- Lower concentrate throughput in first half of 2018/19
- Aurubis expects operating EBT for the current fiscal year to be more than 15 % lower than the previous year
- Fiscal year 2018/19 influenced by a decline in economic conditions
According to preliminary results, the Aurubis Group generated operating earnings before taxes (EBT) of € 103 million in the first six months of fiscal year 2018/19 (previous year: € 186 million). Q2 of the reporting year accounts for € 63 million of this amount (previous year: € 107 million). This includes one-off income of € 20 million from the rejected sale of Segment Flat Rolled Products to Wieland-Werke AG. Operating earnings for the first half of 2018/19 would therefore be below the capital market’s expectations.
IFRS consolidated earnings before taxes (EBT) in the first half of 2018/19 come to € 153 million according to preliminary calculations (previous year: € 233 million). Q2 accounts for € 149 million of this amount (previous year: € 64 million).
Due to these factors and a decline in economic conditions, the company is adjusting its full-year forecast for fiscal year 2018/19: According to current estimates, Aurubis expects operating EBT for the current reporting year to be significantly below that of the previous year. This means a decline of more than 15.0 % (operating EBT 2017/18: € 329 million).
After unscheduled shutdowns at multiple sites led to negative effects on earnings in Q1 2018/19, throughputs were also lower in Q2 compared to the very strong Q2 2017/18. At the same time, the lower benchmark for treatment and refining charges (TC/RCs) and much lower refining charges for copper scrap than in Q2 2017/18 negatively impacted the operating result. Weaker demand in flat rolled products business also affected the quarterly result.
Preparations for scheduled maintenance shutdowns weigh on operating EBT
In calendar year 2019, the company will carry out larger scheduled maintenance shutdowns at the key production sites Pirdop and Hamburg. Aurubis is preparing intensively for them. These types of shutdowns are carried out every three years. Aurubis uses them to implement maintenance and expansion investments and to bring its environmental protection measures up to date. In this way, the company secures the future viability of its production.
Smaller maintenance projects take place regularly prior to the scheduled, short-term production shutdowns, which impacts throughput. This is accompanied by a temporary build-up of inventories that negatively impacts the result and liquidity as at the balance sheet date.
“The current fiscal year is a transitional year for Aurubis as we invest intensively in our production,” explained Jürgen Schachler, Aurubis AG Executive Board Chairman. “Years with larger shutdowns are always connected with a higher risk when it comes to plant availability and throughputs. A year with larger scheduled shutdowns requires a temporary increase in anode inventories to be able to fully utilize cathode production capacities during the scheduled maintenance shutdowns if possible. In turn, this affects liquid assets. Furthermore, we expect a continued decline in the product markets due to the general economic trend, especially in the automotive sector. The preliminary quarterly result and the corrected full-year forecast reflect all of these impacts.”
According to Schachler, the company continues to work intensively on enhancing plant availability in the long term: “We are implementing the measures and targets of our efficiency improvement program with purpose. At the Hamburg plant alone, we have significantly reduced the number of unscheduled maintenance jobs since we started our continuous improvement activities – our AOS program. Our goal is to increase plant availability to continue reducing the financial effects of planned shutdowns down the road.”
Aurubis will publish the full Interim Report on the First 6 Months 2018/19 on May 15, 2019 at www.aurubis.com.