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Aurubis AG
Metals for Progress
Live event on the occasion of the publication of the 2016/17 Annual Report & ONE Aurubis updateon December 13, 2017
Jürgen SchachlerCEO
Agenda
2
1. Financial data
2. Market
3. New organization
4. Outlook
5. ONE Aurubis – strategy & business improvement
Aurubis holds a leading position in the copper value-added chain
3
FY 2016/17Change
vs. prior year Position
Concentrate processing* 2,424,000 t +12 % No. 1 worldwide
Copper scrap input 272,000 t +8 % No. 1 worldwide
Cathode output 1,156,000 t +7 % No. 2 worldwide
Wire rod output 719,000 t -5 % No. 1 worldwide
Copper shapes output 190,000 t +11 % No. 1 in Europe
Flat rolled products and specialty wire output 230,000 t +6 % No. 1 worldwide
Sulfuric acid output 2,364,000 t +14 %
Gold output 42 t 0 %
Silver output 1,071 t +11 %*Custom smelter production
Aurubis result significantly higher than previous year, as expected
4
FY 2016/17 FY 2015/16
Operating EBT (€ million) 298 213
Net cash flow (€ million) 480 239
Operating ROCE (%)(operating EBIT last 4 quarters)
15.1 10.9
Strong performance at our plants and good recycling markets lead to significantly higher result
5
EBT FY 2016/17 (in € million, rounded)
FY 16/17
Operating EBT
Adjust-ments
Operating EBT
EBT IFRS
FY 15/16
456
298
213
-158
Significant factors influencing the results» Very high concentrate throughput, despite Q1 maintenance
shutdown in Hamburg -- prior year large-scale shutdown in Pirdop» Capacity optimization in Pirdop has a positive effect,» advantageous input mix and good availability of copper
concentrates,» significantly higher refining charges for copper scrap with a good
supply,» slightly improved sulfuric acid revenues » higher metal yield with increased metal prices,» lower copper premium,» higher sales of shapes and flat rolled products,» weaker sales of wire rod,» positive contributions from our efficiency improvement program,» the strong US dollar.
All Aurubis Group key figures significantly higher than previous year
6
FY FY Change
(operating IFRS) 2016/17 2015/16 Absolute Relative
Revenues €m 11,040 9,475 1,565 17 %
Gross results €m 1,169 1,050 109 11 %
EBITDA €m 440 358 82 23 %
EBIT €m 308 229 79 34 %
EBT €m 298 213 85 40 %
Consolidated net income €m 236 165 71 43 %
Net cash flow €m 480 239 241 > 100 %
Return on capital employed (ROCE) % 15.1 10.9 4.2 -
Reconciliation of balance sheet/income statement from IFRS (average cost method) to IFRS (operating)
7December 2017
(in € million)
IFRS usingaverage cost
method AdjustmentsIFRS based on
operating
Balance sheet 9/30/2017
Total assets 4,361 -386 3,975
AssetsFixed assetsDeferred tax assetsinventories
1,4896
1,752
-4525
-366
1,44431
1,386
Equity and liabilitiesEquityDeferred tax assets
2,366205
-279-107
2,08798
Income statement 10/01/2016 – 9/30/2017Change in inventories 5 -70 -65Cost of materials -9,774 -88 -9,862Gross results 1,327 -158 1,169Depreciation of intangible and intangible assets -135 3 -132Result from investments measured using the equity method 11 -3 8Earnings before taxes 456 -158 298Tax expense -104 42 -62Consolidated net income 352 -116 236
Very strong Aurubis Group key figures
8
* Rolling EBIT last 4 quarters** Rolling EBITDA last 4 quarters
(operating IFRS)9/30/2017operating
9/30/2016 operating Target
ProfitabilityROCE* 15.1 % 10.9 % 15 %
Capital structure- Equity ratio (equity / total liabilities)- Fixed asset cover (equity / fixed assets)- Intensity of investments (fixed assets / total assets)
52.5 %144.5 %36.3 %
47.8 %130.3 %36.7 %
> 40 %> 120 %< 40 %
Debt and interest coverage- Net debt / EBITDA**- EBITDA / interest result
-0.526.1
0.114.6
< 3> 5
Liquidity- Quick ratio (current assets +
finished products + credit lines / current liabilities) 155.0 % 138.1 % > 100 %
571 472
574453
1.3861.494
1.4441.404
30.09.17 30.09.16
Aurubis with a very strong balance sheet
9
(operating IFRS in € million)
(37%)
(12%)
(12%)
(35%)
(36%)
(39%)
(14%)
(14%)
Fixed assets
Inventories
Receivables etc.
Cash and cash equivalents
Assets
3,8233,975
1.093 972
351 495
444 527
2.087 1.829
30.09.17 30.09.16
Equity and liabilities
3,823
(53%) (48%)
(11%) (14%)
(9%) (13%)
(27%) (25%)
3,975
Equity*
Financial liabilities
Other liabilities
* incl. Group profit, interests in other companies
Provisions
BU Primary Copper: higher throughputs in Pirdop and favorable scrap markets
10
Operating results in BU Primary Copper (FY 2016/17)
BU Primary Copper
FY 16/17
FY 15/16
EBIT (€m) 241 154
EBT (€m) 236 143
ROCE (%) 26.6 16.4
(Quantities in 1,000 t)
Concentrates 2,424 2,156
Copper scrap / blister copper 108 108
Cathodes 624 584
Sulfuric acid 2,364 2,068
Gold (t) 42 42
Silver (t) 1,071 961
» Higher throughputs despite Q1 maintenance shutdown in Hamburg (impact on earnings € 15 million), prior year shutdown in Pirdop (impact on earnings € 29 million)
» Advantageous input mix and good availability of copper concentrates
» Significantly higher refining charges for copper scrap with a good supply
» Weaker sulfuric acid prices due to oversupply on the global markets, especially in the first half-year
» High metal gain due to higher metal prices» High silver output due to higher level of precious metals in input
mix» Strong US dollar.
BU Copper Products: Favorable scrap markets compensate for weaker rod markets and Copper Premium
11
Operating results in BU Copper Products (FY 2016/17)
» Significantly higher refining charges for copper scrap with a good supply
» Lower copper premium on the cathode markets
» Weaker sales volume for wire rod due to lower demand
» Rising demand for flat rolled products and their intermediate product, cast shapes
» Supply of other recycling materials sufficient for increasing competitive intensity
BU Copper Products
FY 16/17
FY 15/16
EBIT (€m) 105 106
EBT (€m) 100 101
ROCE (%) 9.6 9.4
(Quantities in 1,000 t)
Copper scrap / blister copper 303 311
KRS throughput 270 254
Cathodes 532 500
Wire rod 719 758
Shapes 190 172
Flat rolled and wire products 230 218
Executive Board and Supervisory Board suggest significantly higher dividend payout of € 1.45
12
1,101,00
1,351,25
1,45
12/13 13/14 14/15 15/16 16/17*
Aurubis dividends (in € per share)
2,5 2,62,4 2,5
2,1
12/13 13/14 14/15 15/16 16/17*
Dividend yield (in %)
* suggestion
New basis for dividend payout: consolidated operating net income
13
23
36
4851
54
4651 53
46 47
07/
08
08/
09
09/
10
10/
11
11/
12
12/
13
13/1
4
14/1
5
15/1
6
16/1
7*
Payout ratio (in %)calculation Aurubis AG unappropriated earnings
28
50
34
2629
53
45
24
34
28
07/
08
08/
09
09/
10
10/
11
11/
12
12/
13
13/1
4
14/1
5
15/1
6
16/1
7*
Payout ratio (in %)calculation Aurubis Group op.IFRS cnsolidatednet income
* suggestion
Aurubis shareholder structure
14
Shareholder structure as at September 30, 2017
Overview share ownership > 3 %» Dimensional Holdings Inc. (USA)» UBS AG (Switzerland)» Allianz Global Investors GmbH» BlackRock, Inc., (USA)» Salzgitter AG (16 %)
~25 %
~50 % ~25 %
» Reduction of the Salzgitter percentage to 16 % on 10/27/2017
Private investors
Institutional investors
Salzgitter
~16 %
Listed in the following indices:
» MDAX index
» Global Challenges Index (GCX)
» STOXX Euro 600 (since 09/18/2017)
Agenda
15
1. Financial data
2. Market
3. New organization
4. Outlook
5. ONE Aurubis – strategy & business improvement
Source: Wood Mackenzie, 09/2017
Global copper demand continues to increase
16December 2017
Global demand for refined copper (in million t)
» Despite slowed economic growth, China continues to be the most important source of global copper demand (approx. 48 % share) and major net importer
» Growth potential for copper use is primarily in the expansion of the electricity grid, in machinery and plant engineering as well as in construction and transportation
» Further momentum from the “One Belt, One Road” initiative
» The development in emerging countries as well as the use of new technologies increases the long-term need for copper, also outside of China
China:
21,9 22,5 23,0 23,4 23,9 24,2
2015 2016 2017e 2018e 2019e 2020e
47 %47 %
(Share in %)
48 % 48 % 48 % 48 %
The European copper market traditionally shows a cathode deficit
17
• Expected copper demand according to region 2017 (in million t)
• Expected copper surplus / deficit (in million t)
Total demand 2017e: 23.0 million tGlobal production 2017e: 23.3 million t
2.4
15.0
0.4 0.2
-0.5
+2.6+1.1 +0.5
-2.9
Source: Wood Mackenzie, 09/2017
3.8-0.8
0.8-0.6
0.4+1.0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Collahuasi (CL)
Batu Hijau (ID)
Los Pelambres (CL)
Antamina (PE)
Esperanza (CL)
Los PelambresExpansion (CL)
AntaminaExpansion (PE)
Los BroncesExpansion (CL)
Salobo I (BR)
Toromocho(PE)
Caserones/Regalito (CL)
Oyu Tolgoi(MN)
Mina Ministro
Halees (CL)
Las Bambas
CobrePanana
Corredor (CL)
El Teniente (CL)
Quellaveco (PE)
AndinaExpansion
(CL)
Chuquicamataunderground (CL)
0
10
20
30
40
50
60
70
80
90
1995 2000 2005 2010 2015 2020 2025
Expected copper prices will support mining projects
18
Size of deposits(in million t of copper content)
Copper price(in US$/t – 3-month quotation)
Source: company data
Expansion of Chinese smelter capacity loses momentum
19
Production of refined copper in China (in million t)
7,07,8
8,49,4
10,3 10,6 10,9 11,1
2015 2016 2017 2018 2019 2020 2021 2022
Source: Wood Mackenzie, 09/2017
» Expected production increases will primarily take place at a multitude of existing smelters and accrue modestly, for the most part
» For 2018, planned projects will be strained by difficult financing options
Trend in most important earnings drivers
20
50%
100%
150%
200%
250%
300%
350%
Okt
15
Jan
16
Apr
16
Jul 1
6
Okt
16
Jan
17
Apr
17
Jul 1
7
Okt
17
TC/RCs fürKupferkonzentrate(kontrakt)
Schwefelsäurepreis (SpotCFR Brasil)
Europäischer Raffinierlohnfür Altkupfer
Kupferprämie
Trend in significant market prices and refining charges
100 % = Oct 2015
Agenda
21
1. Financial data
2. Market
3. New organization
4. Outlook
5. ONE Aurubis – strategy & business improvement
Multi-layered processes, more added value
22
Organizational change on October 1, 2017
Operating EBT (in € million)
New structure FY 16/17
FY 15/16
Diff.16/1715/16
Metal Refining & Processing 334 243 89
Flat Rolled Products 2 0 2
Other/cons. (38) (31) (7)Consolidated earnings before taxes 298 213 85
Old structure FY 16/17
FY 15/16
Diff.16/1715/16
Primary Copper 236 143 93
Copper Products 100 101 (1)
Other/cons. (38) (31) (7)
Consolidated earnings before taxes 298 213 85
» Segment Metal Refining & Processing recovers metals from primary and secondary raw materials and markets these in various forms. Raw material purchasing, the processing into pure metals as well as metal sales of “standard products” with lower depth of added value also belong to this.» Approach Utilization of production capacities with
optimization of input mix, marketing of standard products in large production batches
» Segment Flat Rolled Products produces and markets a variety of copper alloys in the form of rolled and wire products in smaller production batches. Differentiated, rather small product portfolio with well-developed distribution network.» Approach: Products are oriented to customer wishes;
production facilities will be optimally utilized due to the product mix optimization
23
Agenda
24
1. Financial data
2. Market
3. New organization
4. Outlook
5. ONE Aurubis – strategy & business improvement
» The average 2018 copper price is at US$ 6,315/t in a Reuters poll from the beginning of November 2017
» The supply of copper concentrates is expected to allow for satisfactory TC/RCs
» High capacity utilization at our primary copper smelters
» Sulfuric acid markets are currently signaling a stable situation, unchanged short-term visibility makes a forecast difficult
» Copper premium at prior year level
» Expected high metal prices may keep the supply with good refining charges at a high level
» The current level of demand in copper product business is expected to continue
» Efficiency-improvement targets for 2017/18 will be reached
» US$ effects significantly weaker than 2016/17
Forecast for 2017/18
25
» In Segment Metal Refining & Processing, we expect an operating EBT at prior year level for FY 2017/18 and a slightly lower operating ROCE compared to the previous year.
» In Segment Flat Rolled Products, we anticipate significantly higher EBT for FY 2017/18 and a slightly higher operating ROCE compared to the previous year.
Forecast for 2017/18: Very good prior year level is expected to be maintained
26
We expect operating EBT at the very good prior year level and a slightly lower operating ROCE for the Aurubis Group in fiscal year 2017/18 compared to the reporting year.
Aurubis definition for a qualified comparative forecast
Change in operating EBT
± 0 to 5 % At prior-year level
± 5.1 to15 % Moderate
> ±15 % Significant
Operating ROCE delta percentage points
± 0 to 1 At prior-year level
± 1 to 4 Slight
> ± 4 Significant
Agenda
27
1. Financial data
2. Market
3. New organization
4. Outlook
5. ONE Aurubis – strategy & business improvement
Our mission and vision:purpose and ambition for the future
28
Our business model: expertise and capabilities to fulfill purpose
29
Smelting & Refining
Processing
Metal recoveryenabling
synergies
Technology applications
markets
Complexraw material
markets
Copper semi-finished
markets
Standard copper raw material
markets
Our metals for an innovative world:our copper will enable the trends of the future
30
green energy e-mobility
urbanizationdigitization
Sustainable growth in copper demand
expected
Strong metallurgical know-how
Broad experience in realizing synergies between process steps and copper & lead metallurgy
International plant network: leveraging existing infrastructure for investments
Our carrier metal copper:Aurubis best positioned for multi-metal strategy
31
Differentiation by capabilities
Based on our strong capabilities, Aurubis is well positioned to utilize full multi-metal
potential of copper as carrier metal
Base Metals and their by-metals
Our market environment:opportunities and challenges for further development
32
Standard copperraw material markets
Complex raw material markets
Society trends
Products markets
Increasing metal prices foster attractiveness of complex raw materials
Rising global e-scrap generation, still low collection rates
Mine-specific complex concentrate profiles
Increasing generation of high-value industrial waste
Increasing globalsmelting capacities
Expansion of mine supply and copper scrap generation
Cyclical treatmentand refining charges
Competition for standard raw materials
Postponed mine supply could lead to deficit in refined copper
Copper products demand supportedby mega trends
Growing application markets drive copper-related by-metals demand
UN sustainable development goals
Global knowledge society
Sulfuric acid markets to stay volatile
Change & disruption
Balanced use of resources
Our strategic focus:strengthening of copper business
33
Smelting & RefiningTechnology applications
markets
Complexraw material
markets
Copper semi-finished
markets
Standard copper raw material
markets
Processing
enabling
synergies
Strengthening leading position: cost competitiveness & structural optimization
Metal recovery
Our strategic focus:development of multi-metal business
34
Smelting & RefiningTechnology applications
markets
Complexraw material
markets
Copper semi-finished
markets
Standard copper raw material
markets
Processing
enabling
synergies
Expanding multi-metal business: strong capabilities & innovative industry solutions
Metal recovery
35
Our strategy:Growth, Efficiency and Responsibility
Our strategic focus Growth: development of strong multi-metal capabilities
36
Targets
100 % sales volume growth of
non copper metals until FY 2022/23*
100 % volume growth in direct supply of complex recycling raw materials until
FY 2022/23*
Establishing new sales channels for high-
growth application markets
» Consequent development of multi-metal processing capabilitiesbased on copper as main carrier metal
» Development of mine specific solutions for primary raw materials in close cooperation with suppliers
» Development of recycling solutions for industrial and end-of-life scrap together with industrial partners
» Establishing new sales channels for non copper metals in high-growth application markets
Approach
* Baseline: FY 2016/17
Our strategic focus Growth:examples for optimized sales channels
37
* Source: Roskill, April 2017
Nickel use in automotive batteries expectedto strongly increase (in kt Ni)*
Leading supplier of Selenium products to:» Industrial applications (i.e. glass, solar cells)» Pharmaceutical & food industry» Animal feed & fertilizer industry
0100200300400500600
2011 2015 2019 2023 2027
» Aurubis is well positioned to benefit from good nickel demand outlook triggered by growing battery industry
Primary raw materials
Recycling
Offering metal for a wide range of applications:» Thermoelectric devices» Metallurgy (i.e. Cu Pb alloys)» Rubber industry
Selenium & Tellurium: Successful examples of value maximization from recovered minor metals
Aurubis Tellurium
Aurubis Selenium
NickelMinor Metals
(in kt Ni)*
Our strategic focus Growth:broad metal portfolio reflected in future reporting
38
Minor MetalsSeleniumTelluriumRheniumAntimonyBismuth
Gold
Nickel
Lead
PGMPlatinumOsmiumIridiumRutheniumRhodiumPalladium
Tin
SilverCopper
Project Future Complex Metallurgy (FCM):substantial step for Growth with multi-metal expansion
39
New facilities in Hamburg and Olen / > 180 workplaces:
bath smelting furnace, as well as leaching and electro-winning plant
engineering & construction approx. 4 yearsProduction start in FY 2020/21
Capex:around 320 €m
Additional use of raw materials: 270,000 t of concentrates, recycling raw materials and
smelter intermediates
EBITDA improvement:As of FY 2022/23: 80 €m
» Expands processing of complex raw materials» Establishes new and optimizes existing processes» Realizes synergies » Shortens throughput times for precious metals » Recovers numerous metals» Reduces intermediate product sales
Financials as per pre-feasibility study
» Continuous improvement of cost competitiveness is key in standard copper raw materials and copper products markets
» Excellence in metal recovery » Optimization of sales channels for copper products and sulfuric acid
» Standardization of core processes across all sites and functions
» Automation of production and support processes and digitizationalong value chain
Our strategic focus Efficiency:optimization and continuous improvement in all areas
Targets
Sustainable EBITDA improvement of 200 m€ from FY 2019/20
Approach
40
» Improves workplace safety
» Enhances performance and efficiency
» Increases results
» AOS is a methodology for continuous and sustainable process optimization
» With AOS, procedures in all areas will be optimized, performance data will be standardized and process losses will be eliminated in alignment with goals
» AOS has been started in Hamburg, and will be transferred to other sites and other administrative functions
Aurubis Operating System (AOS): group-wide standardization driving Efficiency
41
» Internal consolidation and relocation of thin copper strip production from Sweden to Zutphen and Buffalo completed
» FRP sites specialized according to plant capabilities and market requirements
» Extended product portfolio in Buffalo
» Equipment and processes upgraded in all sites
» Sales organization restructured in line with global and regional customer needs
Our strategic focus Flat Rolled Products (FRP) Segment:result improvement after strategic milestone achievement
42
» Detailed result improvement plan as integral part of the Aurubis Group Business Improvement Program
» Clearly defined actions, milestones and assigned responsibilities
» Focus on operational improvement complemented by commercial optimization and sales growth
» Sustainability is an integral part of Aurubis’ Group Strategy with focus on economy, environment and people
» Our expertise of smelting, refining & recycling as well as the trusting cooperation with business partners and stakeholders secure our sustainable business success
» The use of resources, recycling, energy, water and air is linked to set targets of higher efficiency and lower emissions
» Leadership and entrepreneurship drive our businessresponsibly and value based
Our strategic focus Responsibility:guiding in everything we do
43
Targets & Cornerstones
Aurubis’ Sustainability Strategy
2013 – 2018:
87% of all targets achieved so far
Leadership and People Development are key areas of activity on our way to reach our vision
& strategy
PRIMA* –Aurubis’ corporate
values oblige us all to take care of a responsible
business
Approach
* Performance, Responsibility, Integrity, Mutability, Appreciation
44
Our strategic business triad:realizing our purpose
400
3060
120
200
200
Our financial goal: 200 + 200 €m sustainable EBITDA improvement
45
Business improvement* Internal & external growth
* Base year for business improvement potential is FY 2014/15
22/2319/2018/1917/1816/17
EBITDA improvement potential (in € million)
Thank you for your attention
and happy holidays
Dieter BirkholzSenior Manager+49 40 [email protected]
Angela SeidlerDirector+49 40 [email protected]
Elke BrinkmannSenior Manager+49 40 [email protected]
» Quarterly report First 3 Months 2017/18 02/13/2018
» Annual General Meeting 03/01/2018
» Interim Report First 6 Months 2017/18 05/15/2018
» Quarterly report First 9 Months 2017/18 08/09/2018
» Annual Report2017/18 12/11/2018
47
Your IR Contacts:
Christoph TeschSenior Manager+49 40 [email protected]
Financial calendar
Legal disclaimer
48
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.
49
Annex 1: Aurubis AG’s sources of earnings
TC/RCTreatment and refining charge = Mines’ payments to smelters for processing copper concentrates into cathodes. Smelters’ central profit driver – primarily influenced by concentrate supply and demand
RCRefining charge = Fee for processing copper scrap, blister and recycling materials into cathodes; primarily influenced by the situation on the European scrap markets
Metal prices Price risks fundamentally eliminated at Aurubis by hedging; strong influence on revenues and working capital, also for our customers
Cathode premiumSurcharge for high-quality cathodes (Grade A), premium for cathode delivery, paid by the customer; expresses the scarcity in structurally undersupplied markets
Shape surcharge Processing prices for converting cathodes into copper products (wire rod, shapes, flat rolled products, etc.), paid by the customer
Sulfuric acid Sulfuric acid (H2SO4) is a by-product of concentrate processing; 1 t of sulfuric acid is generally produced per t of concentrate treated
