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On Thursday, Deutsche Bank (ETR:DBKGn) analyst Liam Fitzpatrick adjusted the price target for Boliden AB (ST:BOL:SS) (OTC:BDNNF) shares, lowering it to SEK 330.00 from the previous SEK 350.00, while maintaining a Hold rating on the stock. The revision follows Boliden’s first-quarter earnings report, which presented mixed results. The company’s Q1 EBIT was reported at SEK 2.6 billion, aligning with Deutsche Bank’s expectations and 5% above the consensus of SEK 3.6 billion.
Despite the in-line EBIT figures, Fitzpatrick noted that the underlying results were approximately 10% below the consensus when excluding ’Other’ items, which include internal profit adjustments. The shortfall was attributed to the Mines division, which posted SEK 1.3 billion versus the consensus estimate of SEK 1.7 billion. This was due to a combination of weaker production, stemming from various production issues encountered in Q1, and lower zinc sales volumes, which were affected by timing. On a more positive note, Boliden’s Smelters division exceeded expectations, generating SEK 1.0 billion compared to the anticipated SEK 0.9 billion.
The company’s free cash flow (FCF) was negative for the quarter, which was anticipated by Deutsche Bank. However, the seasonal working capital build amounted to SEK 2.4 billion, which was higher than expected and resulted in a negative FCF of SEK 1.9 billion, compared to Deutsche Bank’s forecast of SEK 1.3 billion.
Adding to the company’s challenges, Boliden completed the $1.3 billion acquisition of Somincor and Zinkgruvan in mid-April. Following the acquisition, Boliden provided production, capital expenditure, and unit cost guidance for these new assets for the first time. According to Fitzpatrick, the new guidance was "substantially weaker" than what was previously provided by Lundin, the former owner of the assets.
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