Aurubis very well positioned for further internal and external growth – Annual General Meeting resolves dividend payment of € 1.20 per share
Hamburg, 1 March 2012 – Aurubis significantly advanced the Group’s internationalisation strategy in fiscal year 2010/11 and is very well positioned for further growth initiatives – both internal and external. This is how Peter Willbrandt, Aurubis AG’s Chief Executive Officer, described the situation at the Annual General Meeting of Europe’s largest copper producer on Thursday in Hamburg, delivering a positive summary of the past fiscal year to the nearly 1,600 shareholders and guests. Willbrandt also thanked his predecessor, Dr Bernd Drouven, under whose chairmanship the very good earnings were generated, for his work in the Group.
Willbrandt stated that, following external acquisitions and internal growth measures, the Hamburg copper company had meanwhile become a globally active integrated copper production and processing group that ranked with the big companies in the copper industry. However, he said that it was a decisive factor that Aurubis was the world market leader in some sectors in the meantime. The Group holds top positions worldwide in copper production and processing. When it comes to cathode production, only the state-owned Chilean company Codelco is ahead of Aurubis. The CEO continued, “We are growing in a deliberate and level-headed way because qualitative growth is more important to us than size alone. Aurubis has a good, stable business model and a sensible strategy that we pursue consistently – that was confirmed again during the past fiscal year.”
In fiscal year 2010/11, which ended on 30 September 2011, Aurubis increased the key figure essential for assessing the Group’s economic performance – operating earnings before taxes – by 84 % to € 292 million. Net cash flow increased from € 85 million in the previous year to € 418 million, which was primarily a result of the good business performance. Capital expenditure amounted to € 116 million. ROCE, the return on capital employed, rose to 18.7 % and is thus considerably over the target of 15 %. All of the very good operating financial figures exceed the prior-year values. “We view ourselves as very well positioned from a financial perspective on the basis of these key figures,” Willbrandt stated.
Significant events of fiscal year 2010/11 included
- the 15-day production interruption in concentrate processing due to melt leakage from the bottom of the furnace in the primary smelter at the Hamburg site in December 2010
- the successful share placement in the scope of a 10 % capital increase on 13 January 2011
- the start of the project “Aurubis Bulgaria 2014” in June 2011 with capital expenditure of about € 44 million for productivity and throughput increases (about € 18 million) and additional improvements in environmental standards (about € 26 million) at the Pirdop site
- the commissioning of the KRS-Plus project to expand complex raw material processing at the Lünen site on 7 July 2011 with capital expenditure of about € 60 million and
- the acquisition of Luvata’s Rolled Products Division on 1 September 2011.
In contrast, Aurubis had to shut down the CIS solar cell pilot facility’s operations as of 31 December 2011. The project was operated with the marketing partner Cordes & Graefe KG. The quality of the CIS solar cells produced in the pilot line fully achieved the original targets for the pilot phase in the end. Drastic changes in the solar market have nevertheless led to a strong decrease in solar module prices in the last two years. The construction of a production facility with a capacity of 30 MWp as originally planned was no longer economically feasible under the current conditions. The discontinuation of these activities weighed on the fiscal year with € 4.5 million in depreciation on the technology.
Regarding environmental protection as a key competence and competitive advantage, Willbrandt explained, “Aurubis started doing its homework early on. We have the appropriate certified environmental management systems as well as voluntary commitments to environmental protection. Furthermore, we contribute to sustainable raw material management with our multi-metal recycling. Our international ranking in environmental protection is impressive. The Aurubis Group is currently one of the most environmentally friendly and energy-efficient copper producers in the world.”
According to Willbrandt, the earthquake in Japan and the nuclear disaster in Fukushima did not only affect Germany but also the work at Aurubis. As a result of the tragedy, the German Federal Government resolved to phase out nuclear power and decommissioned seven base load power plants. “That is a risk for us because the Federal Government’s legislative package does not ensure that electricity will remain secure and affordable for Aurubis,” Willbrandt asserted. He said that Aurubis used one billion kilowatt hours of electricity annually – about as much as a city with 600,000 inhabitants, for example Düsseldorf or Stuttgart. Power failures due to voltage fluctuations in the grid would be expensive for Aurubis. Even if the electricity flickered out for only a second, a half-day would be required to start up the facilities again. However, if there was a longer power failure or even a blackout, Aurubis would face the risk of the melts and liquids in the systems solidifying. This would lead to substantial damages. “Since this risk is significant, we have been working intensively on ways to minimise damage in this kind of situation: we have invested € 1.5 million in order to protect ourselves to some degree,” explained the CEO. Addressing policymakers, he said, “We expect that the urgently necessary political steps will be taken in connection with the energy turnaround. The focuses in this case are grid expansion and power plant capacities. There is a threat of losing another benefit in Germany – the secure energy supply.”
The Annual General Meeting adopted the recommendation of the Supervisory Board and the Executive Board to distribute a dividend of € 1.20 per share to the shareholders (€ 1.00 in the prior year). Related to the Aurubis shares’ closing price of € 38.19 on 30 September 2011, this corresponds to a dividend yield of 3.1 % (2.9 % in the prior year). The payout ratio is 51 percent of Aurubis AG’s unappropriated earnings. This represents a good compromise between an attractive dividend payout and the fact that economic uncertainties must be accounted for.
Following the very good results of the first quarter (October to December 2011), Willbrandt said the following regarding the overall positive expectations for the rest of fiscal year 2011/12: “Our primary copper production sector is already well supplied with copper concentrates for the current year. Treatment charges under long-term delivery contracts are expected to be higher than the prior year in the market. While we asses the ongoing high copper prices as volatile, they ought to stay at the same level overall. Because of this, the availability of other raw materials important for Aurubis, e.g. copper scrap, Blister copper and other recycling materials, will be at a good level. We expect sufficient refining charges for these materials as well. The copper product market is in more of an orientation phase. The European market, which is affected by the debt and financial crisis and which has the world’s second highest copper demand after Asia, has cooled down somewhat, which has affected copper processors most strongly. At the same time, the mood of German companies is positive and there are good prospects that the economic growth dynamics in China will continue until the change in political leadership in autumn 2012. For us, this means that we can assume a continued high level of concentrate processing and a cathode output at the same high prior-year level. We expect that the Lünen recycling facilities will also be fully utilised.“
The CEO continued, “Supported by the German economy’s still relatively good export activities, we expect demand for continuous cast wire rod and shapes to stabilise and recover. Due to the restructuring and optimisation measures in the former Luvata companies, it is expected that the resulting Business Line Flat Rolled Products & Specialty Wire will improve its competitive advantage. The price level for sulphuric acid weakened considerably at the end of the last quarter and in the course of the last few weeks. The main reasons for this are lower demand in China at the moment and reduced fertiliser production. But we expect a recovery in the next few months for seasonal reasons. Overall, we expect a very satisfactory result in the current fiscal year.”
Summing up, Willbrandt stated, “We continue to view the future of copper very positively. Though copper demand is decreasing because of substitution due to the relatively high prices in some applications, copper’s excellent electrical and thermal conductivity results in many new, growing applications and opportunities, for example electric cars and renewable energy expansion. Without copper, wind turbines, solar cells and electric cars cannot function. Copper was, is and will remain the metal of modern life.”
The resolutions voted on at the Annual General Meeting were passed by a large majority.
About 62.21 percent of the shared capital with voting power attended this year’s Annual General Meeting.
This information contains forward-looking statements based on current assumptions and forecasts. Various known and unknown risks, uncertainties and other factors could have the impact that the actual future results, financial situation or developments differ from the estimates given here. We assume no liability to update forward-looking statements.
Aurubis is the leading integrated copper group and the world’s largest copper recycler. We produce some 1 million tonnes of copper cathodes each year and from them a variety of copper products. Aurubis has about 6,300 employees, 18 production sites in Europe and the USA and an extensive service and sales system for copper products in Europe, Asia and North America.
Thanks to our wide range of services, we rank among the global leaders in our industry. Our core business is the production of marketable copper cathodes from copper concentrates, copper scrap and recycling raw materials. These are processed within the Group into continuous cast wire rod, shapes, rolled products and strips as well as special wire made of copper and copper alloys. Precious metals and a number of other products, such as sulphuric acid and iron silicate, round off our product portfolio.
Customers of the Aurubis Group include companies in the copper semis industry, the electrical engineering, electronics and chemical industries as well as suppliers of the renewable energies, construction and automotive sectors.
The Aurubis Group is oriented to growth and to increasing corporate value. The main focus of our strategy is on strengthening our business, utilising growth opportunities and practising a responsible attitude when dealing with people and handling resources and the environment.
Aurubis shares are part of the Prime Standard Segment of the Deutsche Börse and are listed in the MDAX, the European Stoxx 600 and the Global Challenges Index (GCX).
Further information at www.aurubis.com