The first results of KGHM after the change of government. A huge loss

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It didn’t take long to wait for the first financial report under the new authorities. On Wednesday, the management board published the annual financial report summarizing 2023. The situation does not look good, but it is worth noting that the previous management board is responsible for the results of the previous year.

It turns out that the KGHM group recorded a net loss of PLN 3,698 million, and a year earlier it could boast of a profit of PLN 4,772 million.

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What do the results of the KGHM group look like by segment? “The decrease in EBITDA of the operating segments (excluding Sierra Gorda) concerned:

• decrease in EBITDA of the KGHM Polska Miedź SA segment by PLN 1,907 million
• decrease in EBITDA of the KGHM International Ltd segment by PLN 1,231 million
• increase in EBITDA of other segments by PLN 82 million

Consolidated revenues from contracts with customers were very similar to the previous yearwhich reached PLN 33,467 million in 2023 compared to PLN 33,847 million a year earlier.

From the report we learn that in 2023 it was recorded a decrease in the production of payable copper in the capital group by 3%., i.e. by 22.2 thousand t. It concerned KGHM International (-16.3 thousand t) and Sierra Gorda (-12.3 thousand t for a 55 percent share) and was not compensated by higher production of KGHM Polska Miedź (+6.4 thousand t) .

“Higher copper production in KGHM Polska Miedź SA in 2023 resulted from higher availability of technological lines, in particular an increase in the effective operating time of the installation of bath halls at the Głogów Smelter and Refinery, and concerned production from both own and external copper-bearing materials. Decrease in copper production in Sierra Gorda SCM resulted mainly from the exploitation of ore with lower Cu content and lower yield, which were not compensated by the higher volume of ore processed,” we read in the management report.

The reduction in production in the KGHM International Ltd. segment occurred mainly due to the decline in production of the Robinson mine (-15.4 thousand tonnes). Additionally, for the first 4 months of 2022, the production of the Franke mine was included (-2.8 thousand tonnes). The mines of the Sudbury Basin recorded higher copper production than last year (+2.1 thousand tonnes).

KGHM’s capital expenditure amounted to PLN 3,199 million, i.e. 2%. below the amount assumed in the budget. However, other investments, including increases in shares in subsidiaries and other capital investments, amounted to PLN 1 billion 54 million compared to the plan of PLN 2 billion 129 million, mainly due to postponements in the implementation of the RES investment plan.