Boliden (BOL) Q1 2022 earnings summary

Executive summary

• Record Q1 result: EBIT excluding process inventory revaluation reached SEK 4.5bn, driven by exceptionally strong metal prices and favorable currencies.

• Higher supplier costs and inflation partly offset the price benefit; production was generally stable, with recovery at Tara and Harjavalta progressing more slowly than expected.

Financial highlights

• EBITDA was just under SEK 6.5bn and EBIT excluding process inventory revaluations was SEK 4.5bn, each up about SEK 2bn YoY.

• Prices added SEK 2.3bn YoY to profit; net volume effect was positive SEK 176m, while non-labor cost inflation was about 10% YoY.

• Free cash flow was SEK 674m after SEK 3bn was tied up in working capital as metal prices rose; CapEx was SEK 1.5bn.

Outlook and guidance

• Mine grade guidance for Aitik, Garpenberg and Kevitsa was unchanged; Kevitsa grades are expected to remain below reserve grade.

• Tara ramp-up was slower than planned, with production expected to recover during Q2; Aitik milling was expected to return quickly to a 45m-ton annual pace.

• Non-labor inflation was running about 10% YoY and expected to continue at roughly that rate; labor cost increases were expected at 2%–3% in 2022.

• Guidance for 2022 CapEx was unchanged; Odda spending will peak around the 2022/2023 year-end, with timing between years still uncertain.