This article first appeared on GuruFocus .
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Revenue:Up almost 40% year-on-year for the first half of 2026.
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EBITDA:Increased almost 90% year-on-year.
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Net Profit:Tenfold increase year-on-year for the group.
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Operating Margin:Increased from 25% to 34% for the entire group.
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Copper Production (Payable):Up 20% year-on-year.
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Silver Production:Up 8% year-on-year.
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Sierra Gorda Copper Production:40,200 tonnes of payable copper for the first six months, down 5% year-on-year.
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Sierra Gorda Silver Production:14.9 tonnes, a 38% increase year-on-year.
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Sierra Gorda Molybdenum Production:11.8 million pounds, up 6% year-on-year.
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KGHM International Production:Down 34% year-on-year due to reduced output and lower copper content.
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Robinson EBITDA:Over PLN780 million after the first six months, twice as high as budgeted.
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International Assets Cash Flow:$290.3 million after six months.
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International Assets Adjusted EBITDA Contribution:Nearly 20% of the entire capital group, approximately PLN2.5 billion.
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Electrolytic Copper Production:Up 7% year-on-year.
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CapEx (First Six Months):PLN1.449 billion, with PLN497 million allocated to development.
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Glogow II Smelter Refurbishment Cost:PLN670 million.
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Cost Savings Program:PLN300 million in savings achieved after one year, targeting PLN1 billion by 2028.
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Energy Costs:Net price effect of PLN32 million increase for the first six months.
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Operating Cash Flow:Over PLN2.5 billion.
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Global Cash Flow after Investments:PLN774 million.
Release Date: August 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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KGHM Polska Miedz SA ( KGHPF ) reported a strong financial performance in H1 2026, with revenues up nearly 40% and EBITDA up almost 90% year-on-year, alongside a tenfold increase in net profit.
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The company successfully reduced its debt and significantly strengthened cash flows, with operating cash flow exceeding PLN2.5 billion, providing a solid financial base for future investments.
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Production volumes increased, with payable copper production up 20% and silver production up 8% year-on-year, driven by improved efficiency and operational stability in its Polish assets.
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The company is advancing its strategic growth projects, including the launch of the fourth processing line at Sierra Gorda in Chile, which is expected to increase metal production by 20% and further reduce C1 costs.
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KGHM Polska Miedz SA ( KGHPF ) is actively pursuing cost optimization, achieving PLN300 million in savings against its 2024 benchmark, and is exploring new growth avenues such as polyhalite extraction and potential M&A opportunities in stable jurisdictions.
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The company is benefiting from a favorable market environment, with high prices for core metals and by-products like sulfuric acid and rhenium, contributing to a significant increase in operating margin from 25% to 34%.
Negative Points
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KGHM Polska Miedz SA ( KGHPF )'s international assets, particularly the Robinson mine, experienced a 34% decrease in copper production due to challenging ore conditions and equipment failures, leading to lower-than-anticipated output.
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Sierra Gorda's copper production saw a slight 5% year-on-year decrease, partly attributed to the impact of torrential rains in Chile during Q1 2026, which negatively affected production volumes.
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The company faces significant cost pressures, including a PLN2.1 billion increase in payroll costs due to a one-off bonus payment, which contributed to a rise in unit production costs in Poland.
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The construction of the fourth line at Sierra Gorda will shorten the mine's life by three years (until 2045) based on current identified deposits, although exploration efforts are underway to potentially extend it.
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KGHM Polska Miedz SA ( KGHPF ) is navigating a volatile and politically influenced copper market, with high COMEX and LME inventories and non-standard spreads, posing risks to price stability and demand.
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The company's capital expenditure is heavily weighted towards long-term projects like new shafts, which require years of investment before generating returns, potentially straining short-term cash flows.
Q & A Highlights
Q: What is the outlook for inventory levels and cash flow recovery in the second half of 2026, given the significant build-up in the first half? A: CEO Remigiusz Paszkiewicz clarified that the cash flow was not poor, but rather tied up in inventory. He confirmed that in Q3 and Q4, the company will release the frozen capital as the 60,000 anodes currently being processed are sold, converting into final products and improved cash flow.
Q: What dividend can shareholders expect for 2026? A: CFO Piotr Krzyzewski stated that the dividend will be communicated at the General Shareholders Meeting next year. He emphasized the company's goal to leverage the favorable macro environment to build a financial base for investments while maintaining a financial buffer to allow for shareholder returns via dividends.
Q: Will the high unit production costs in Poland, driven by payroll, decrease in Q3? A: CFO Piotr Krzyzewski explained that the increased costs were due to a mandatory contribution to the price and reward fund (over PLN300 million year-to-year) triggered by profitability, as per the collective agreement. Since this is a one-off, he expects unit costs to stabilize and not grow at the same rate in Q3.
Q: What are the strategic directions and target commodities for potential M&A activity? A: CEO Remigiusz Paszkiewicz stated that while no regions are excluded, the focus is on stable jurisdictions in South America, North America, and North Africa (specifically Morocco). He noted that copper projects are currently overpriced, so the company is being cautious. A priority is also exploring in Ukraine, particularly for lithium and titanium, which are undergoing due diligence.
Q: When can we expect an improvement in copper output at the Robinson mine? A: CEO Remigiusz Paszkiewicz acknowledged the challenges at Robinson due to difficult ore in the Liberty pit, which is a transitional phase. He stated that equipment failures have been remedied and the mine is working to meet budget targets. He also mentioned AI-supported plans to improve the ore mix and quality, which could provide a quick boost to output, with a more significant shift to a better part of the deposit expected in 2028.
Q: What is the company's view on the copper market, particularly regarding the impact of U.S. trade policies and strategic stockpiles? A: A company representative acknowledged the risk that U.S. stockpiles could be introduced to the market to stabilize prices. They noted that copper has become an object of political games and that the U.S. storage facility has strategic importance beyond just being a warehouse for cathodes, making the situation complex to predict.
Q: Given recent high prices, will the company increase its hedging activity for copper and silver? A: CEO Remigiusz Paszkiewicz confirmed that the company has a hedging strategy and monitors the market daily. They have already closed some silver transactions at favorable levels (around $55) and are monitoring the market, which they see oscillating in a range around $75. He noted strong industrial and institutional demand for silver, making it a shallow but resilient market.
Q: Does the company's potential acquisition cost align with recent industry comments that new copper projects cost over $100,000 per tonne? A: A company representative declined to comment on BHP's specific statements but confirmed that acquisition talks are in progress. They stated that the cost is not at that level and that the company will inform the market when it is ready to disclose details.
Q: Will the change in the Sierra Gorda Supervisory Board leadership affect the ownership structure? A: A company representative clarified that the change is part of the cyclical two-year terms defined in the joint venture agreement. KGHM will take over the chairmanship from South32 in January 2027, but the 50% ownership stake remains unchanged.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
