Regulated Information
3 May 2018 at 07:00 CEST
HIGHLIGHTS:
-
Group underlying EBITDA[1] of EUR 54 million for
Q1 2018, EUR 3 million lower than Q1 2017. Nyrstar benefited from a
23% increase in the zinc price and ramp-up of the Middle Tennessee
Mines which was offset by reductions in treatment charge terms, a
substantial weakening of the USD/EUR from 1.06 to 1.23, negative
earnings contributions of the Myra Falls Mine whilst in start-up
and reduced free metal price exposure due to the zinc price collar
hedging
-
Metals Processing underlying EBITDA of EUR 49
million, down EUR 14 million year-on-year, driven primarily by
lower realised zinc treatment charges and zinc metal production,
partially offset by higher commodity prices; and
-
Substantially improved Mining underlying EBITDA
of EUR 16 million, up EUR 11 million year-on-year, driven by higher
commodity prices and the successful restart of the Middle Tennessee
mines, partially offset by the EUR 8 million negative EBITDA
contribution from the restart of the Myra Falls mine
-
Net debt excluding zinc metal prepay and
perpetual securities of EUR 1.351 billion at the end of Q1 2018, an
increase of EUR 249 million on 31 December 2017 driven
predominantly by working capital outflow mainly due to higher
commodity prices and amortisation of prepays. Net debt inclusive of
zinc metal prepay and perpetual securities of EUR 1.592 billion at
the end of Q1 2018, an increase of EUR 229 million on 31 December
2017
-
Port Pirie Redevelopment ramp-up progressing
well
-
Ramp-up is ahead of schedule with important
milestones achieved on operating time, volume of material treated
and proportion of residue in feed
-
Earnings uplift in-line with guidance provided
at the start of 2017 against a 2016 basis, with at least EUR 40
million expected in H2 2018, EUR 100 million in 2019 and EUR
130 million in 2020
-
Restart of the Myra Falls mine commenced in
August 2017 and is progressing in-line with schedule for zinc
production by the start of H2 2018
-
Chris Eger to step down as Chief Financial
Officer in the summer of 2018 after a comprehensive transition
period; Michel Abaza, currently Corporate Treasurer at Safran
Group, to take over. Please see biography for Michel Abaza included
at the end of this document
Commenting on the first quarter
2018 interim management statement, Hilmar Rode, Chief Executive
Officer said:
"We have made substantial progress on the Port Pirie Redevelopment
ramp-up, the restart of the Myra Falls mine and have also advanced
our other strategic priorities in Q1 2018. Production performance
across the group during the quarter was in-line with full year
guidance. No material unplanned outages were experienced at the
operations and the mines had a 42% increase in zinc in concentrate
production year-on-year as a result of the successful ramp-up of
the Middle Tennessee mines.
Following the successful start of
hot commissioning at the Port Pirie Redevelopment and first feed to
the new TSL furnace at the end of 2017, during Q1 2018 we have been
able to ramp-up the TSL furnace more quickly than anticipated in
terms of operating time, volume of material treated and the
proportion of high margin residues in the feed. For the month of
April 2018 the residue consumed in the TSL feed was 55% of the
overall feed mix, which exceeds the fully ramped-up target of 40%
residue in the feed.
The financial performance of the
Company continues to be supported by strong zinc market
fundamentals, with the quarterly zinc price 23% higher in Q1 2018
compared to a year ago. Offsetting some of this support has been
lower zinc treatment charge terms, the translational earnings
impact of the material weakening of the US dollar against the Euro
and the impact of 70% of the free metal zinc price exposure being
capped by the current collar hedge at USD 3,094/t through to the
end of the first half of this year. We continue to expect a
substantial improvement in earnings and a move to positive free
cash flow generation in H2 2018 with the ramp-up of the Port Pirie
Redevelopment, the restart of the Myra Falls mine and ongoing
improvements in operational performance at the mining and smelting
operations.
After two and a half years as the
Chief Financial Officer at Nyrstar, Chris Eger has communicated to
the Board over the past months that he has decided to leave Nyrstar
in the summer to pursue other opportunities. We undertook a
thorough search process and have appointed Michel Abaza as CFO to
take over from Chris. Michel has over 20 years' experience in
treasury, capital markets, financial reporting and M&A and
joins us from the Safran Group where he was the Corporate
Treasurer. Michel will start at Nyrstar in the coming months and
will work with Chris to ensure an orderly handover. We thank Chris
for his hard work and dedication which has been instrumental in
strengthening Nyrstar's balance sheet and placing Nyrstar on a much
stronger financial footing to enable the transformation of the
business.
CONFERENCE
CALL
Management will discuss this statement in a conference call with
the investment community on 3 May 2018 at 9:00am Central European
Summer Time. The presentation will be webcast live and will also be
available in archive. The webcast can be accessed via
https://edge.media-server.com/m6/p/6brkechn
KEY FIGURES
EUR million
(unless otherwise indicated) |
Q1 |
Q1 |
% |
|
2017 |
2018 |
Change |
Revenue |
|
|
|
Metals Processing |
931 |
957 |
3% |
Mining |
49 |
77 |
57% |
Other |
(48) |
(77) |
60% |
Group Revenue |
932 |
957 |
3% |
|
|
|
|
Underlying EBITDA |
|
|
|
Metals Processing
Underlying EBITDA |
63 |
49 |
(22%) |
Mining Underlying
EBITDA |
5 |
16 |
220% |
Other and
Eliminations Underlying EBITDA |
(11) |
(11) |
- |
Group Underlying EBITDA |
57 |
54 |
(5%) |
Underlying EBITDA
margin |
6% |
6% |
- |
|
|
|
|
Capex |
|
|
|
Metals Processing |
56 |
24 |
(57%) |
Mining |
8 |
28 |
250% |
Other |
2 |
- |
- |
Group Capex |
65 |
53 |
(18%) |
|
|
|
|
Loans and borrowings,
end of the period |
1,045 |
1,550 |
48% |
Less cash and cash
equivalents, end of period |
58 |
199 |
243% |
|
|
|
|
Net
Debt Exclusive of Zinc Prepay and Perpetual Securities |
986 |
1,351 |
37% |
|
|
|
|
Zinc Prepay |
147 |
55 |
(63%) |
Perpetual
Securities |
139 |
186 |
34% |
|
|
|
|
Net Debt Inclusive of Zinc Prepay and Perpetual
Securities |
1,272 |
1,592 |
25% |
|
|
|
|
Metals Processing Production |
|
|
|
Zinc metal ('000
tonnes) |
261 |
252 |
(3%) |
Lead metal ('000
tonnes) |
35 |
39 |
11% |
Mining Production |
|
|
|
Zinc in concentrate
('000 tonnes) |
23 |
33 |
42% |
Copper in concentrate
('000 tonnes) |
0.3 |
0.5 |
41% |
Silver ('000 troy
ounces) |
117 |
108 |
(8%) |
Gold ('000 troy
ounces) |
0.3 |
0.4 |
25% |
|
|
|
|
Market[2] |
|
|
|
Zinc price
(USD/t) |
2,780 |
3,421 |
23% |
Lead price
(USD/t) |
2,278 |
2,523 |
11% |
Silver price
(USD/t.oz) |
17.42 |
16.78 |
(4%) |
Gold price
(USD/t.oz) |
1,219 |
1,331 |
9% |
EUR/USD average
exchange rate |
1.06 |
1.23 |
15% |
EUR/AUD average
exchange rate |
1.40 |
1.57 |
12% |
|
|
|
|
GROUP FINANCIAL OVERVIEW
Revenue for Q1 2018 of EUR 957
million was up 3% on Q1 2017, primarily driven by higher zinc and
lead prices which were up 23% and 11% respectively, higher mining
production partially offset by deteriorating benchmark zinc
treatment charge terms.
Group underlying EBITDA of
EUR 54 million in Q1 2018, a decrease of 5% on Q1 2017, due to
lower treatment charges a weakening of the US dollar versus the
Euro, largely offset by higher commodity prices.
Capital expenditure was EUR 53
million in Q1 2018, representing a decrease of 18% year-on-year
driven by a substantial EUR 32 million capex reduction in Metals
Processing with the completion of the Port Pirie Redevelopment at
the end of 2017, partially offset by a EUR 20 million increase in
total capex spend in mining compared to Q1 2017 with the restart of
the Myra Falls mine.
Net debt at the end of Q1
2018, excluding the zinc metal prepay and perpetual securities, was
23% higher compared to the end of 2017 at EUR 1,351 million (EUR
1,102 million at the end of 2017). Net debt increased during the
quarter due to a cash outflow from capex spend of EUR 53 million,
interest and tax payments of EUR 55 million, a temporary
reduction in prepays of EUR 50 million mainly from the planned
maintenance outage at Port Pirie at the start of Q2 2018 and a
working capital outflow of EUR 155 million. The net debt inclusive
of the zinc metal prepay and perpetual securities at the end of Q1
2018 was EUR 1,592 million, up 17% compared to the end of 2017.
Cash balance at the end of Q1 2018 was EUR 199 million compared to
EUR 67 million at the end of 2017 with liquidity at the end of Q1
2018 of EUR 479 million.
ZINC CONCENTRATES
The zinc concentrate 2018
benchmark treatment charges have been settled at the end of April
2018 with a base TC of USD 147 per dmt (dry metric tonne) of
concentrate. The 2018 benchmark zinc concentrate treatment charge
represents a base TC decrease of approximately 15% on the 2017
headline treatment charge of USD 172 per dmt.
Similar to 2017, the vast majority
(90-95%) of Nyrstar's concentrate requirements for 2018 are priced
at benchmark terms or by reference to the benchmark with a discount
applied. The average discount to the benchmark realized by Nyrstar
in Q1 2018 has been in-line with that achieved in Q1 2017 at
approximately USD 40 per tonne. The same discount is expected to be
realized over the course of 2018.
SAFETY, HEALTH AND
ENVIRONMENT
"Prevent Harm" is a core priority
of Nyrstar. The Company is committed to maintaining safe operations
and to proactively managing risks including with respect to people
and the environment. At Nyrstar, we work together to create a
workplace where all risks are effectively identified and controlled
and everyone goes home safe and healthy each day of their working
life.
Continuing the positive trend seen
in 2017, during Q1 2018, there was a significant reduction in the
severity of injuries with the frequency rate of cases with time
lost or under restricted duties (DART) decreasing by 15% compared
to Q1 2017 and the frequency rate of cases requiring at least a
medical treatment (RIR) decreasing by 3% compared to Q1 2017. Four
of our sites continue to operate DART free in 2018.
No environmental events with
material business consequences or long-term environmental impacts
occurred during the period.
OPERATIONS REVIEW: METALS
PROCESSING
EUR
million |
Q1 |
Q1 |
% |
(unless otherwise indicated) |
2017 |
2018 |
Change |
|
|
|
|
Revenue |
931 |
957 |
3% |
|
|
|
|
Underlying EBITDA |
63 |
49 |
(22%) |
|
|
|
|
Sustaining |
21 |
17 |
(18%) |
Growth |
7 |
4 |
(43%) |
Port Pirie
Redevelopment |
27 |
3 |
(88%) |
Metal Processing Capex |
56 |
24 |
(56%) |
Metals Processing delivered an
underlying EBITDA result of EUR 49 million in Q1 2018, a decrease
of 22% over Q1 2017 due to slightly lower zinc metal production, a
substantially weaker USD and lower zinc treatment charges.
Sustaining capital spend in Q1
2018 decreased by 18% on Q1 2017, in-line with the lower capital
expenditure guidance provided for 2018 (EUR 130 million to EUR 150
million) and the absence of Port Pirie Redevelopment capital
expenditure in 2018.
|
Q1 |
Q1 |
% |
|
2017 |
2018 |
Change |
|
|
|
|
Zinc
metal ('000 tonnes) |
|
|
|
Auby |
40 |
39 |
(3%) |
Balen/Overpelt |
64 |
69 |
7% |
Budel |
71 |
66 |
(6%) |
Clarksville |
29 |
24 |
(18%) |
Hobart |
57 |
54 |
(5%) |
Total |
261 |
252 |
(3%) |
|
|
|
|
Lead
metal ('000 tonnes) |
|
|
|
Port Pirie |
35 |
39 |
11% |
|
|
|
|
Other
products |
|
|
|
Copper cathode ('000
tonnes) |
0.9 |
1.1 |
31% |
Silver (million troy
ounces) |
2.8 |
2.8 |
- |
Gold ('000 troy
ounces) |
17.6 |
17.9 |
1% |
Indium metal
(tonnes) |
2.7 |
9.2 |
243% |
Sulphuric acid ('000
tonnes) |
331 |
330 |
- |
Metals Processing produced
approximately 252,000 tonnes of zinc metal in Q1 2018, in-line with
full year 2018 guidance, representing a 3% decrease on Q1 2017. The
decrease in zinc metal production year-over-year was primarily
driven by extreme cold weather in Tennessee in January 2018 that
resulted in a number of process equipment failures and an
electrical event on one of the transformers at Clarksville that
limited amperage to 60% of the plant maximum for 3 weeks in
February 2018; a cautious ramp-up and focus on process stability at
Budel following the hydrogen explosions experienced in the leaching
department in Q4 2017; high lead in cathode zinc due to issues
experienced in the leaching and electrolysis departments at Hobart
resulted in a 5% reduction in the production of zinc market metal.
The Balen smelter had a strong production performance in Q1 2018
with an 7% year-on-year improvement driven primarily by increased
roaster rates with the consumption of a greater proportion of
secondary oxides in the feed mix.
Lead market metal production at
Port Pirie of 39kt was 11% higher compared to Q1 2017. This
improved production was despite poor quality sinter production in
January and February 2018 due to a feed system change to allow the
new TSL furnace to run on the existing proportioning plant. Gold
and silver production in Q1 2018 was on par with Q1 2017. Copper
production was higher in Q1 2018 by 31% due to a different feed mix
consumed with higher copper contained.
OPERATIONS REVIEW: MINING
EUR
million |
Q1 |
Q1 |
% |
(unless otherwise indicated) |
2017 |
2018 |
Change |
|
|
|
|
Revenue |
49 |
77 |
57% |
|
|
|
|
Underlying EBITDA |
5 |
16 |
220% |
|
|
|
|
Sustaining,
exploration and development |
8 |
25 |
202% |
Growth |
- |
3 |
- |
Mining Capex |
8 |
28 |
240% |
Mining underlying EBITDA of EUR 16
million in Q1 2018 was EUR 11 million higher than in Q1 2017 due to
the higher zinc price, lower zinc treatment charge and the restart
of the Middle Tennessee Mines. The Mining result includes a EUR 8
million negative underlying EBITDA impact of the Myra Falls mine
restart in Q1 2018 (EUR 3 million in Q1 2017). As the Myra Falls
mine commences mill production during the start of H2 2018, the
complex is expected to begin contributing positive EBITDA when it
makes its first shipments and sales of concentrate.
Mining capital expenditure in Q1
2018 was EUR 28 million, up EUR 20 million year-on-year, due
primarily to the re-start of the Myra Falls mine which commenced in
August 2017.
'000
tonnes |
Q1 |
Q1 |
% |
unless otherwise indicated |
2017 |
2018 |
Change |
|
|
|
|
Total
ore milled |
586 |
974 |
66% |
|
|
|
|
Zinc
in Concentrate |
|
|
|
Langlois |
7 |
6 |
(17%) |
Myra Falls |
- |
- |
- |
East Tennessee |
17 |
17 |
1% |
Middle
Tennessee |
- |
11 |
- |
Total |
23 |
33 |
42% |
|
|
|
|
Other
metals |
|
|
|
Copper in
concentrate |
0.3 |
0.5 |
41% |
Silver ('000 troy
oz) |
117 |
108 |
(8%) |
Gold ('000 troy
oz) |
0.3 |
0.4 |
25% |
Nyrstar's Mining operations
produced approximately 33kt of zinc in concentrate in Q1 2018, an
increase of 42% compared to Q1 2017. During Q1 2018, the Middle
Tennessee Mine, which restarted during 2017, performed in-line with
management expectations with production of 11kt of zinc in
concentrate. Production at the East Tennessee Mines was flat
year-on-year with a 13% increase in ore milled due to increased
feed from the mines and the installation and commissioning of
higher capacity cyclones in the grinding and flotation circuit of
the plant allowing a higher throughput being offset by the mining
of lower grade ore zones at the mines.
NEW CFO BIOGRAPHY
Michel Abaza is a seasoned finance
director with over 20 years of experience in treasury, capital
markets, financial reporting and analysis as well as in M&A.
Michel has a proven track record in developing robust capital
structures and balance sheets within complex international
businesses and across multiple geographies and cultures.
Michel joins Nyrstar from the
publicly listed Safran Group (an international high-technology
group, operating in the aircraft propulsion and equipment, space
and defense markets) based in France where he was the Group's
corporate treasurer. Prior to that, he was the finance director for
Messier-Dowty France, one of the major divisions of Safran.
Michel has also worked at Valeo in
divisional senior finance management roles gaining significant
corporate transactions and restructuring experience. He started his
finance career at Schlumberger in the mid-nineties where he
undertook a variety of finance roles in financial control, tax,
financial planning and analysis and commercial decision
support.
Michel holds a degree in
Management Controlling from the Ecole des Hautes Etudes
Commerciales in Paris (HEC Paris). A French national, he is fluent
in French, English and Spanish.
FORWARD-LOOKING
STATEMENTS
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.
About
Nyrstar
Nyrstar is a global multi-metals business, with a market leading
position in zinc and lead, and growing positions in other base and
precious metals, which are 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 and Australia and employs approximately 4,100
people. Nyrstar is incorporated in Belgium and has its corporate
office in Switzerland. Nyrstar is listed on Euronext Brussels under
the symbol NYR. For further information please visit the Nyrstar
website: www.nyrstar.com.
Important
information
This announcement is for general information only. It does not
constitute, or form part of, an offer or invitation to sell or
issue, or any solicitation of an offer to purchase or subscribe
for, nor shall there be any sale or purchase of, the securities
referred to herein. In particular, this announcement is not
an offer of securities for sale in the United States. Any such
securities may not be sold in the United States absent registration
with the United States Securities and Exchange Commission or an
exemption from registration under the U.S. Securities Act of 1933,
as amended. The Company does not intend to register any part of any
offering in the United States or to conduct a public offering of
securities in the United States. Any offering of securities
will be made by means of an offering document that will contain
detailed information about the company and management as well as
financial statements. This announcement is not a prospectus within
the meaning of Directive 2003/71/EC of the European Parliament and
the Council of November 4th, 2003, as amended and as implemented
respectively in each member State of the European Economic Area
(the "Prospectus Directive"). This announcement does not, and shall
not, in any circumstances constitute a public offering nor an
invitation to the public in connection with any offer to buy or
subscribe for securities in any jurisdiction.
For further information
contact:
Anthony Simms - Head
of Investor Relations T: +41 44 745 8157 M:
+41 79 722 2152 anthony.simms@nyrstar.com
Franziska Morroni - Head of Communications T: +41 44
745 8295 M: +41 79 719 2342
franziska.morroni@nyrstar.com
[1] Underlying EBITDA is a non-IFRS measure of
earnings, which is used by management to assess the underlying
performance of Nyrstar's operations and is reported by Nyrstar to
provide additional understanding of the underlying business
performance of its operations. Nyrstar defines "Underlying EBITDA"
as profit or loss for the period adjusted to exclude loss from
discontinued operations (net of income tax), income tax
(expense)/benefit, share of loss of equity-accounted investees,
gain on the disposal of equity-accounted investees, net finance
expense, impairment losses and reversals, restructuring expense,
M&A related transaction expenses, depreciation, depletion and
amortization, income or expenses arising from embedded derivatives
recognised under IAS 39 "Financial Instruments: Recognition and
Measurement" and other items arising from events or transactions
clearly distinct from the ordinary activities of Nyrstar. For a
definition of other terms used in this press release, please see
Nyrstar's glossary of key terms available at:
http://www.nyrstar.com/investors/en/Pages/investorsmaterials.aspx
[2] Zinc, lead and copper prices are averages of LME daily cash
settlement prices. Silver/Gold price is average of LBMA daily
fixing / daily PM fixing, respectively
The full press release can be downloaded from the
following link:
Press Release (English)
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Nyrstar via Globenewswire
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