Regulated Information
22 February 2018 at 07:00 CET
HIGHLIGHTS:
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Group underlying EBITDA[1] of EUR 205 million for 2017, an increase of 5% on 2016, supported by a 38% increase in the average zinc price (USD 2,095/t to USD 2,896/t), and a substantial production increase in Mining, largely offset by lower treatment charges, expected reduced production at Port Pirie, and reduced free metal price exposure due to the call option price in the zinc price collar hedging structure
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Metals Processing underlying EBITDA of EUR 206 million, down EUR 16 million year-on-year, driven by lower zinc treatment charges, reduced lead and by-product production, and the H2 2017 outages at Budel and Hobart, partially offset by higher commodity prices net of strategic hedges
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Mining underlying EBITDA of EUR 47 million, up EUR 39 million year-on-year, driven by higher commodity prices, lower treatment charges, a positive contribution from the successful restart of the Middle Tennessee Mines, partially offset by the cost of the Myra Falls mine re-start
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Balance sheet substantially strengthened with increased liquidity and extended maturity profile
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Net debt excluding zinc metal prepay and perpetual securities of EUR 1,102 million at the end of December 2017, an increase of EUR 237 million on 31 December 2016, predominantly due to working capital outflow due to higher commodity prices and capex expenditure at the top end of guidance which were partially offset by new silver prepays in 2017 and a EUR 100 million equity placement in November 2017. Net debt inclusive of zinc metal prepay and perpetual securities of EUR 1,363 million at the end of December 2017, an increase of EUR 199 million on 31 December 2016
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Key activity: successful placement of leverage neutral EUR 400m notes due 2024 in March 2017 and EUR 100m upsize in September 2017 due 2024 and tender for 2018 convertible bonds in September 2017; private placement of EUR 100m of equity and two year extension of the USD 250m committed working capital facility with Trafigura in November 2017 and upsized refinance of the structured commodity trade finance facility to EUR 600 million in December 2017
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Net profit of EUR 47 million for 2017, assisted by an impairment reversal of EUR 126 million related to the Middle Tennessee and Myra Falls mining assets
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Port Pirie Redevelopment delivered, in line with guidance
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successful commencement of hot commissioning at the end of September 2017; furnace heat-up and first feed to the new TSL furnace in October 2017. All major systems, including slag caster (December 2017) and acid plant (January 2018) are in operation;
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currently ramping-up to deliver in-line with earnings guidance provided at the start of 2017 with an uplift against a 2016 basis of at least EUR 40 million in 2018, EUR 100 million in 2019 and EUR 130 million in 2020
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The progress on our strategic priorities, combined with record safety performance across the group, has placed Nyrstar on a solid footing for 2018 where we anticipate a sustainable improvement in operational and financial performance across our business
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Zinc smelting and mining optimisation reviews completed by Q3 2017 with substantial improvements in production and operating costs identified which will be gradually implemented in 2018 and subsequent years
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Latin American mining operations sales completed and divestment process concluded in Q3 2017 with the North American mining portfolio to be held as a core component of the Nyrstar business and optimised; Middle Tennessee Mines fully ramped-up and Myra Falls restart on schedule
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Record safety performance achieved across the group in 2017
Commenting on the 2017 full year results, Hilmar Rode, Chief Executive Officer said:
"The year of 2017 was all about delivering on the successful commissioning of the Port Pirie Redevelopment, optimising our mining portfolio, further strengthening our balance sheet to provide liquidity and an extended maturity profile, while staying on track with our smelter production. Port Pirie is ramping up and we expect it to contribute to earnings as previously guided, by at least EUR 40 million, EUR 100 million and EUR 130 million in 2018 to 2020 respectively. Our North American mines now form a core part of the business and we will continue to identify production improvements. Metals Processing was impacted by historically low treatment charges, unplanned outages at Budel and Hobart and lower lead metal and by-products at Port Pirie. We have completed the Metals Processing and Mining optimisation reviews and have identified improvements in production and operating costs which will be realized in 2018 and beyond.
"The zinc price continued its rally throughout 2017 and topped the base metals charts for the second year in a row, backed by robust demand and supply deficiencies of both zinc concentrate and zinc metal. In 2018, we expect to see a continued supply response from zinc mines with additional mine production to come online during the course of the year. Demand is also expected to remain strong throughout 2018 with economic indicators pointing to synchronous global growth. The zinc industry is now approaching a turning point in the treatment charge cycle where we expect to start seeing increases during the second half of 2018. We remain positive on the short to medium term outlook for the zinc price."
CONFERENCE CALL
Management will discuss this statement in a conference call with the investment community on 22 February 2018 at 9:00am Central European 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/pji2sxqc
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 six smelters, one fumer and four mining operations, located in Europe, Australia and North America, 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.
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
The full press release can be downloaded from the following link:
