Aurubis AG generated operating earnings before taxes (EBT) of € 36 million in Q1 of the current fiscal year 2015/16 (previous year: € 39 million). The forecast for fiscal year 2015/16 was confirmed.
The results in Q1 were burdened by weak copper scrap markets, lower precious metal production and a lower metal yield with reduced metal prices.
In contrast, increased treatment and refining charges for copper concentrates, higher sales of continuous cast wire rod and shapes and related higher income from cathode premiums positively impacted the results. The ongoing strength of the US dollar – the currency in which treatment and refining charges and the cathode premium are established – supported the results.
“In an overall favorable market environment, the main factors that burdened the Q1 results were the weak scrap markets and a lower metal gain in conjunction with reduced metal prices,” Executive Board Spokesman Erwin Faust said about the results.
The operating return on capital employed (ROCE) reached an excellent 17.5 % (previous year: 11.0 %) and was therefore significantly above the target of 15 %. The equity ratio is at a very good level of 49 % (previous year: 44 %) with very low debt, demonstrating Aurubis’ excellent balance sheet strength.
The Aurubis Group’s revenues reached € 2,398 million during Q1 (previous year: € 2,635 million). The reduction in revenues is primarily due to lower metal prices.
The net cash flow was € -23 million compared to € 102 million in the previous year. The decrease in the net cash flow is primarily due to the build-up of working capital, mainly as a result of an increase in inventories leading up to the large-scale shutdown in Pirdop (April/May 2016). The inventories will decrease to a normal level again after the shutdown, with a positive impact on the cash flow accordingly.
IFRS earnings before taxes (EBT) in Q1 of fiscal year 2015/16 were € -34 million (Q1 of the previous fiscal year: € 33 million) and were primarily influenced by a drop in metal prices. In contrast to operating earnings, IFRS earnings include measurement effects due to copper price fluctuations and other factors. Therefore, the operating earnings are decisive for Aurubis in assessing the business performance and managing the company.
We anticipate good treatment and refining charges for Aurubis until the end of the fiscal year. We expect the volume of copper concentrates processed during the fiscal year to be lower than the previous year. The main reason for this is the planned large-scale maintenance and repair shutdown of our concentrate pro-cessing facilities in Pirdop, which is scheduled for April and May 2016 and which will lead to a significant strain on earnings in Q3.
From the current perspective, we expect the copper scrap markets to recover from Q3 onwards, with a consequent recovery in refining charges.
Based on the assumption that the copper scrap supply will be otherwise uninter-rupted and that there will be a sufficiently full supply of concentrates, we expect cathode output to be at the prior-year level.
There is no current perceptible improvement in sulfuric acid prices, which came under pressure at the start of the fiscal year. There is still a surplus supply on the international market.
In the copper product segment, we expect good demand overall from our main markets in Europe. In North America, we expect stronger competition from imports for our local strip production due to the strong US dollar.
With regards to the optimization projects we have initiated, we are confident that we will be able to achieve the project targets in the medium term. The projects are already contributing to earnings in the current fiscal year; they will, however, only have a significant positive impact in future fiscal years.
“For the entire year, we still view our earnings forecast from December as realistic: while Aurubis’ earnings will be significantly lower than the record earnings of the previous year, they will still be satisfactory in fiscal year 2015/16,” Erwin Faust concluded.