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⛏️ KGHM Polska Miedź: Unknown raw material share

$KGH (-1.05%) is one of the absolutely most important players for the industrial future. Anyone who buys KGHM is not just buying copper, but one of the world's largest silver producers.

🥈 World leader in silver

KGHM consistently occupies second place in the global ranking of silver producers.

Production volume: Around 1,200 to 1,400 tons of silver are mined every year.

The leverage: At KGHM, silver is primarily a by-product of copper mining. This means that the costs of silver mining are extremely low, while the proceeds from sales when silver prices rise are passed on almost one-to-one to profits.

💰 Revenue distribution: where does the money come from?

It is important to understand that KGHM is not a "pure play". The distribution of revenue shows the strategic diversification:

Copper (approx. 70-75%): The mainstay. Used for power grids, e-cars and infrastructure.

Silver (approx. 15-18%): The most important profit earner alongside copper. Particularly in demand in the photovoltaic industry.

Other metals & services (approx. 10 %): This includes gold, molybdenum, nickel as well as smelting and energy sales.

📈 Financial check:

Q3 2025:

PLN 8.32 billion turnover

PLN 433 million profit (+80% yoy)

EPS: PLN 2.17

Q2 2025:

PLN 8.61 bn Sales

PLN 244m profit

EPS: PLN 1.22

Q1 2025:

PLN 8.94 billion Turnover

PLN 330 million profit

EPS: PLN 1.65

Q4 2024:

PLN 8.58 billion Turnover

PLN 1.55 billion profit (turnaround)

EPS: PLN 7.77

2023 saw high losses due to write-downs.

And 2024 was also modest at the beginning, but then things slowly started to improve. Debt was reduced through strong cash flows.

In the course of 2025, important approvals for the planned small nuclear reactors (SMR) were expedited. From an entrepreneurial perspective, this is the most important long-term step to move away from expensive Polish electricity prices.

🚀 Outlook & conclusion for 2026

The company is currently trading at an expected P/E ratio of around 9-10. Very low compared to other competitors.

Investment case:

1. copper shortage: falling global inventories with rising demand.

2. silver demand: The solar industry needs more and more silver, KGHM supplies.

3. efficiency: The new strategy for energy self-sufficiency (own wind farms & SMR reactors) will reduce the high Polish electricity costs in the long term.

However, the weakening export revenues with a strong zloty must be taken into account. And labor costs in Poland are also rising, which will eat up some of the savings.

I find the share very interesting, as it really benefits from the high commodity prices and many trends with its high copper and silver weighting. However, I am not invested myself at the moment.

Do you see KGHM as a good alternative to other mining stocks or as leverage for the copper and silver price trend?

3 Comments

Raketentoni@Raketentoni

Hello everyone! I've been reading through your "investment cases" on KGHM and am wondering whether we're talking about the same company here or whether there's a bit too much sniffing at the bare copper wire in the forum. 😬 Let's put your arguments through the shredder of hard numbers:
1. the fairy tale of the expected P/E ratio of 9-10
Dream on! The current, real trailing price/earnings ratio (P/E ratio) is a whopping 26. In order to achieve a P/E ratio of 9, net profits would have to almost triple at the current share price level (approx. PLN 335). Where would that come from? With a solid but unspectacular operating margin of around 16%, this is pure wishful thinking. Anyone talking about a P/E ratio of 9 here is making the world look good with wild fantasy estimates for 2027 or 2028.
2. the copper & silver fantasy (when the story is bigger than the numbers)
Ah, the classic rookie mistake: a great-sounding macro story (solar needs silver, the world needs copper) is blindly projected onto a share. But what's in the real cash register? KGHM's sales fell by 4% in the third quarter of 2025! Why? Because KGHM produces in expensive Polish złoty, but copper is traded in US dollars. The strong złoty almost completely eats up the attractive commodity prices on the stock exchange. A share whose turnover shrinks during an alleged "super cycle" is a macroeconomic gamble, not a qualitative growth investment. This is a crystal-clear red card: no top-line sales momentum, no buy.
3. "Efficiency" through SMR reactors and wind farms
Now it's getting really adventurous. KGHM wants to install small nuclear reactors (SMR) in its front garden with its US partner NuScale in order to reduce the enormous electricity costs. Do you know when this is due to go online at the earliest? By the end of 2030! Until then, these projects are a gigantic black hole for capital expenditure (CapEx). Although the operating cash flow is there, it is currently being completely eaten up by these investments and maintenance - KGHM is burning money at the bottom line and the free cash flow is deep red. A genuine "real cash machine" looks different. Until these reactors deliver the first "cheap" electricity, billions more will flow out.
Conclusion for you:
Anyone adding KGHM to their portfolio is currently not buying a cheap quality share, but an expensive currency bet (złoty vs. dollar) paired with a CapEx monster. Qualitative growth? Negative. Margin security? Not a chance. Reliable dividend? A joke that is not even covered by cash flow. Don't let yourselves be dazzled by beautiful stories about the future when the fundamental figures are already in the red today!

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Johnny B.@JBatelli

@Raketentoni Hi there for now! Thank you for the feedback with the hard facts - that's exactly what I love the community here for.

I just wanted to introduce the share because I thought: "Wow, the second largest silver producer and I haven't read anything about it on GetQuin yet"

You're absolutely right: KGHM is no bargain. My idea was based more on the forward P/E ratio. Due to the recovery in production and rising copper prices, a massive jump in profits is expected for 2026/27, which can put a lot of pressure on the P/E ratio. But of course, this is a risky bet on the future.

Currency hedge: The złoty-dollar effect does not always have to be negative. It currently hurts, but can quickly turn into a turbo for margins if the dollar strengthens.

CapEx: The SMR issue can become a long-term billion-dollar grave, you're right. But without these investments, KGHM will be stuck with the expensive Polish electricity prices. The market seems to be celebrating the fact that management is tackling the problem at all, even if free cash flow suffers as a result.
In the end, KGHM is not a classic 'buy & hold' stock for eternity, but a highly cyclical commodity play. However, the +144% in one year shows that the story is a good one.
It will be interesting to see whether the annual figures in March confirm your skepticism or catapult the share further upwards.

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Raketentoni@Raketentoni

@JBatelli that's what it's all about, talking to each other and i just like the whole thing to be funny and not so opinionated 😬

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