3Q 2019 – Results Highlights

Results of the KGHM Polska Miedź SA. Group for the first 9 months of 2019

Highlights

The KGHM Polska Miedź SA. Group posted another solid quarter, achieving better results in the production of its main products both in quarterly terms as well as for the accrued period. Production of payable copper in the first 9 months of 2019 year-over-year (yoy) was higher by 14% (530 kt in the first nine months), and in the third quarter of 2019 alone amounted to 178 thousand tonnes. Silver likewise provided support, with a percentage increase (by 22%) even higher than that for copper production. Production of silver amounted to 1 031 tonnes versus 848 tonnes in the first nine months of 2018.

Revenues were higher in each of the Group’s segments – the most important being those of KGHM Polska Miedź S.A. (+15%).

Adjusted EBITDAi for the KGHM Group for the first 9 months amounted to PLN 4 112 million and was higher by 8%.

Such good results were achieved despite unfavourable macroeconomic conditions during the first 9 months of 2019. The price of copper fell by 9 percent, silver by 1.7% compared to the corresponding period of 2018. During this same period support came from a strengthening of the USD versus the Polish zloty by 7.6 percent.

Net profit for the first three quarters rose to PLN 1 666 million, or 71 percent higher than in the corresponding period of 2018. In the third quarter of 2019 alone, the KGHM Group earned PLN 696 million, or 91 percent more than in the third quarter of 2018.

KGHM Group

The greatest impact on the production and financial results of the KGHM Group came mainly from the results of the Parent Entity (KGHM Polska Miedź S.A.). The situation in the largest company in the Group decidedly improved compared to the corresponding period of 2018 due to the completion and optimalisation of significant investments, such as the flash furnace at the Głogów I smelter and the auxiliary installation for the roasting of concentrate. The proper functioning of these investments, important for the production line, had a large impact on the results achieved by KGHM Polska Miedź S.A. Production of payable copper increased versus the corresponding prior-year period by 62 thousand tonnes (or by 17%) to 428 thousand tonnes for the first 9 months of 2019, and silver by 182 tonnes (22%). The production plan for all of the main metals (copper, silver, precious metals, molybdenum) was exceeded by several percent. Only in the case of sales of copper and silver were the targets not achieved, mainly due to the lack of sales of concentrate which were expected in the budget of KGHM Polska Miedź S.A.

In the case of the main overseas investment, i.e. the Sierra Gorda mine in Chile, the year 2019 brought a substantial improvement in its operations. During the first nine months of 2019 copper production increased by 11.3 thousand tonnes (+16%) as compared to the volume realised in the corresponding period of 2018. The main reason for the increase in production was the higher extraction and processing of ore and higher copper recovery during processing. Moreover, extraction took place in mining areas with higher ore quality, which was reflected in the higher copper content in processed ore. Higher ore processing and gold content were also responsible for the increase in gold production (+44%). As for molybdenum, there was a decrease in production by 23% due to the lower content of this metal in processed ore.

We invite you to review our full Quarterly Report.



i Adjusted EBITDA including 55% of EBITDA in Sierra Gorda, which is consolidated by using the equity method.

in mn PLN3rd quarter 20193rd quarter 2018Change
in mn PLN
Change
in %
Revenue 5 641 5 364 +277 +5%
Cost of goods sold -4 818 -4 717 +101 +2%
Adjusted EBITDA 1 380 1 225 +155 +13%
Net result on sales 823 647 +176 +27%
Profit for the period 696 365 +331 +91%


 

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