- Operating nine-month EBT increases to € 133 million
- Higher throughputs of concentrates and recycling material compensate for weak product demand for wire rod and shapes
- Fiscal year forecast confirmed
- Aurubis continues strategy implementation as planned
The Aurubis Group generated operating earnings before taxes (EBT) of € 133 million in the first three quarters of the current fiscal year, exceeding the same period of the previous year (€ 125 million). A good operating performance boosted concentrate throughput, though treatment and refining charges were lower. A higher metal gain with increased precious metal prices had a positive impact. The recycling business made a positive contribution to the result due to higher refining charges for copper scrap year-over-year, in connection with a substantially higher throughput. Aurubis has therefore been able to compensate well for the impacts of the coronavirus pandemic so far during the fiscal year.
Lower sulfuric acid revenues resulting from significantly reduced sales prices strained the result. A distinct decline in demand for wire rod, shapes, and flat rolled products also had a negative impact compared to the previous year.
Aurubis increased revenues to € 8,896 million (previous year: € 8,681 million) due to higher precious metal prices in particular. Operating ROCE improved to 8.5 % (previous year: 7.3 %). Aurubis has secured the supply for the smelter network in insecure times thanks to higher inventories of input materials. At € 166 million as at June 30, 2020, the net cash flow was significantly above the low prior-year level (€ -240 million) due to precious metal sales at increased market prices and cathode sales to Asia.
Aurubis achieved EBT of € 248 million from continuing operations on an IFRS basis (previous year: € 135 million).*
For the first time following the acquisition of the recycling company Metallo on May 29, 2020, the new sites in Beerse (Belgium) and Berango (Spain) were included in the consolidated financial statements in June.
“The past quarter was very challenging with regard to external factors due to the global coronavirus crisis,” summarized Roland Harings, Aurubis AG Executive Board Chairman. “Nevertheless, the commitment, flexibility, and discipline of our employees, together with agile crisis management, ensured that we kept coronavirus infection numbers at a very low level at Aurubis and continued production at our smelter sites largely unaffected. Furthermore, the robust nature of our business model has proven itself once again during the pandemic, a fact that is reflected in the strong result.”
However, Harings stated that Aurubis would have to be more cost-conscious in the future: “We will therefore continue implementing our cost reduction program in the next several months.” The Performance Improvement Program (PIP), which focuses on cost reduction, had previously been delayed by the coronavirus crisis. Intensive discussions are currently taking place with the employee representative bodies.
Aurubis confirms forecast for the current fiscal year.
The impacts of COVID-19 on the raw material and product markets remain difficult for Aurubis to forecast.
Nevertheless, Aurubis expects plant availability during the current fiscal year to exceed the previous year. Despite a reduced global supply of copper concentrates with low treatment and refining charges, Aurubis will be able to provide its plants with a good raw material supply due to both its good position on the market and the supply on the copper scrap market, which appears to be improving with rising refining charges.
In contrast, demand on the copper product markets is significantly lower. While Aurubis does anticipate a recovery in demand for copper wire rod, it will nevertheless be considerably lower than the prior-year level. Furthermore, Aurubis expects a continued surplus on the international sulfuric acid market for Q4 2019/20.
Aurubis remains cautiously optimistic about the rest of the fiscal year.
The good raw material supply in the entire Group, including Metallo, can help compensate for weak product markets. Aurubis therefore still expects an operating EBT between € 185 and € 250 million for fiscal year 2019/20.
Aurubis successfully continues company development despite the crisis
Moreover, Aurubis continues to implement its strategy with various measures: the integration of Metallo in the Group is underway. In this context, Aurubis became the first European company in the basic materials industry to place a Schuldschein loan with an ESG (environmental, social, and corporate governance) component, which was oversubscribed by two and a half times the original amount and thus reached a volume of € 400 million. Aurubis will use these funds for the Metallo acquisition and general company financing.
Aurubis also acquired the Berlin software development company azeti in mid-June 2020. azeti develops and markets an internet-of-things (IoT) platform that integrates and evaluates production data, and the company is an important component of Aurubis’ new digital organization.
The Aurubis AG Supervisory Board appointed Heiko Arnold as new Chief Operating Officer (COO) effective August 15, 2020. He holds a doctorate in chemistry and will be responsible for the production plants, the continuous improvement of operating processes, environmental protection, and occupational health and safety in the company. Most recently, he served as Chief Technology Officer of the Austrian company Lenzing AG. Previously, he worked at BASF for many years, where he held management positions at international production sites. As Chief Technology Officer (CTO), Thomas Bünger will oversee the further development of innovative metallurgical processes and Research & Development in the company.
* Because the IFRS result includes measurement effects due to metal price fluctuations and other factors, Aurubis discloses an operating result (EBT) that differs from the IFRS result. The operating result largely eliminates the effects of metal price fluctuations and thus allows for a more realistic assessment of the business performance. Operating EBT is used for control purposes within the Group.
Segment FRP will continue to be classified as discontinued operations pursuant to IFRS 5 and is therefore not included in the IFRS result. The intended sale of the segment does not affect the operating reporting, however.
The complete Quarterly Report on the First 9 Months 2019/20 is available here.
„At a Glance“