Ladies and gentlemen, I'd like to welcome all of you to the Q1 2018 results presentation. My name is Olof Grian Mark, Head of Investor Relations. Today, we will have a results presentation and a Q and A session led by our President and CEO, Lennart Efrel and also our CFO, Hakan Gabrielsson. During the Q and A session, please limit yourself to one question at a time. Lenard Torell, the stage is yours.
Thank you and good morning. My 42nd quarterly presentation and my last one. I will continue as the CEO until the 1st June, announce the way, and then I pass over to my successor, Mr. Mikael Staffas. Q1 was good.
Hakan and I, we will take you through our presentations and give you the main highlights of the quarter. And the quarter was good. Basically, everything was stable. We had a slight decline in profit, which is quite a lot or basically a seasonal effect of winter conditions and that we start up the crusher in Aitik. If we look at the highlights, revenues came to SEK 13,300,000,000, that's up from the previous year.
Earnings or operating earnings were SEK 2,700,000,000 compared to SEK 2,000,000,000 a year ago and the free cash flow SEK 1,400,000,000. With that cash flow and we reduced our gearing target or gearing to 6% from 11% a year ago. And as you know, we will as a result of the good strong balance sheet and strong cash flows, we are going to propose the ADM today in addition to the normal regular dividend, a one off dividend, but more on that later. High grades in Aitik again. And this time, you should understand what's happening in Aitik and I'm coming back to that.
But basically, the lower volume and higher grades are effects of the same event and basically driven by the new crusher installations. And the project is going on plan. The crusher is running with ore today. We're doing the start stop and testing and taking over criterias with the suppliers. So plenty of work there.
So far, so good. And I think we are over the risks involved in startup periods. So it looks good. A particular case or situation in the Q1 was very good safety standards. We have seen our safety records being improving over time, but we had certainly a very strong Q1, which is typically a quarter where slip, trip and fall is coming in volumes with winter climates and a lot of ice.
But we have been successful in that area. Markets continue to be good. The general economy in the world is absolutely booming or is a very strong general economy around the world. But surprisingly enough, I would say that the automotive industry and the construction industries, being part of the global economy development, are not so strong. Nothing problem.
We have growth in both sectors, but very low in automotive and quite low and lower growth rates than we have seen before in construction. So in the general context of a very strong global economy, it is slightly less strong for the segments for the base metals, strong but not quite as strong as the general picture may look like. Base metals, high copper prices or high copper and nickel demand growth, Much is more than normal is driven by the developed economies with new energy systems. There is a hype for battery metals and a lot of other things. Lower zinc demand growth and the prices are continuing to be volatile.
The zinc and nickel metal demand was good or on that level and with the supply constraints, there was a deficit in both zinc and nickel, whereas we saw a slight surplus in copper. In the concentrate markets, we saw a tight market in zinc concentrate and quite balanced market in copper concentrates. Looking at the prices, we have this picture we always follow. Of course, we see a good metal price development. That's well known to you all.
If we compare with the long term prices or the cost of the industry, I would say that zinc is very high priced nickel is in spite of the positive development, still a low priced commodity. And copper is good, not without being extremely high. And that can be seen on this picture where we have the cost of the industry. The yellow line is showing the 90th percentile where 90% of the mine supply or the different metals are running at positive cash flows. And as we can see here, certainly, it's very profitable to be a zinc miner.
Sorry, it's not so profitable to be a nickel miner. If we combine and with the weights of the different metals, we see the light gray line here, very positive development, and we see that being compensated or offset by a negative currency development. And if we combine the whole market term index for bullinen's set of commodities and currencies, we see that we are on a very high level now, so very favorable market terms. If we then go into the mines, first of all, sales, SEK 1,900,000,000 as compared to SEK 1,500,000,000 a year ago sorry, the earnings SEK 1,900,000,000 compared to SEK 1,500,000,000 percent. And the CapEx was higher than last year and a lot is going on in smaller projects, many smaller projects.
And of course, we are working on the final stages of the crushers. Improved EBIT, high metal prices and high metal production. High-tech high grades in Q1 and increased grade guidance in 2018. We are seeing now that when we are very bottom of the pit, the high grade areas, we have probably underestimated slightly the grades, and that is the reason why we do a slight up or increase of the guidance for the rest of the year. Low mint volume is an effect of the same thing as the grades are high.
The new crusher is on the top of the pit, and we stood still 1 week to reconnect from the old crusher into the new system. And we have had an on off situation on a daily basis. Therefore, we have focused our mining in the lower part of the pit where the grades are high, but the volume of ore is low because of this sort of planned and not very surprised pricing disturbances. So all in all, copper production is good, but it's a very high grade and lower volume kind of situation. Also in Tara, we have been in very good areas.
We have had very good grades and Tara is developing well with very high returns given also in apart from the grades, the favorable zinc prices. Winter conditions and as an interesting detail, winter is harsh in the north of Sweden, but this year, we can also say winter impacted our underground mining, which we have never said before. And I'm referring to Tara, where the whole of Ireland was on a standstill because people couldn't go to work during the heavy snowfall situations there. So funny, but true also underground mines were affected by weather conditions this year. And the winter conditions, as I will mention later on, also continued into the Q2, which is not very typical.
If we look at the mine production, 1st, starting with copper, we can see that the bars are low. We produced or had low mill volume. But despite that, we had very good metal production because of the high grades. You can see it very clear on the chart. Zinc, not very dramatic.
Nickel, the continued success with Kevitsa, where after the acquisitions, we have been able to push volumes and being in good areas. So Kevitsa continues to develop very strong. In Smelters, this is a picture from 1 of the or the other the second very large investment going on right now, a new asset plant in Harjavalta. And earnings were $640,000,000 compared to $835,000,000 The decline is due to lower market terms. This is in sync being the most important.
CapEx were $231,000,000 down from last year. We see a market with good conditions in general, but market terms are going negative to us. Stable production and high free metals in the copper smelters. We had a production record in Harjavalta, and the zinc smelters are doing fine. In the quarter, we took a one off write off of our fire, which I think we mentioned last time in the lead smelter base, we had a new But better than it looks because we got
Ladies and gentlemen, please continue to stand by. Ladies and gentlemen, once again,
level. And with that, Wolfgang will lead us through the financials.
Thank you, Leonard. So good morning. As you've seen from the report I've shown today, we reported a Q1 with revenues of SEK 13,300,000,000 and an EBIT, excluding process inventory, of SEK 2,700,000,000. That is roughly 32% up compared to the same quarter last year, and it's slightly down on Q4, which I'm sure you remember was one of our better quarters ever in fact. Capital expenditures, investments, SEK 1,100,000,000 slightly on the low side.
There is some seasonality in that. The guiding for the full year remains. We had a free cash flow of SEK 1,400,000,000, which brought the gearing down to 6%. And if we then move into the next slide with the EBIT bridge comparing Q1 to Q1, we have an improvement of almost SEK 700,000,000 in profit compared to the same quarter last year. Prices is more or less neutral on in digitality prices and terms.
We had negatives in the currencies, which offset the positive effect on the metal prices. So the improvement in the result is mainly due to volumes and more specifically than higher grades in our mines, which has been mentioned earlier. But in addition to the mines, we also had good free metals in smelters, and we had a positive internal profit in the quarter. Costs are slightly up, mainly due to inflation. Depreciation, there we have a connection between the depreciation of stripping and so on, which follows the production level of metals.
So with higher production of metals, we get higher depreciation. And finally, we had a fire in the Bergso plant, as we talked about in the last report. We've taken a charge to the P and L of €50,000,000 to reflect that equipment that was damaged in the fire. Comparing Q1 to Q4, it's a slightly lower result, minus SEK 187,000,000. Out of that, SEK 125,000,000 came from lower prices and terms.
So the main factor, in fact, then was a negative foreign exchange effect. We had lower dollar and we had stronger euro, which had a negative impact. Looking at the combination of volumes and cost inflation altogether, it's more or less at the same level as the very strong quarter. And then we had, again, the write down of all the equipment in place. Moving into cash flow, SEK 1,400,000,000.
In the end of 2017, we had low inventory levels, and that situation has normalized. We've built inventories, and that gives a negative impact from working capital in the cash flow, adding up to 1,400,000,000. Apart from that, slightly higher tax paid due to the strong result last year. I think the main thing here is that we have slightly higher inventory. Moving on then to the balance sheet.
You can see here, we have on the chart at the side, we have 7 consecutive quarters now of strengthened balance sheet. We're down to 6% gearing. Net debt is down to SEK 2,500,000,000, and we have a financing that we're happy with. We have low funding costs, 1.2% interest rates and a duration of 2.7 years. Payment capacity, very high, SEK 12,200,000,000, which is stronger as an effect the expected dividend payments.
So that was a brief summary of the financials. Lennart, would you like to conclude?
So as always, we try to point out what happened in the Q1, which is good to understand. Are there any extraordinary or unusual things to the guidance going forward. If we start with Aitik, program is going very well. It's going well, it's going according to plan, but you always have precautions for some of this. But I must say that running in order commissioning at this point is going very well.
So I have no problem whatsoever to report on. However, running up for commissioning or run-in of big equipment is always involving high risk than going sort of going forward or an ongoing situation. So the risks are not over of disturbances, but as far as I can say, I have nothing to be very nervous about. The guidance for grades in Aitik, we had the 1 year or full year guidance. We have had a very strong quarter in Q1, and we have seen that we dare to tell that it's probably going to be a little bit better than we have said before in the rest of the year in Q2 to Q4.
So the guidance is 0.6%. The guidance of 2019 is subject
to that.
Gaten Bay, low zinc grade and then high silver grades in Q1. So I think this will probably normalize. In other words, you could probably expect some reverse on those quite unusual grade situations. The guidance for 2018 is unchanged with 4% 115 grams. We had very good grades in Tara in Q1, so be a bit careful with that one.
It continues over the winter, I mentioned in the beginning, continued into if you're a skier and you're in Scandinavia, it's an amazing skiing season also now. So it's a lot of snow. It has also been a lot of snowfall. So we have had some disturbances also in the Q2, which is unusual. Nothing to nervous about too much, but still some disturbance.
2018 benchmark for TC, zinc TC has not been settled yet, and I'm sure we will have a lot of questions on it. But we are sort of taking the profits in the zinc smelters in line with what we think will be the zinc leases, and we're not going to voice our opinion where that will be. So that's the situation there. Positive internal profit elimination in Q1, that's a zero game. So it's sometimes up and sometimes down.
It was positive in Q1. The maintenance stops in the planned maintenance 2018 is only €200,000,000 compared to over €400,000,000 last year. So if last year was an exceptional heavy year, it's rather quite light year compared to the sort of long term average. SEK130 1,000,000 will be in the 2nd quarter, and the CapEx guidance remains unchanged. I think the conclusion is very much what we have said before.
We are in a situation where very good times for mining, where we are right now, is offset by not so good terms for the smelters going opposite direction. This gives us a more stable over cycle stability than most comparable companies. Base metals and precious metals also tend to go opposite directions and add to our stability, but also our synergies and our ability to take complex materials from internal suppliers. We have the highest productivity in the world in Katunberg and in Aitik. We have the AGM today at Katunberg.
We are going to have a lot of people going underground. We have with investments or the cost involved in an AGM on-site. We have also had family days. We have had days for people living around here. We have had school classes from the towns from around the area here.
We have done surveys on the school children or school class people 15 years old and 72% answered on the survey after having been with us at Garpenberg that they would be interested to work as adults in our mines, which is a very exceptional number, I think. So we're very pleased with that. Strong balance sheet. We see how tremendous our cash flow is right now and gearing is going very, very quickly to 0. High grades, stable smelter production, new crusher unit decommissioning and it's going well.
And I think that concludes our presentation. So now we are prepared to take questions.
Yes, operator, please go ahead with the Q and A session.
Thank you. The first question comes from the line of Alain Guyburn from Morgan Stanley. Please go ahead.
Yes, good morning, ladies and gentlemen. Two questions from my side. Firstly, on the Itik grade, Lennart, you mentioned that higher grades go hand in hand with lower throughput. How should you think about the throughput for the remainder of the year on Itik? And then does the higher grade profile in the remainder of the year mean that you're bringing forward higher grades for 2019?
That's the first question. And the second question is on the market terms that you mentioned in the smelting business. Have we seen the full negative impact of the weaker market terms in Q1? Or will we see another step down in Q2? Thank you.
Okay. On Aitik, I think we will continue approximately as now to mine the lower parts, which is very high grade. But of course, we will now commission and start seeing volumes from the top. And we have a lot of ore there, big volumes and lower grades. So we will sort of blend in lower grade material.
So I think the scenario is higher volumes with a lower average grades, which is made up of all the high grade stuff we're doing and then blending in more low grade material. And some of that material will probably be very low grade to compensate for the high. So we're going to see a normalizing grade situation at high volumes, we hope. But again, in the Q2, I would say, we are in a starting up period and the risks are there and it's going to be a bit on off. So volatility on both volumes and grades will remain in the Q2.
And thereafter, I think we're quickly coming into the guidance values and with the variations we may have in the Q2. Nothing I necessarily believe will happen, but a probability which is there. My the second question was about market terms, and we have seen about half the I mean, we have inventories. When the year starts, we have inventory with the old terms. The new terms will start to hit or to impact us from the 1st January deliveries.
But now we get them delivered and they will be sort of compensated or adjusted in retrospect. So if we assume the right levels, which I think we do more or less, then we're probably seeing half of all picture, half of the volume of the smelters have been on inventories from last year and half from the new year. So yes, there will be an additional impact in the second quarter.
Thank you. Thanks.
The next question comes from the line of Liam Fitzpatrick from Deutsche Bank. Please go ahead.
Morning. Two questions as well. Just wanted to push you a bit more on Aitik. I guess this year is going to be a ramp up year, but are you willing to give us a throughput guidance or a range for 2019? And then secondly, just on mining grades.
I think you've explained, but we've also seen big variances versus your guidance at Garfenberg. I think Kevitsa was higher as well. So are you still capital with your full year guidance at those mines? And are you able to give us guidance for zinc grades at Tara?
A lot of questions, of course. I agree. We have had more variations in different mines from probably what is normal. Mining is such. We are in different areas.
We have rock stability. Now I'm going back to the previous quarter, we have to redirect and probably going to lower these areas and time, and then we go back and then we take the high yield areas we planned in the 1st place. So of course, this is normal for any kind of mining. So variations are typical for mining, even though I have to admit that we have had a little bit more than normal and certainly true for Aitik. What was your additional question?
We had lower grades lower zinc grades than the full year guidance in Garpenberg. That was something we talked about in Q4. I expect that to continue a bit into Q2, but the full year guiding remains. Please also note that we had very high silver grades in Q1, and the full year guiding also remains there. Tara, also very high zinc rates.
We expect that to normalize during the rest of the year. So that is nothing that I think you should plan to continue. I think that's maybe some more So in other words,
in broad or in general, our guidance remain there. But you had the additional question. It was just on volume in I think, let me Yes, you were asking about that. I mean we have sort of close to 40 or around call it a little bit below 40, sometimes over 1,000,000 tons a year, and we're going towards 45. And one of the key elements is to get stability in the crushers, and the new crusher is looking very good.
I was there the other week, I was looking at the commissioning and starting up. It's a workhorse with redundancy, which we didn't have in the previous surface crusher. We have basically 2 crushers in the same system, so we can maintain 1 when we upgrade the other. And this has been a major bottleneck for us or the main bottleneck in the system for years. So I think that as soon as we're up running with 2 crushers in the second half of the year, we're going to be back on the good levels and moving towards the 45,000,000 tonnes.
How fast that will go and going into details, I'm not really up I'm not really interested today. I'm very excited about and the focus is to get the commissioning going. It's going to plan.
Okay. Thank you.
The next question comes from the line of Jitin Jagowal from Citigroup. Please go ahead.
Hi, good morning. Just a question on grades again. You've seen about a month into Q2 as well. So at Garden Bay and Tara, do you expect Yes.
Jitinder, Jitinder, please bear with us. The speaker line has just disconnected. Please stand by. Thank you.
We had a technical disruption, but now we're on again. So please go ahead, Mr. Rivell and Kobylsson.
Jitinder, please go ahead with your question. Thank you.
Thank you. Not sure what happened there. I'll start again. Just on grades, you have seen a month into the Q2 already. So on Garten Bay and Tara, do you expect the diversion already into Q2?
Or is it more of a 2 edge event when grades are going to more normalized territory? Thank you.
You can take that if you want.
I think Gaertan in fact, we came in slightly above what we expected in Q1, and that means that in Q2, we'll probably still mine below full year average, at least in the beginning. Tara, we expect a normalization from Q2 including Q2 then.
The next question comes from the line of Ola Sodema from Kepler Cheuvreux. Please go ahead.
Yes, good morning. Just coming back to Aitik and the crushers and the guidance, can we view that you're giving this firm guidance quarter for quarter over the rest of 2018 that you are very confident in the commissioning of the new traffic station that you're there to improve the guidance a little bit?
I mean, the philosophy
of guiding we have is that we don't normally guide on things which are on average grades or on a continuous or on a steady state kind of situation. And then we focus when we start up such a big thing we're doing in Aitik right now, then we narrow in and try to lead you as good as we can. The problem is, in reality the reality, the real situation is a bit volatile, which is absolutely normal when you start up the equipment on the tank. So the precise guidance or the quarter by quarter guidance, we will do when we think it is important for the market to understand what's going on. But in a normal situation, I don't think you should do this as sort of a trend towards more short term guidance.
We will do it and we will continue to do it on a need to be kind of basis.
Yes. I'm not sure. Maybe I misunderstood your question, but the guiding of 0.7 6 percent is for the remainder of the year average for each quarter.
The next question comes from the line of Christian Kopfer from Nordea. Please go ahead.
Okay. Thanks, operator. Just a few follow ups from my side there. So sorry if you have already answered these questions. There has been a lot of disturbances on the line.
So but apologies for that in that case. Firstly, on the power volumes. San Mateo, I think you mentioned that you had a lot of wind disturbances in power for Q1. What is the normal mill volumes for Tara, would you say, in a normal weather scenario?
Weather scenarios at all in the underground mines. It's very unusual that we have, but this time, it was because people couldn't get out on the roads. They got 30 centimeters or 10 inches of snow in overnight and things up for several days. So I think the normal guidance is absolutely no problem with winter conditions either winter or any month at all. So we don't have any weather sort of pattern in any of the underground mines typically.
Yes. But if you just look in tonnes, I mean, the Tara has in my book, it has underperformed the last number of quarters. If you go back a couple of years, this mine has produced somewhere around 650,000 tonnes per quarter. So is 650,000 tons per quarter the right magnitude what Tara should perform?
I think here, you should look at a mine which was going to close by 2019, which has been extended and extended and extended. And of course, we are suffering from some old equipment, which was planned to be depreciated, and we're now buying a little bit of an impact of previous plans. And now we are accelerating again. We have a longer life of mine plan, and we're seeing what's an addition, we have a lot of enthusiasm for Tara Deep. Even though we're not doing any drilling there, we're building the drift into or the ramp into Tara Deep.
And so I think the decline, which you can see on the graph I showed before, it is a longer term step by step in a negative direction. I think that will be over time reversed. But it's a bit of the reasons why.
All right. Then on SG and A cost, they have come up more than 20% here in Q1 versus Q4. I think it was EUR260,000,000 in Q1. Is there a special reason for this? Or is this level of EUR260,000,000 in SG and A, is that also representative for the next couple of quarters?
I think you should let's see then. I think all in all, Q1 is representative when it comes to That is the general comment. Then we had the only thing is the one off adjustment in connected to the fire embarizer. Apart from that, I believe it's representative.
So the firing in Brazil, was that in SG and A or?
No, it was not.
So why did SG and A come up, I believe, for Q1 versus Q4?
SG and A?
€260,000,000 in Q1 was more than 20% higher than in Q4.
Yes. I think I mean, we have an extent to normal variations in the amounts.
So I don't think you can
go into more detail on that.
But listen, I think important is we are primarily following the entire cost development. And you have the cost bridges and you see we generally have very good control over inflation. We have a few percent and the variation between the lines is more it's less relevant than looking at the cost breakdowns in the cost analysis or in the P and L analysis. So I think please follow that more or look at that, which is more important, I think.
Okay. Finally for me then on CapEx, you have guided slightly above SEK 6,000,000,000. If you look historically, you more or less always come in below that. And if you look at the CapEx for this quarter, it was SEK 11,100,000,000, which is far below I mean, it's implying that you should come in far below. So I mean, are you speaking to this slightly above $16,000,000 Obviously, you are, but I mean, how will you get there?
I mean, then CapEx
the the late quarter of the year, so in Q1. SEK 6,000,000,000 is a big amount. There are some operational challenges to deliver on that. They are important projects. A lot of it is maintenance CapEx.
So that is something that we're working hard on achieving because not doing it would have a negative impact on production. But we are slightly behind, that's correct. Plan is still to catch up during the remainder of the year. Okay.
Thank you very much guys.
Thank you.
The next question comes from the line of Gustaf Hansen from Pareto Securities. Please go ahead.
Good morning. Just a follow-up question on the Q1 volume loss in Hi Tec. Can you quantify the loss due to the new crusher? And how much is just normal seasonality? And then follow-up on that.
I mean, sorry again if this has been discussed, but I didn't really get your answer on the Q2 I think grades. So is it fair to assume continued higher grades in Q2 and then declining in the second half of the year?
We don't give guidance by quarter. Now we say that the total of the 3 quarters will be higher than we said before, the EUR 0.26. It's possible that we are seeing higher grades than the EUR 0.26 in the Q2, but that is most likely then related to lower than sand volumes again, but we have an exchange. So I think if you look at contained metal, it's probably, again, a more a less volatile parameter to look at in the commissioning stage we are in. And for this winter conditions, how much should we take out of the winter?
It was quite heavy winter this year. We had a bit of disturbances, and it can be maybe 5% or 10% of volume in the Q1 compared to the average of the year for parts. And I think it is very volatile and weather you can never talk about. But it has been a quite big impact this year. It's quite bad weather year.
And it was also in the other open pit, the Kevitsa also affected by weather conditions, probably more than normal, if anything is normal, by the way.
All right. Thank you.
The next question comes from the line of Johannes von Seelis from Handelsbanken. Please go ahead.
Yes. Hello, everyone. It's Johannes here. My first question is also on Aitik. When you are ramping up now and execute on the crushing project, are there any extra cost involved?
Or is everything here capitalized as CapEx? Can you help me on that one, please?
We have, of course, the operations are costing more. We have people under on commissioning and so on. So there is a bit of cost for commissioning. But it's not big numbers on the project itself. Most was in the CapEx of last year.
But we, of course, are holding some equipment payments until commissioning and sort of all the tests criteria that have to be full have to be met for final payments with the main suppliers. So in the Q1, basically, everything was installed. We're holding some payments, and they're probably going to be paid in the second or third quarter. So OpEx, a little bit CapEx, quite low period in the Q1.
Okay. Okay. Then also on smelters, and you showed us during the presentation, Lena, the investments in Finland, Harjavalt. I think you also have made recent investments in Oda. Will this have any sort of significant impact on the quarterly on the results for the upcoming quarters because it's been quite heavy investments done?
Yes. I mean, basically, what we're doing, we are increasing uptime. We're reducing unplanned small stops. We're doing some improvements in capacities, debottlenecking in some parts. So over time, yes, there is I mean, we have expansion plans in particular in the mines.
So all the mines are in different kinds of expansion stages, Garpenreiter, 3,000,000 tons, Tara with the new sort of prolongation and then later on opportunities or potentials. I think we spoke about and so on. And we spoke about last time the investments we're doing in Finland in both Harjavalta and in Kavitha. So I think that in general, you have the picture of growing production without being too dramatic in the units. In the Smelters, in particular, we are doing debottlenecking smaller projects, smaller improvements, which will increase the uptime.
It's not going to change the picture, but improve. Okay.
Then my last question is on the market terms for the smelters, as you elaborated on the call here. But is the new terms fully in your P and L when it comes to the mining side? Because lower TCLC also means a public for your mines, obviously. But is everything reflected on the mining division here concerning this?
Yes. We apply the same thing in both because otherwise we would understate or overstate. So for example, in zinc where we have a high degree of internal, well, if we have done something wrong with the TC assumptions, well, they are hitting one way and one with a 9. And the external part is relatively limited.
The next question comes from the line of Daniel Lutz from Exane BNP Paribas. Please go ahead.
Hi, good morning. Thanks very
much for taking my questions. Just two quick ones. You highlighted in your presentation on copper, clearly benchmark or spot terms are currently below benchmark. Can you speak a bit about copper concentrate supply? How you see it at this point?
Do you think that the current spot terms are reflective of tightness in the market? And maybe quickly some comments on copper scrap availability in Europe. Do you feel that there's increased competition by China for volumes? My second question, just quickly coming back on the benchmark terms, a quick follow-up. So you outlined that your Q1 includes an assumption on your zinc benchmark TCE or where you expect the TCE will settle, at least for the contracted volumes.
Once the benchmark is settling, how does it work? Do you will you issue a restatement? Or will this be done as part of the Q2 results? Thank you.
Well, on copper TCs, I think in general, we do not forecast any thesis, and we don't want to involve in certain markets where they are still open. So I think that the terms are in copper well known. It's in sync. They are open, and we don't want to sort of comment on them too much. On the scrap availability, I think there is this is a real thing happening in the market with China and scrap.
We have longer term agreements with some of the sources of scrap, and we are not very affected by it at this point.
Yes, we do correction once the final or once the benchmark cases are known. So that will hit Q2 in that case.
Great. Thank you.
The next question comes from the line of Luke Nelson from JPMorgan. Please go ahead.
Hi, guys. Just two questions from me. Firstly, a question on CapEx relating to your early comment about issues or potential issues deploying the SEK 6,000,000,000 as per the guidance, but relative to potential impact from production thereafter, if you didn't achieve that. It would be interesting if you could just give us a bit more granularity on exactly how you're seeing any potential impact from not being able to deploy the CapEx this year, particularly from 2019 and beyond perspective on mine plans and how you see that evolving? And then second question for me, just on the internal profit adjustment, obviously, a large positive there.
Can you just give us a bit more color on the breakdown between the contribution from inventory and prices? Thank you.
Well, I'm sorry to say we had technical disruptions again, but please go ahead.
Hello. Can you hear me? Thanks for that.
So we were on CapEx of our guidance and what No problem. We will come back to somewhere of the guidance for the year. Suppose that it doesn't happen, well, that is not the scenario we look for. But in that case, I do not there are nothing critical that we are missing a maintenance stop and therefore have a new risk picture of equipment which have to produce 1 more year or something like that. The impact will then be several year laters in increasing the dam heights or whatever, things like that, stripping in the open pits and things like that.
We have plenty of time to do corrective actions, and I see no reason to be cautious about this. But again, I think we will be back on the CapEx terms. And as you mentioned in the beginning, this is a typical seasonal pattern. A lot of suppliers are sending in a lot of bills, and we are it's a very hectic period in Q4, and then it's a little bit of a vacuum when you're into the Q1. So it's nothing to be nothing very special about this.
Sorry. And then it broke up there. There was a bit of static. The question on the internal profit adjustment, the contribution from inventory and pricing?
Please continue to stand by. The conference will resume shortly.
Okay. A lot of problems with the lines, I think, here. On internal profits, Hakan?
Hakan, we didn't quite hear the question. But just to give a indication where we're having going forward. Apart from that, I didn't quite hear the question. So maybe you want
to Yes.
From what I understand, it was a last question, was it? So we conclude this quarter. It was another strong quarter for our bullish, a typical Q1 situation. We're going into the Q2 now with obviously spring weather, no problems with the open pits. We're going to have slower or lower maintenance than we normally do.
And then we have a number of things related to grade variations, and we have tried to guide you as good as possible. And we have both sort of positive and some negative deviations on that one. It's my last quarterly presentation. I've done 42 now, and I'm very thankful. It has been a privilege to work with Voliden and our shareholders.
And I thank you so much for a great number of years. Thank you very much.