Nexa Resources S.A. (NYSE:NEXA) Q4 2019 Earnings Conference Call - Final Transcript

Feb 14, 2020 • 10:00 am ET


Nexa Resources S.A. (NYSE:NEXA) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Nexa Resources Fourth Quarter and Full Year 2019 Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] The presenter in this call is Ms. Roberta Varella, Head of Investor Relations. Also joining the call and available for questions are Mr. Tito Martins, CEO of Nexa Resources; and Mr. Rodrigo Menck, CFO of Nexa Resources. [Operator Instructions]

I would now like to turn the conference over to Ms. Roberta Varella. Please go ahead.

Roberta Varella

Thank you. Good morning, and good afternoon, everyone and thank you for participating in another Nexa's earnings conference call. Today, we'll be talking about our results for the fourth quarter and full year of 2019.

Please let's move to Slide 3, we will begin our presentation. Nexa is a large scale, low cost integrated zinc producer with a unique position in Latin America. We are strategically located in Brazil and Peru, which is the second largest zinc producer in the world and where we operate 300 ground mines. We also operate in Peru Cajamarquilla smelter, the largest in the Americas. In Brazil, we operate two mines and two smelters, and we are developing the Aripuana project. Located in the Mato Grosso state, Aripuana is a world-class underground polymetallic mine, which will produce zinc, lead and copper, among other metals.

And beyond Aripuana, we have important strategic projects that are in different stages of maturities, like Magistral, Shalipayco, Pukaqaqa and Hilarion, which should support our strategic organic growth of increasing our capacity on copper and zinc and fully integrate our mine and smelter business. We remain confident in the long term prospects and market fundamentals of zinc and copper, but the scenario is still challenging.

In 2019, commodity prices faces downward pressure due to the volatile economic scenario. Zinc and copper prices decreased 13% and 8%, respectively, compared to 2018. As a result, Nexa's net revenue of $2.3 billion was 6% lower than 2018. Lower prices were partially offset by higher sales volumes. Production sales guidance for 2019 were achieved. However, we also faced some setbacks in our operations, primarily in our mining segment, which affected our performance.

Adjusted EBITDA, excluding non-recurring expenses was $402 million in 2019 compared with $605 million in 2018, which was positively affected by the recognition of a tax credit of $34 million. And we are attentive to this challenging new world and the needs to improve the efficiency of our operations and to transform ourselves. And based on that, in 2019, Nexa initiated our operational efficiency program called Nexa Way, which I will comment on the next slide.

We will maintain our efforts to build a differentiated, sustainable and cost efficient business model, generating value for all our stakeholders. In this context, we'd like also to reinforce our commitment of returning capital to the shareholders. Based on our statutory accounts, we are pleasure to announce dividend distribution of $50 million to be paid in March.

Moving to next slide. As