KGHM Reported Best Results In Nearly A Decade
LUBIN - "We are proud of the results of our work. Especially now, when we are commemorating the 60th anniversary of KGHM’s founding. The strategic significance of copper, as a raw material needed in electromobility, renewable energy, electronics and medicine, has a long term outlook. This can also be seen in our results for the first quarter. I wish to emphasis that we are achieving these effects under the conditions imposed by the COVID-19 epidemic, when many sectors of the economy have suffered from the impact of lockdowns. KGHM is consistently enhancing its position as a global champion,” said Marcin Chludzinski, President of the Management Board.
KGHM reported the best operating and financial results in nearly a decade, a substantial decrease in debt, a recommended dividend payout and a new concession, as well as top-tier silver production in world rankings: KGHM announced a summary of the work of the copper company in the first quarter of 2021. The company also published the Integrated Report of KGHM for 2020.
In the first quarter of this year, KGHM recorded its highest consolidated and standalone operating profit since the acquisition of the Group’s international assets in 2012. The company also achieved its highest quarterly consolidated EBITDA margin to date, at 34 percent. Consolidated adjusted Group EBITDA for the first quarter amounted to PLN 2 608 million, or an increase of 2.3x compared to Q1 2020. Standalone quarterly EBITDA rose by 86 percent compared to Q1 2020 and amounted to PLN 1 675 million. Worth noting is that EBITDA for the Sierra Gorda mine increased more than six-fold, reaching PLN 643 million as KGHM’s share.
This substantial improvement in EBITDA enabled the KGHM Group to record a profit for the period which was PLN 675 million (+98%) higher than that achieved in Q1 2020 and closed the quarter in the amount of PLN 1 365 million. Such a level of quarterly net profit is the highest since the acquisition of the international assets. The same is the case in terms of profit for the period of KGHM Polska Miedz S.A. (PLN 975 million). The increase in Group revenues for the quarter by 27 percent compared to the first quarter of 2020, to PLN 6 745 million, was due to the increase in the prices of basic products. This was despite an adjustment in revenues due to derivatives and a less favorable USD/PLN exchange rate.
The price of copper in the first quarter of 2021 continued to rise, reaching the levels from 2011. Silver prices remained above 25 USD/koz t. As a result of the economic recovery there was improved sentiment towards these commodities, with stabilization of the gold/silver ratio at historic averages.
The increase in copper production by the KGHM Group by 6.6% versus Q1 2020, with production in the first quarter of 186 thousand tonnes, was due to the greater availability of feed material and improved availability of production lines, as well as higher recoveries and better ore quality. In the Polish operating segment there was improvement in mining parameters in the Deep Glogow area.
In the first quarter of 2021 the decision was made to define and create Strategic Programs for KGHM. In 2021 the company will continue to improve its production parameters, stabilize its finances and achieve ambitious investments. Especially given that at the end of April the Minister for Climate and the Environment issued a decision granting KGHM concessions for the Bytom Odrzanski and Kulow – Luboszyce deposits.
The Company is planning further projects aimed at minimizing the impact on its environment. Continuing the Program to adapt the technological installations of KGHM to the requirements of BAT conclusions for the non-ferrous metals industry together with the restriction of arsenic emissions (BATAs). 11 projects were advanced at the Glogow Copper Smelter and Refinery and the Legnica Copper Smelter and Refinery, of which in the first quarter of 2021 realization of the following was completed: A de-leaded slag transport installation (HM Glogow); and A warehouse and storage area for lead-bearing materials (HM Glogow). KGHM is continuing its sanitary regimes and other restrictions related to the COVID–19 pandemic. The vaccination of company employees is well underway.