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Very good profit in turbulent times

Very good profit in turbulent times

Thursday, 14 May, 2020

A high net profit, at the level of PLN 690 million, was generated by the KGHM Group in the first quarter of this year, given the unfavourable situation accompanying the coronavirus pandemic in Poland and worldwide. Maintaining production, good sales level and EBITDA are further achievements of the copper mogul in the first quarter of this year. At that time the costs were also kept in check.

"We have achieved such good results, despite the fact that since the beginning of March 2020 the whole world has been struggling with the coronavirus pandemic. The last quarter has shown that we can operate in a volatile market situation. Despite the epidemic, we operate efficiently, we implement production, sales and investment plans. And all of this with restrictive care for the health of employees and a comprehensive programme of assistance for the region and the whole of Poland", says Marcin Chludziński, President of KGHM.


The satisfactory net result of the KGHM Group in the amount of PLN 690 million, which is 25% higher year-on-year, is one of the highest values realised in recent quarters, despite 3% lower revenues due to price pressure. The increase in net profit was also supported by the positive effect of exchange rate differences. Sales in the Group maintained at a good level of PLN 5,299 million. The effect of this consistently implemented strategy is an increase in the production of paid copper (1%) and silver (3%), with a simultaneous drop in C1 by as much as 7.4%.

"In difficult conditions we have increased the volume of silver and gold sales. We have achieved 25% higher net profit than in the corresponding period of the previous year. The higher financial result and solid operational reliability was also influenced by a strong cost discipline. We have kept the level of operating costs in check, we have reduced the level of C1 cost. Lower revenues translated into the amount of EBITDA, which was also slightly influenced by, among others, higher costs of depreciation or external services. Paradoxically, it' s a good signal. We are continuing our investments, we are taking over fixed assets from the investments, we are carrying out mining preparatory works and we are conducting intensive renovation economy", says Katarzyna Kreczmańska-Gigol, Vice-President for Finance.

KGHM has achieved good results, despite unfavourable macroeconomic conditions - global copper prices fell by 9.3%, although the increase in silver prices by 8.5% and the strengthening of the dollar helped somewhat. The average copper price in PLN was 6.3% lower than in the first quarter of 2019.

"It has to be said honestly - macro-economics does not favour us. The pandemic has intensified previous macroeconomic trends - the lower price of copper. I am convinced that effective management in such an exceptional situation is, first of all, the ability to enter into dialogue, listen to many groups and parties and cope with a mass of relevant information. On the other hand, we are able to make informed, courageous decisions", says Marcin Chludziński, President of the Management Board of KGHM.


The Group continues to implement investment projects in accordance with the adopted schedules. In the first quarter of 2020, work continued under the key investment projects in the mining and smelting industry.

In the area of mining, mainly investment tasks related to post-flotation waste management were carried out - the expansion of the South Quarter is proceeding as planned. Construction of the Waste Segregation and Compaction Station has begun. The progress of work is estimated at 67%.

The deepening of the GG-1 shaft continues, which is drilled to 1129.2 m. Preparations are also underway to start construction of the GG-2 shaft.

In the area of smelting, the BATas programme related to the emission of arsenic by smelters is continued. Currently, 14 projects are in progress - 9 at Głogów smelter and 5 at Legnica smelter.

Restoration investments were carried out in the scope of significant repairs of equipment and installations of the main technological line. Component purchases continue in connection with the planned stoppage of HM Głogów I.

In the first quarter, the processes of launching the investment Preparatory Phase of new development projects under the Strategic Programmes were also started: construction of the Photovoltaic Power Plant under the Energy Development Programme; the Hybrid Steelworks programme in HM Legnica; construction of a production line under the Anaerobic Copper Production Intensification in HM Cedynia.

"As you can see, we're not slowing down. Our strategy also proves effective at a time of unprecedented scale of uncertainty in the world. Undoubtedly, we are helped by our ability to navigate in a global, unstable economy", says Marcin Chludziński, President of KGHM.


In connection with the COVID-19 (coronavirus) epidemic, which continues to spread around the world, KGHM monitors the global economic situation on an ongoing basis in terms of potential negative impact on KGHM Polska Miedź S.A. Group and taking neutralisation measures.

From the point of view of the KGHM Group, a significant effect of the coronavirus epidemic in the reporting period, affecting operations in the entire mining sector, was the volatility and decrease in copper prices.

At present, there have been no significant disturbances in the continuity of the Group' s operations due to the virus infections among employees. Additionally, absence among employees of the main production line of KGHM Polska Miedź S.A. and domestic and foreign production assets has not increased significantly due to the epidemic. The Group takes a number of prophylactic measures to prevent the spread of the virus among the crew, including regular disinfection and ozone treatment of common areas and buses, temperature measurement, reduction of the number of people transported in employee buses and cages going down the mine. There is also an extensive information campaign to make employees aware of the importance of preventive measures.


On 13th May the Company also published the Integrated Report of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group for 2019. The publication contains financial and non-financial results achieved by the Company in the reporting period (1.01.-31.12.2019).

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