Structural progress despite operational challenges in mining
6 February 2014
Group underlying EBITDA of EUR185 million down 16% on 2012 (EUR 221 million)
- Metals Processing EUR 149 million, driven by higher realised premiums and the recognition of the EUR 45 million termination fee from Glencore, partially offset by lower acid prices
- Mining EBITDA EUR 78 million, adversely impacted by lower copper, silver and gold prices, operational challenges during H1 2013 and significant reduction in deliveries from Talvivaara during H2 2013.
- Delivered significant cost savings through Project Lean, EUR 43 million by end of 2013; on track to deliver target of EUR 75 million by end of 2014
- Strategic hedges for zinc, gold and silver partially offset challenging metal price environment
PAT of EUR (195) million impacted by impairments and impairment reversals
- Impairment of EUR 194 million (after tax) related to write-downs at an number of mining operations
- Reversal of EUR 139 million (after tax) historic (2008) impairments of Balen and Port Pirie smelters due to improvements in the valuation of these two assets driven by a reduction in energy costs and a more favourable metal price outlook compared to 2008
- Significant improvement of PAT in H2 2013 versus H1 2013 prior to impact of impairments and impairment reversals
- No impairment on Talvivaara zinc streaming agreement in 2013 – Nyrstar actively involved in Talvivaara’s corporate reorganisation process
- The Board of Directors has decided not to propose to shareholders a distribution for the full year 2013, reflecting its commitment to support the opportunities identified by the company’s growth plans
Solid financial position and significant committed undrawn liquidity headroom and cash on hand
- Net debt of EUR 670 million (EUR 756 million at the end of H1 2013)
- Committed undrawn liquidity headroom and cash on hand of 721 million at end of 2013
- Successfully refinanced the EUR 120 million bonds maturing in 2014 with new EUR 120 million convertible bonds due 2018 with attractive terms
- Significant reduction in capital expenditure through disciplined approach resulting in capital expenditure of EUR 200 million, 19% down on 2012, and at the low end of full year guidance
Metals Processing and Mining segments production in line with guidance
- Metals Processing production in H2 2013 a new half-yearly record, as a result zinc metal production of approximately 1,088kt at top end of full year guidance
- Mining segment achieved full year guidance for all metals (excluding lead); although down on 2012 due to operational challenges
Structural progress towards delivering Nyrstar’s strategic mission
- Reorganisation of company into three distinct segments: Mining, Metals Processing (formerly the Smelting Segment) and Marketing, Sourcing and Sales
- Commenced asset level Mining Strategic Review, focused on identifying opportunities to make a step change improvement in the Mining segment’s operational performance; not envisaged to be capital consumptive
- Started implementing recommendations of Smelting Strategic Review and continued to make significant progress on the proposed Port Pirie Redevelopment
- Established a strong marketing, sourcing and sales team to actively support Nyrstar’s industrial strategy
- Entered into a strategic off-take and marketing agreement with Noble Group
Commenting on the 2013 full year results, Roland Junck, Chief Executive Officer of Nyrstar, said:
“Despite a challenging year, we continue our transformation and are confident we have the right plans in place to reach our strategic targets. Our Group underlying EBITDA of EUR 185 million decreased 16% from 2012. This decline was partly driven by tough macroeconomic headwinds and markedly weaker commodity prices, particularly copper, gold and silver prices, and also company-specific challenges; however, particularly from H2 onwards, we note solid underlying performance, especially in cash generation, cost control and our capital expenditures.
Metals Processing was up 10% on 2012 at EUR 149 million. This was driven by higher realized premiums and the recognition of the EUR 45 million termination fee from Glencore that compensated Nyrstar for agreeing to end the European component of its commodity grade metal off-take contract, partially offset by lower acid prices in 2013.
Mining segment EBITDA was down 40% on 2012 at EUR 78 million; adversely impacted by lower commodity prices, operational challenges during the first half and significantly reduced deliveries from Talvivaara. We remain keenly focused on improving the performance of our Mining segment and during H2 2013 we commenced an asset level Mining Strategic Review aimed at identifying opportunities to make a step change improvement in the Mining segment’s operational and financial performance.
We continue to seek sustainable cost reductions across our entire business through Project Lean and achieved costs savings at the end of 2013 of EUR 43 million and are confident of achieving our targeted cost savings of EUR 75 million by the end of 2014.
Net debt at the end of 2013 was EUR 670 million, down 11% on H1 2013 and we have committed undrawn liquidity headroom and cash on hand of EUR 721 million at end of 2013. Metals Processing segment generated strong cash flows driven by effective management of working capital and capital expenditure. During the year we successfully refinanced the EUR 120 million bond maturing in 2014 with new EUR 120 million convertible bonds due 2018 with attractive terms.
As a result of our disciplined capital management approach, capital expenditure in 2013 was significantly down on 2012 at EUR 200 million and at bottom of full year guidance.
Our operational performance was impacted by a number of planned maintenance shuts across our Metals Processing segment and, disappointingly, operational events across our Mining segment. Most notably a two month suspension of mining operations at Campo Morado due to a licensing issue. However, whilst own mine zinc in concentrate production in H2 2013 was down marginally on H1 2013 this largely reflected the focus on gold at El Toqui. Full year own zinc in concentrate production was 271,000 tonnes (in line with our guidance although down 4% on 2012). Lead in concentrate production was marginally down on our guidance whilst the production of other metals (copper, gold and silver) was in line. Deliveries of zinc in concentrate from Talvivaara during H2 2013 were significantly down on H1 2013 (30kt in H1 2013 to 14kt in H2). Talvivaara’s liquidity position weakened further in H2 2013 and Nyrstar is now actively participating with a number of stakeholders in Talvivaara’s corporate reorganization process which commenced in Q4 2013.
Our Metals Processing Segment had a strong year, with a new half-yearly record in zinc metal production in H2 2013, as a result zinc metal production was at top end of our guidance (and in line with 2012). Production of other metals in Metals Processing (lead, copper, silver, gold and indium) was broadly in line with H1 2013 and above 2012 performance.
Our marketing, sourcing and sales team in H1 2013 reached agreement to terminate the European component of the commodity grade zinc metal offtake agreement with Glencore. In H2 2013, Nyrstar successfully concluded negotiations for a strategic offtake and marketing partnership with Noble Group for 200,000 tonnes per annum of commodity grade zinc metal. In parallel with the partnership in Europe with Noble, we have also established a strong marketing, sourcing and sales group which will actively position Nyrstar within key markets.
Looking ahead, we recognise that 2014 is an important year for Nyrstar and while there are early signs of improving conditions across the markets in which we operate, we are conscious of the need for a prudent and disciplined approach to managing the business ensuring it is sustainable for the long term. With this in mind, we continue to actively progress the Port Pirie redevelopment and the initiatives identified following the outcome of the Smelting Strategic Review, supported by a more advanced Marketing, Sourcing and Sales strategy, and look forward to results of the Mining Strategic Review. We continue to execute the Group strategy and remain convinced that our unique industrial footprint, ownership of raw materials and commercial focus provide a unique opportunity to generate value to our shareholders.
Management will discuss this statement in a conference call with the investment community on 6 February 2014 at 09:00am Central European Time. The presentation will be webcast live on the Nyrstar website, www.nyrstar.com, and will also be available in archive. The webcast can be accessed via: http://www.media-server.com/m/p/c4sbogcn
This release includes forward-looking statements that reflect Nyrstar’s intentions, beliefs or current expectations concerning, among other things: Nyrstar’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies and the industry in which Nyrstar operates. These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause Nyrstar’s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Nyrstar cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which Nyrstar operates may differ materially from those made in or suggested by the forward-looking statements contained in this news release. In addition, even if Nyrstar’s results of operations, financial condition, liquidity and growth and the development of the industry in which Nyrstar operates are consistent with the forward-looking statements contained in this news release, those results or developments may not be indicative of results or developments in future periods. Nyrstar and each of its directors, officers and employees expressly disclaim any obligation or undertaking to review, update or release any update of or revisions to any forward-looking statements in this report or any change in Nyrstar’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.
Nyrstar is an integrated mining and metals business, with market leading positions in zinc and lead, and growing positions in other base and precious metals; essential resources that are fuelling the rapid urbanisation and industrialisation of our changing world. Nyrstar has mining, smelting, and other operations located in Europe, the Americas, China and Australia and employs over 7,000 people. Nyrstar is incorporated in Belgium and has its corporate office in Switzerland. Nyrstar is listed on NYSE Euronext Brussels under the symbol NYR. For further information please visit the Nyrstar website, www.nyrstar.com
For further information contact:
Anthony Simms Group Manager Investor Relations T: +41 44 745 8157 M: +41 79 722 2152 [email protected]
Sheela Pawar de Groot Group Manager Corporate Communications T: +41 44 745 8154 M:+41 79 722 6917 [email protected]