Post on 25-Aug-2020
Earnings Call Presentation Q1 2018 1 1
Saudi Arabian Mining Company (Ma’aden) Earnings Conference Call – First Quarter 2018
May 3, 2018
Earnings Call Presentation Q1 2018 2 2
Reem Asaad
Manager of Investor Relations
Earnings Call Presentation Q1 2018 3 3
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.
Forward looking statement
Earnings Call Presentation Q1 2018 4 4
Khalid Al-Mudaifer
President & Chief Executive Officer
Earnings Call Presentation Q1 2018 5 5
PRODUCTION
■ 118K ounces of gold, up 66% vs. Q1 2017
■ 233K tonnes of primary aluminium, up 2% vs. Q1 2017
■ 598K tonnes of ammonia, in line with Q1 2017
■ 753K tonnes of ammonium phosphate fertilizer1, up 4% vs. Q1 2017
■ 389K tonnes of alumina, up 5% vs. Q1 2017
STRONG
FINANCIAL
PERFORMANCE
IMPROVED
PROFITABILITY
■ Improved prices across the portfolio, year-on-year
■ Sales SAR 3,564 million, up 32% vs. Q1 2017
■ Operating income SAR1,172 million, up 62% vs. Q1 2017
■ Net income SAR 754 million, up 121% vs. Q1 2017
OUTLOOK
■ Despite improved pricing environment, cost pressures remained evident
■ Raw material costs in both phosphate and aluminium continued to increase
■ Maintained focus on efficiency helped to mitigate the impact of cost increases
■ Underlying EBITDA Margin1 increased to 55%
■ Price volatility in our commodities remains high but underlying market
fundamentals remain supportive
■ Strong pipeline of development projects designed to grow profitably
■ International opportunities remain a target
Production growth and price recovery delivers strong results
1 excluding pre-commercial production from MWSPC. 2 see appendix for details
Earnings Call Presentation Q1 2018 6 6
1,416 1,475 1,360
1,521
1,947
52% 49%
43% 47%
55%
0%
10%
20%
30%
40%
50%
60%
70%
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
EBITDA EBITDA Margin
SA
R m
illio
n
Rebase t
o 1
00 a
s o
n 1
Jan 2
017
Source: Bloomberg
Commodity price movement
Underlying EBITDA and margins
Mixed trends in the commodities markets despite volatility
40
60
80
100
120
140
160
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
Aluminium Alumina Copper Gold DAP Ammonia
Earnings Call Presentation Q1 2018 7 7
200
250
300
350
400
450
500
2017 2018
Q1 Q2 Q3 Q4 Q1
Source: Ma’aden SBU analysis, CRU , FMB and FERTECON
Average DAP Price Tampa Index (US$/t) % Average quarterly change
Avg. DAP Prices
10% 1% 5% 8%
Phosphate market remained firm in Q1-2018
■ DAP prices moved up by ~8% in Q1 – 2018, with an average of ~US$393/t (Avg. Tampa FOB)
■ Phosphate demand in Q1 was strong in Australia, East Africa, US, and China
■ Plant closures, delays in project ramp-ups and strong domestic Chinese market impacted the supply side
■ Increase in Indian subsidy by 16% has encouraged Indian demand positively
8%
Earnings Call Presentation Q1 2018 8 8
2017 2018
Q1 Q2 Q3 Q4 Q1
Aluminium Price Movement (US$/t)
Source: Bloomberg, Ma’aden SBU analysis, CRU June 2017
% Average quarterly change
Aluminium dipped in Q1-2018 but outlook more positive
■ Aluminium price averaged US$ 2,159/ton (LME), up 17 % vs. Q1 2017 and up 2 % vs. Q4 2017
■ Primary Aluminum demand growth continues with estimates for 2018 of 4-5%
■ Global trade issues remain a major risk factor and have led to significant volatility in pricing
■ Alumina refinery supply interruptions continue to support prices
Al
Al2O3 1% 12% 13%
9% 3% 6%
33%
4%
14%
2%
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
200
250
300
350
400
450
500
Earnings Call Presentation Q1 2018 9 9
0
200
400
600
800
1000
1200
1400
1600
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
Copper
Gold
2017 2018
Q1 Q2 Q3 Q4 Q1
Gold and copper price movement (US$/t)
Source: Bloomberg, CRU June 2017, SBU secondary analysis
1% 3% 2%
11% 3% 12% Cu
% Average quarterly change
Au 0%
7%
Gold price remains strong but copper off its 2017 highs
■ The geopolitical environment continued to provide support to gold prices over 2017 and into 2018
■ Copper weakened after a strong recovery in 2017 but supply deficits are still expected in 2018 given continued strong
demand and limited supply growth
4%
2%
Earnings Call Presentation Q1 2018 10 10
Darren C. Davis
Chief Financial Officer
Earnings Call Presentation Q1 2018 11 11
Consolidated Phosphate
FY2017 vs.
Prev. Yr. FY2017 vs.
Prev. Yr.
Revenue (SRmn) 12,086 28% Revenue (SRmn) 5,461 31%
EBITDA* (SRmn) 5,762 56% EBITDA* (SRmn) 2,465 58%
EBITDA margin 48% EBITDA margin 45%
43% of Group EBITDA
Aluminium Gold
FY2017 vs.
Prev. Yr. FY2017 vs.
Prev. Yr.
Revenue (SRmn) 5,032 18% Revenue (SRmn) 1,593 52%
EBITDA* (SRmn) 2,499 42% EBITDA* (SRmn) 798 112%
EBITDA margin 50%
EBITDA margin 50%
43% of Group EBITDA
14% of Group EBITDA
All of our businesses grew profitability in Q1 2018
Consolidated Phosphate
Q1-18vs.
LY Qtr.
vs.
Prev. Qtr.Q1-18
vs.
LY Qtr.
vs.
Prev. Qtr.
Revenue (SRmn) 3,564 32% 10% Revenue (SRmn) 1,542 23% 17%
EBITDA¹ (SRmn) 1,947 36% 28% EBITDA¹ (SRmn) 771 36% 40%
EBITDA margin 55% EBITDA margin 50%
40% of Group EBITDA
Aluminium Gold
Q1-18vs.
LY Qtr.
vs.
Prev. Qtr.Q1-18
vs.
LY Qtr.
vs.
Prev. Qtr.
Revenue (SRmn) 1,426 26% 4% Revenue (SRmn) 595 82% 8%
EBITDA¹ (SRmn) 838 20% 16% EBITDA¹ (SRmn) 338 104% 35%
EBITDA margin 59% EBITDA margin 57%
43% of Group EBITDA 17% of Group EBITDA
¹ see appendix for details
Earnings Call Presentation Q1 2018 12 12
341
286
562
-276
-64 -22 -22 -5 -7 -1 -3 -36
754
Net income bridge Q1 2017 vs. Q1 2018
Q1 2017 Volume
effect
Price
effect
Cost
effect
Sales,
marketing
logistics
G&A Finance
charges
Others Q1 2018
SAR MN
Key factor
All products ↑
Key factors
Aluminium ↑
Alumina ↑
APF ↑
Gold ↑
Key factors
Aluminium ↑ Alumina ↑ APF ↑
Write-off
& impair.
Growing volumes and improved prices driving earnings
Depn.&
amort.
Invty.
change Explo. &
tech.
Serv.
Earnings Call Presentation Q1 2018 13 13
-198 192
154 -179
-76 157
62 39 4
153
473
-28
754
Net income bridge Q4 2017 vs. Q1 2018
Q4 2017 Volume
effect
Price
effect
Cost
effect
Sales,
marketing
logistics
G&A Finance
charges
Others Q1 2018
SAR MN
Key factors
Aluminium ↑
APF ↑
Gold ↑
Key factors
Aluminium ↑
Alumina ↑
APF ↑
Write-off
& impair.
Growing volumes and improved prices driving earnings
Depn.&
amort.
Invty.
change Explo. &
tech.
Serv.
Key factors
APF ↑
Ammonia ↑
Alumina ↑
Gold ↑
Key factor
2017 year end impartment of
Aluminium rolling business
Key factor
One-off MAC refinancing
charges in 2017
Earnings Call Presentation Q1 2018 14 14
Operational performance
Earnings Call Presentation Q1 2018 15 15
Phosphate Performance
Ammonium phosphate fertilizer (Kt)
Ammonia (Kt)
721 726
753
637 667
728 320
363
393
200
250
300
350
400
450
400
450
500
550
600
650
700
750
Q1 2017 Q4 2017 Q1 2018
Production Sales Avg Prices
599
539
599
466
311 354 249
327 326
100
150
200
250
300
350
400
450
500
0
100
200
300
400
500
600
700
Q1 2017 Q4 2017 Q1 2018
Production Sales Avg Prices
US$/t
US$/t
Operational performance
■ During Q1 2018, Ma’aden produced 753K tonnes
of ammonium phosphate fertilizer from MPC, a
4% increase on the quantities produced in the
same quarter last year and a new record
■ Sales were impacted by delayed shipments due
to bad weather at quarter end
■ Ammonia production at MPC and MWSPC stable
but sales of ammonia lower as MWSPC
consumed ammonia in DAP production during the
ramp-up phase
■ Production ramp-up at MWSPC remains on track
Cost performance
■ DAP and MAP costs were impacted by higher
Sulphur prices
Earnings Call Presentation Q1 2018 16 16
Aluminium Performance
Primary aluminium (Kt)
Alumina production (Kt)
228 229 233
176 174 163
1836
2171 2230
1000
1200
1400
1600
1800
2000
2200
2400
100
120
140
160
180
200
220
240
Q1 2017 Q4 2017 Q1 2018
Production External sales Avg LME PricesUS$/t
369 403 389
30 63
343
442
389
0
50
100
150
200
250
300
350
400
450
500
0
50
100
150
200
250
300
350
400
450
Q1 2017 Q4 2017 Q1 2018
Production External sales Avg Prices (API)
US$/t
Operational performance
■ During the Q1 2018, 233K tonnes of primary
aluminium were produced, an increase of 2%
compared to the same quarter last year
■ Produced 389K tonnes of alumina, an increase of
5% compared to same quarter last year and
exports resumed with a shipment of 63K tonnes
made during this quarter
■ Ma’aden continues to focus on increasing
production from both the smelter and the alumina
refinery above nameplate capacity
Cost performance
■ During the quarter, aluminium cash costs
increased due to higher input costs, in particular
pitch and coke prices
■ Alumina cash cost also increased due to the
increase in key inputs, notably caustic soda
Projects
■ The rolling mill operation continues to ramp up
production
Earnings Call Presentation Q1 2018 17 17
Gold and Copper Performance
Gold (‘000 ounces)
Copper volumes (Kt)¹
¹ Ma’aden attributable production & sales @ 50%
3.5
5.3 6.0
3.7
4.8
6.2 5820
7496
6526
4000
5000
6000
7000
8000
9000
0
1
2
3
4
5
6
7
Q1 2017 Q4 2017 Q1 2018
Production Sales Price
71
114 118
70
115 118 1238
1281
1348
1000
1100
1200
1300
1400
1500
0
20
40
60
80
100
120
140
Q1 2017 Q4 2017 Q1 2018
Production Sales Avg PricesUS$/oz
$/t
Operational performance
■ Gold production reached 118,000 ounces in Q1,
a 69% increase compared to the same quarter
last year
■ Production growth reflects the continued
ramping up of the Ad Duwayhi mine
■ Copper production reached 6kt of copper from
the Jabal Sayid operations, a 71% increase
against Q1 last year
Cost performance
■ Cash costs per ounce of gold decreased,
primarily as a result of higher volumes and
higher grades at the Ad Duwayhi mine
■ Cash costs of copper also continued to decline
Earnings Call Presentation Q1 2018 18 18
Financial position
Earnings Call Presentation Q1 2018 19 19
4,2
20
53,2
79
2,0
88 8,5
48
26,7
34
Current
Liability
All numbers are in SAR millions
18%
34%
44%
4%
MPC WAS Aluminium Others
60%
33%
7%
Banks PIF SIDF
Long term borrowing
By business By source
12,2
53
44,5
46
26,0
32
12,0
38
Capital work
in progress
Mine, plant,
property &
equipment
Current assets
Other non
current assets
Equity
Total Debt
Other non current
liability
Assets Equity and
liabilities As at 31 March 2018
Balance sheet
95%
5%
Floating Fixed
51%
49%
SAR USD
Type of loan
Financial position
Non controlling
interest
Earnings Call Presentation Q1 2018 20 20
12 5 7 7 6
45 45 54 54 53
57%
56%
62%
61%
60%
53%
54%
55%
56%
57%
58%
59%
60%
61%
62%
63%
0
10
20
30
40
50
60
2014 2015 2016 2017 Q1 2018
Cash & Cash Equivalent Long Term Borrowing Debt/Total Capital
6.1x 8.2x 12.6x 11x 9.2x
Net debt 1
SRbn
33 40 47 47 47
Capital Structure
■ Our ongoing refinancing programme continues and in Q1 2018 we issued our first sukuk by Ma’aden Phosphate
Company
■ Our liquidity position remains strong with cash on hand of SAR6B and our undrawn SAR7.5B corporate revolver
■ We continue to explore further refinancings and optimisations of our debt structure
1 see appendix 2 2016 restated as per IFRS
Net debt: EBITDA
Earnings Call Presentation Q1 2018 21 21
Summary
Fundamentally attractive commodities seeing sustained
recovery
▪ Our belief in the long term fundamentals of our core products is evidenced in the
sustained recovery in prices
▪ 2018 expected to be a volatile pricing environment but generally positive in terms of
trends
Growing production
▪ Production growth continues and allows for lower unit costs and the opportunity to benefit from
the improved pricing environment
▪ Further upsides to production are being pursued
Raw material costs are a concern but efficiency is mitigating
▪ We have seen significant increases in raw material costs but have been able to improve
profitability nonetheless through greater efficiency
Positive outlook for growth
▪ Increased cashflow allows us to improve our capital structure whilst still pursuing profitable
growth projects
▪ International opportunities also remain under review
Earnings Call Presentation Q1 2018 22 22
Q&A
Earnings Call Presentation Q1 2018 23 23
Appendix
Earnings Call Presentation Q1 2018 24 24
Schedule debt repayment profile
As at 31 March 2018
-
500
1,000
1,500
2,000
2,500
3,000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
USD Millions
MIC
MGBM
MWSPC
MBAC
MRC
MAC
MPC
695
1,117 1,164
1,565
1,946
2,227
1,227
1,717
1,004
721 715
390
495 662
Earnings Call Presentation Q1 2018 25 25
Sales summary
(All numbers are in ‘000 tonnes except as mentioned)
Particulars Q1 2018 Q1 2017
%
change
Phosphate business
Ammonium phosphate fertilizer 728 637 14%
Ammonia MPC 125 152 -18%
Ammonia MWSPC 229 315 -27%
Aluminium business
Alumina 63 30 110%
Primary Aluminium 163 176 -7%
Precious and base metals business
Gold (‘000 ounces) 118 70 69%
Copper 6.2 3.7 68%
Earnings Call Presentation Q1 2018 26 26
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.
■ 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 Q1 2018 27 27
Thank You!
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