sales increased by 5% compared to 2016.
Ammonium phosphate fertilizer (Kt) Production
Record 2,343K tonnes of ammonia produced, an increase of 91% compared to 2016 with sales of 1,660K tonnes, an increase of 132% compared to last year.
Avg Prices US$/t
750
363
700 ■
Sales
341
650 600 550
297 668
700
744
770
726 667
500 ■
Ammonia volumes reflecting the start of commercial operations of the Ma’aden Wa’ad Al Shamal Phosphate Company ammonia plant.
Cost performance
450 400 Q4 2016
Q3 2017
During the year, ammonium phosphate fertilizer average cash cost reduced by nearly 10% compared to previous year primarily driven by the reduction in fixed cash costs and the increase in production
Q4 2017
Ammonia (Kt)
US$/t
Production ■
Sales
Avg Prices
700
500
600
450 400
500 400
327
313 100
250
470
200
210
549
311
173 204
200
150
0
100 Q4 2016
Earnings Call Presentation YE 2017
350 300
620
300
15
380 360 340 320 300 280 260 240 220 200
Q3 2017
Q4 2017
Aluminium Performance Operational performance ■
During the year 2017, 916K tonnes of primary aluminium produced, an increase of 5% compared to last year.
Primary aluminium (Kt) Production
■
Record 1,484K tonnes of alumina produced, an increase of 4% compared to last year with the first export of 30K tonnes made during the year. Ma’aden continues to focus on increasing production from the alumina refinery which will help us optimize our cash costs and allow us to benefit from increased sales of excess alumina production.
Cost performance ■
■
■
2200
2171
2000
1972
220
1800 1715
210 200
1600
240 239 229 229 219 216
190
1000 Q4 2016
Q3 2017
Q4 2017
Alumina production (Kt) US$/t
Alumina cash cost also increased due to the increase in key inputs, notably caustic soda.
340
Production
Sales
442
390
290 240
Avg Prices (API)
282 403
375
309 363
363
374
362
190 140 90 Q4 2016
16
Earnings Call Presentation YE 2017
1400 1200
180
440
The rolling mill operation continues to ramp up production
US$/t 2400
240
During year, aluminium cash cost increased due to higher input costs.
Projects
Avg LME Prices
250
230 ■
Sales
Q3 2017
Q4 2017
500 450 400 350 300 250 200 150 100 50 0
Gold and Copper Performance Operational performance ■
■
Gold production reached a new record for Ma’aden, at 332k ounces, a 47% increase compared to last year Production growth reflects the continued ramping up of the Ad Duwayhi mine
Gold (‘000 ounces) Production
Copper production reached 38,600 tonnes of copper concentrate from the Jabal Sayid copper mine, an increase of 34%.
■
■
Due to the continuous focus on costs and the increase in production, gold cash costs decreased by 11% compared to last year. Copper cash costs fell by 28% as production increased
US$/oz 1500
120
1400
100
1308
80
40
1281 114 115
1182 64
64
1300 1200
79
78
1100
20 0
1000 Q4 2016
Cost performance
Avg Prices
140
60 ■
Sales
Q3 2017
Q4 2017
Copper volumes (Kt)¹ $/t Production
12
Sales
Price
8000
10 6922
7000
8 5754
6 9.9
9.9
4
6000 10.5
10.5
9.5
7.8 5000
2
4762
0
4000 Q4 2016
17
Q3 2017
Q4 2017
¹ Ma’aden attributable production & sales @ 50% Earnings Call Presentation YE 2017
Financial position
18
Earnings Call Presentation YE 2017
Financial position All numbers are in SAR millions
Long term borrowing By business
26,098
Other non current assets
4%
Equity
50,701
Mine, plant, property & equipment
Non controlling interest
32% 44%
60%
Other non current liability
33%
WAS
Aluminium
Others
PIF
SIDF
Type of loan
Total Debt
49% Current assets
Assets
51%
Current Liability
Equity and liabilities
95%
As at 31 December 2017 Floating 19
Banks
5%
7,730
44,451
7% 19%
MPC
12,184
By source
Capital work in progress 2,156 8,432
26,409
12,073
Balance sheet
Earnings Call Presentation YE 2017
Fixed
SAR
USD
Capital Structure ■
We continue to improve our debt structure and successfully refinanced the debt of Ma’aden Aluminium Company in 2017 with better terms including lower margins
■
Maintaining an appropriate liquidity cushion and successfully renewed our corporate revolver in 2017
■
Reviewing options to optimize our debt structure
Cash & Cash Equivalent
SRbn
29
60
33
Debt/Total Capital 1
Long Term Borrowing
40
47 62%
47
Net debt
47
48
47
62%
62%
50
63%
61%
61%
60%
60%
40
61%
59% 30 54 57%
54
53
57%
20
45
33
57
53
57% 56%
56% 45
55%
10 12 0
4 2013
5
7
2015
2016
7
6
5
7
54% 53%
2014
1 see appendix 2 2016 restated as per IFRS 20
58%
Earnings Call Presentation YE 2017
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Summary Fundamentally attractive commodities now recovering from recent weakness ▪ Our belief in the long term fundamentals of our core products remains and the outlook is
▪
now more positive than a year ago 2017 showed signs of recovery and we are optimistic that this can be sustained
Growing production ▪ Growth in production from established assets and ramping up our new facilities remains a priority and will help to ensure we optimise our cash costs per unit
Maintaining pressure on costs ▪ Controlling our costs has helped to ensure that better commodity prices translate directly to higher profitability notwithstanding pressure on input costs
Outlook for growth is positive ▪ Wa’ad Al Shamal ramping up fertiliser production steadily ▪ Development of new gold and phosphate projects progressing well ▪ International opportunities remain a target
21
Earnings Call Presentation YE 2017
Q&A
22
Earnings Call Presentation YE 2017
Appendix
23
Earnings Call Presentation YE 2017
Debt repayment profile 3,000
USD Millions MIC MGBM
2,500
MWSPC 2,226
MBAC MRC MAC
2,000
MPC
1,752
1,717
1,500 1,210
1,294
1,258
1,227 1,004
1,000
755
788
721
715
588 500
390
-
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
As at 31 December 2017
24
Earnings Call Presentation YE 2017
Sales summary (All numbers are in ‘000 tonnes except as mentioned)
2017
2016
% change
2808
2676
5%
591
715
-17%
1070
-
-
30
-
-
653
871
-25%
Gold (‘000 ounces)
333
225
48%
Copper
38.6
24.8
43%
Particulars
Phosphate business Ammonium phosphate fertilizer Ammonia MPC Ammonia MWSPC Aluminium business Alumina Primary Aluminium Precious and base metals business
25
Earnings Call Presentation YE 2017
Non-IFRS Financial Measures Non-IFRS Financial Measures Some of the financial information included in this presentation is derived from Ma’aden consolidated financial statements but are not terms defined within the International Financial Reporting Standards (IFRS) as applied In the Kingdom of Saudi Arabia. Such information is provided as the Company believes they are useful measures for investors. An explanation of these terms is provided below.
26
■
Debt: Total Capital = (Long-term borrowings + Current portion long-term borrowings) / (Long-term borrowings + Current portion of long-term borrowings + Total equity)
■
Operating Cashflow = Net cash generated from operating activities
■
Underlying EBITDA: Earnings before interest, tax, depreciation and amortization, impairment and asset write offs.
■
Underlying EBITDA Margin: Underlying EBITDA / Sales
Earnings Call Presentation YE 2017
Thank You! Copyright © 2016. Ma’aden . All rights reserved.
27
Earnings Call Presentation YE 2017
