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DVFA Analyst Conference
on February 13, 2014
Aurubis AG
The Leading Integrated
Copper Producer
Peter Willbrandt
CEO
Erwin Faust
CFO
February 13, 2014
February 13, 2014
1
Agenda
1. Current situation and trends
on the main markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 13, 2014
2
Weak earnings with high cash flow
3 months
FY 2013/14
February 13, 2014
3 months
FY 2012/13
Operating EBT (€m)
(3)
140
Net cash flow (€m)
284
88
ROCE (%) (operating)
0.5
22.5
3
Operating EBT impacted by difficult market
environment and maintenance and repair shutdown
EBT (in € m, rounded)
Q1 FY 13/14
Q1 FY 12/13
140
Significant factors influencing the result
» EBT in the previous year included an extraordinary
effect of € 65 million
» Lower throughputs and cost increase affected by
the maintenance and repair shutdown in Hamburg
» Significantly lower refining charges for copper
scrap and a weaker raw material mix resulting from
decreased availability, with higher throughputs
-3
-73
EBT
IFRS
February 13, 2014
» Restructuring expenses in Business Line Flat
Rolled Products
-70
Adjustments
» Prices for sulfuric acid significantly down on
previous year
Operating Operating
EBT
EBT
» Lower metal yield with lower metal prices
4
Concentrate and cathode terms will improve, sulfuric
acid and copper scrap expected to be restrained
Trend in important market prices and processing charges
100 %= Oct 2012
140%
TC/RCs for copper
concentrates
(contract)
European cathode
premium
120%
100%
Sulfuric acid price
(pentasul Tampa)
80%
European refining
charge for copper
scrap
60%
40%
February 13, 2014
Oct 12 Jan 13 Apr 13
Jul 13
Oct 13 Jan 14 Apr 14
5
Aurubis, an integrated copper producer
Mines and
recycling markets
Copper production
BU Primary Copper
Copper processing
BU Copper Products
Iron silicate
CONCENTRATES
Processors and
end users
Flat rolled
products
SULFURIC
ACID
SHAPES
BU Recycling /
Precious Metals
RECYCLING
MATERIALS
February 13, 2014
PRECIOUS
METALS
Other
metals
CATHODES
WIRE ROD
Other semi-finished
products
6
Global copper demand continues to grow and
Chinese demand will be the decisive factor
Global copper demand
(in million t)
China
26.4
20.7
13.5
15.3
13.5
12.9
9.2
0.7
1.8
1990
2000
2013e
» The main driver is the infrastructure sector,
followed by consumer goods.
» Central applications include construction,
energy production and distribution,
electronics, cars and air conditioning.
11.5
10.9
10.2
» Development in emerging countries and the
use of new technologies will continue to
push copper demand.
2020e
» China is the main driver for growth in copper
demand; share of global demand expected
to increase from 44 % (2013) to 49 % (2020)
- CAGR = 7 % p.a.
Source: Wood Mackenzie 12/2013
February 13, 2014
7
The European copper market traditionally
exhibits cathode deficits
• Copper demand by regions in 2013 (in million t)
• Copper surplus / deficit before adjustment
-0.5
0.8
3.4
-0.7
2.3
-3.1
-0.4
0.6
+2.8
0.6
0.2
12.9
+1.1
Total demand 2013e: 20.7 million t
Global output 2013e: 20.9 million t
February 13, 2014
+0.6
0.1
+0.4
Source: Wood Mackenzie 12/2013
8
A number of new projects will start up production
before 2020
Size of deposits
Copper price
(in mill. t of copper content)
(in US$/t – 3-month quotation)
10000
140
9000
120
Andina Expansion Phase II
100
7000
80
6000
Escondida (CL)
5000
60
Oyu Tolgoi
(MN)
Collahuasi (CL)
40
Chuquicamata
underground (CL)
Los Pelambres Expansion (CL)
Los Pelambres (CL)
20
Los Bronces Expansion (CL)
Antamina Expansion (PE)
Antamina (PE)
Caserones/Regalito (CL)
Salobo I (BR)
Esperanza (CL)
Batu Hijau (ID)
0
1990
8000
1995
2000
2005
2010
4000
3000
Toromocho (PE)
El Teniente (CL)
Mina Ministro Halees (MMH)
Las Bambas
Quellaveco (PE)
Salobo II (BR)
2015
2000
1000
2020
Source: CRU 01/2014, internet
February 13, 2014
9
Copper price recovering to over US$ 7,000/t
Copper price and metal exchange inventories
Metal exchange inventories
LME copper price
in 1,000 t
2500
Copper price
2/12/2014:
7,174.5
2250
2000
in US$/t
10000
9000
8000
1750
7000
1500
6000
1250
5000
1000
4000
750
10/13
04/13
10/12
04/12
10/11
04/11
10/10
04/10
1000
10/09
0
04/09
2000
10/08
250
04/08
3000
10/07
500
Exchange inventories in days of usage (end of January 2014): world 8 days
February 13, 2014
10
Agenda
1. Current situation and trends
on the main markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 13, 2014
11
Aurubis is the largest buyer on the free
concentrate market
International custom smelter output
(2013; in 1,000 t of Cu content; primary*)
570
Aurubis
Aurubis
460
JX Holdings (JP)
Mitsubishi Materials (JP)
430
Glencore Xstrata (CH)
420
Sumitomo Metal Mining (JP)
420
Jinchuan (CN)
370
Tongling (CN)
360
340
Jiangxi Copper Co. (CN)
* Copper production from concentrates from non-controlled mines
February 13, 2014
Birla Copper (IN)
240
Sterlite Industries (IN)
230
Source: Wood Mackenzie 12/2013, Aurubis
12
Aurubis is the world market leader in copper
recycling
Throughput of recycling material worldwide
(in 1,000 t)
660
Aurubis
Aurubis
350
Metallo Chimique (BE)
210
Boliden (SE)
Copper scrap
160
MW Brixlegg (AT)
100
KGHM (PL)
*
Chinese smelters 1.200
*
Japanese smelters 230
Other recycling materials
February 13, 2014
* Copper content
Source: Wood Mackenzie, competitor’s homepage, Aurubis estimates
13
Aurubis is a top international cathode producer
International cathode output
(in 1,000 t)
1,461
Codelco (CL)
1,148
Aurubis*
Aurubis
Glencore Xstrata (CH)
1,089
Freeport McMoran (US)
1,080
1,027
Jiangxi (CN)
Tongling (CN)
697
JX Holdings (Nippon, JP)
610
KGHM (PL)
576
Southern Copper** (PE)
575
Sumitomo (JP)
556
* Fiscal year 2012/13; ** excl. SPCC; source: Wood Mackenzie 12/2013
February 13, 2014
14
Aurubis is the leading wire rod producer with
expertise and customer proximity
Copper wire rod output
(in 1,000 t, excl. oxygen-free rod)
608
Aurubis
Aurubis*
545
Freeport McMoRan (US)
490
Jiangxi Copper (CN)
380
Jiangsu Jinhui (CN)
Southwire (US)
315
Nanjing Walsin (CN)
290
Nexans (FR)
275
Changzhou Jinyuan (CN)
270
LS-Cable (KR)
270
CCI/CCP (IT)
255
* FY 2012/13
Source: 2013 basis, Aurubis estimates
February 13, 2014
15
Aurubis produced more than 200,000 t of copper and
alloy strip for industrial applications in 2012/13
Copper and copper alloy strip output from producers
worldwide in 2012/13 (in 1,000 t)
215
Aurubis
Aurubis
210
Poongsan (KR)
185
Wieland (DE)
160
Chinalco (CN)
145
Mitsubishi Shindo (JP)
130
KME (IT)
Global Brass and Copper
(US)
Anhui Jingcheng (CN)
110
100
Source: Aurubis information and estimates
February 13, 2014
16
Agenda
1. Current situation and trends
on the main markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 13, 2014
17
Group figures down on very good prior year
(on the basis of operating IFRS)
February 13, 2014
3 months
3 months
2013/14
2012/13
Revenues
€m
2,804
3,395
Gross profit
€m
199
336
EBITDA
€m
33
175
EBIT
€m
4
148
EBT
€m
(3)
140
Consolidated net income
€m
(2)
104
Return on capital employed (ROCE)
%
0.5
22.6
18
Reconciliation of balance sheet and income statement
from IFRS operating to IFRS (average cost method)
(in € million)
IFRS based on
operating
IFRS using
average
Adjustments
Balance sheet 12/31/2013
Total assets and liabilities
Assets
Fixed assets
Inventories
Equity and liabilities
Equity
Deferred tax liabilities
3,566
4,058
492
1,404
1,509
1,457
1,949
53
440
1,567
91
1,899
252
332
161
(46)
13
(2,576)
199
(3)
1
(2)
(155)
13
(2,535)
131
(73)
21
(52)
(109)
0
41
(68)
(70)
20
(50)
Income statement 10/1/2013 – 12/31/2013
Change in inventories
Other operating income
Cost of materials
Gross profit
Earnings before taxes
Tax expense
Consolidated net result
February 13, 2014
19
Business performance reflected in lower key
ratios
(on the basis of operating IFRS)
12/31/2013
operating
12/31/2012
operating
Target
0.5 %
22.6 %
15 %
43.9 %
111.6 %
39.4 %
40.6 %
122.0 %
33.3 %
> 40 %
> 120 %
< 55 %
Debt and interest coverage
- Net borrowings / EBITDA
1.6
0.1
<3
- EBITDA / net interest expense
5.1
16.2
>5
86.9 %
117.8 %
> 100 %
Profitability
ROCE*
Capital structure:
- Equity ratio (equity / total liabilities)
- Fixed asset cover (equity / fixed assets)
- Intensity of investments (fixed assets /
total assets)
Liquidity
- Quick ratio (current assets - inventories
+ cathodes + credit lines/current liabilities)
* EBIT rolling over the last four quarters
February 13, 2014
20
BU Primary Copper: Large-scale maintenance
shutdown, weak sulfuric acid and copper scrap
markets strain earnings
Operating result in BU Primary Copper (1st quarter of fiscal year 2013/14)
BU Primary
Copper
Q1 FY
13/14
Q1 FY
12/13
(in € million)
EBIT
8.8
110.0
EBT
5.8
108.0
ROCE (%)
4.1
39.8
Concentrates
509
552
Copper scrap
48
53
Cathodes BU1
222
234
Sulfuric acid
492
544
(Quantities in 1,000 t)
February 13, 2014
» Extraordinary effect of € 42 million last year
» Factors impacting earnings in Q1 2013/14:
- Large-scale maintenance shutdown in
Hamburg and delays in ramping up the smelter
- Lower refining charges for copper scrap
- Reduced sulfuric acid demand worldwide led
to significant price pressure
- Lower metal yield with declining metal prices
21
BU Recycling/Precious Metals: Operating EBT
significantly below prior-year level
Operating result in BU Recycling/Precious Metals (1st quarter of fiscal year 2013/14)
BU Recycling/
Precious
Metals
Q1 FY
13/14
Q1 FY
12/13
(in € million)
EBIT
6.1
45.9
EBT
4.9
42.4
(3.3)
60.4
ROCE (%)
(Quantities in 1,000 t)
KRS throughput
84
57
Copper scrap
32
31
Cathodes BU 2
47
50
February 13, 2014
» Extraordinary effect of € 23 million last year
» Refining charges for copper scrap significantly
lower than previous year
» Lower metal yield with declining metal prices
» Shutdown in Hamburg influenced throughputs of
recycling material and output of intermediate
products
» Higher KRS throughputs could not compensate for
negative effects on earnings
22
BU Copper Products: Earnings still strained by
Business Line Flat Rolled Products
Operating result in BU Copper Products (1st quarter of fiscal year 2013/14)
BU Copper
Products
Q1 FY
13/14
Q1 FY
12/13
» Continued effects due to:
(in € million)
EBIT
(1.8)
1.5
EBT
(4.5)
(0.5)
0.5
3.4
156
127
Shapes
39
28
Strip and wire
products
50
46
ROCE (%)
(Quantities in 1,000 t)
Rod
February 13, 2014
» Output and sales of Rod & Shapes considerably
up on previous year; demand increasing
- Restructuring in Business Line FRP, especially
at the Zutphen site
- Market for engine cooling strip significantly
weaker
23
Stable shareholder structure
Shareholder structure
~35 %
» IPO in 1998
~25 %
~40 %
» Aurubis shares are in the Prime
Standard Segment of the Deutsche
Börse
» Shares are listed in the MDAX, in the
European Stoxx 600 and in the Global
Challenges Index (GCX)
Salzgitter AG
Institutional investors
Retail investors
February 13, 2014
24
Aurubis shares
Closing prices of Aurubis shares
Comparison of Aurubis shares with indices
(Xetra)
55 €
(9/28/2012 = 100 %)
160%
200 days average
50 €
Aurubis
DAX
MDAX
150%
45 €
140%
40 €
130%
35 €
120%
30 €
25 €
110%
20 €
100%
15 €
Market capitalization
February 11, 2014:
about € 1.8 billion
10 €
5€
90%
February 13, 2014
1/14
10/13
7/13
4/13
1/13
10/12
1/14
1/13
1/12
1/11
1/10
1/09
1/08
1/07
1/06
1/05
1/04
80%
25
Agenda
1. Current situation and trends
on the main markets
2. Aurubis’ market position
3. Financial data
4. Strategy and outlook
February 13, 2014
26
Demand for refined copper determined by global
trends in the long term
Society
Energy
Growing energy demand
Continued
urbanization
Changes in energy
transmission and distribution
Growing global middle
class
Decentralization of
energy production
Economy
February 13, 2014
Technology
Balance in financial
markets and global
economy
New engine
technologies
Uncertain trend in
production relocation
Copper substitution and
emerging new materials
27
Aurubis’ strategy is based on seven core
segments
We will strengthen our leading market position and
add more value for our suppliers and customers
Markets
Rising copper
demand
More complex
materials
Increasing
recycling efforts
Growing
sustainability
ambitions
February 13, 2014
Sustainability
Internationalization
Core metal
copper
Production
capability &
innovation
Full synergy
potential of
value chain
Multi-metal
supply and
recovery
Solutions for
customers &
suppliers
28
Recycling is making a growing contribution to the
global copper supply, though currently less than 20 %
Global production of refined copper (in million t)
22.4
18.1
2.7
15.4
18.1
2.7
15.4
18.8
3.2
15.6
19.5
3.4
16.1
19.9
3.6
16.3
20.9
3.7
3.6
Secondary /
recycling
Primary /
concentrates /
EW
17.3
18.7
2008 2009 2010 2011 2012 2013e 2014e
Source: CRU 01/2014, Wood Mackenzie
February 13, 2014
29
Recycling isn’t sufficient to cover current
demand
Copper in products currently in use and estimated recycling potential, worldwide
(in million t)
Global recycling
potential
2010-2020:
~ 50 million t
Global recycling
potential
2020-2030:
~ 70 million t
Average life cycle of all copper
products: ~33 years, including:
» Electrical devices:
2-4 years
» Transformers:
30-40 years
» Construction:
60-80 years
» Copper from products manufactured 2-3 decades ago is being recycled today
Source: Fraunhofer, Global Copper Flow Model 2012
February 13, 2014
30
The target must be a far-reaching, closed value chain
and increasing sustainability
Our Copper for your Life:
We successfully produce the future –
tomorrow even more responsibly than today.
Aurubis copper production
Aurubis copper
processing/copper
products
Primary
copper
concentrate
2nd fabrication
step
Scrap collection (from
production)
Copper ore
Scrap processors
Scrap collection (after
product use)
Copper in
use
1st fabrication step
Producers of final
products
Losses
February 13, 2014
31
The German Renewable Energies Act (EEG):
a hot topic
Conflict about exemption from green electricity allocation
Stabilizing green electricity costs “to a reasonable level”
EEG proceedings to start in eight days
“Sheer panic is spreading”
The curse of good deeds
Electroshock from Brussels
EU proceedings against relief from green electricity charges could cost
companies over € 9 billion.
How the Grand Coalition can save the energy turnaround
A lot of hot air about
(almost) nothing
Into the wind
The fearmongers
February 13, 2014
Black-red energy deal
32
Improved earnings level expected in fiscal year
2013/14
» Despite economic uncertainties and physical cathode shortages, the copper
market proves to be resistant with volatile but high copper prices
» Tight cathode availability on the global market leads to higher cathode
premiums, also at Aurubis
» Mine output has stabilized at a good level, leading to a significant increase in
benchmark TC/RCs (US$ 92/t / US¢ 9.2/lb)
» There is no recovery in sight for the sulfuric acid markets at the moment
» There are initial signs of recovery on the copper scrap markets
» A positive trend for Rod & Shapes and a continuation of the strained situation for
flat rolled products are expected in Business Unit Copper Products
» Effects of the maintenance shutdown in Hamburg will continue to influence the
second quarter
We are confident that we will reach a higher earnings level than last
year in fiscal year 2013/14.
February 13, 2014
33
Financial calendar
Financial calendar for fiscal year 2013/14
February 13, 2014
»
Annual General Meeting:
»
Publication of results of the first 6 months:
May 14, 2014
»
Publication of results of the first 9 months:
August 13, 2014
February 26, 2014
34
Aurubis AG
The Leading Integrated
Copper Producer
February 13, 2014
December 2013
35
IR contacts
Angela Seidler
Head of Investor Relations
+49 40 7883-3178
[email protected]
Dieter Birkholz
Senior Investor Relations Manager
+49 40 7883-3969
[email protected]
Frank Dernesch
Senior Investor Relations Manager
+49 40 7883-2379
[email protected]
February 13, 2014
36
Disclaimer
Forward-looking statements
This document contains forward-looking statements that involve risks and
uncertainties, including statements about Aurubis’ plans, objectives, expectations
and intentions. Readers are cautioned that forward-looking statements include
known and unknown risks and are subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
control of Aurubis. Should one or more of these risks, uncertainties or
contingencies materialize, or should any underlying assumptions prove incorrect,
actual results could vary materially from those anticipated, expected, estimated or
projected.
February 13, 2014
37

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