World largest copper recycler reports sharp decline in revenues and earnings

By Paul Ploumis (ScrapMonster Author)

August 12, 2016 03:23:27 AM

SPOKANE (Scrap Monster): Hamburg-based copper producer Aurubis reported weak earnings and revenues for the initial nine-month period of the fiscal year 2015/16. This is when compared with the corresponding nine-month period previous fiscal. The company attributed the decline to the continuing weakness in copper scrap markets. However, the earnings remained in line with market expectations.

According to the company press release, Aurubis Group generated operating earnings before tax (EBT) of € 148 million in the first nine months of fiscal year 2015/16 beginning October 2015. The EBT was comparatively lower when compared with € 262 million recorded during the corresponding nine months of the previous fiscal. The rolling EBIT for the last four quarters was 11.2%, significantly lower when compared with 18.7% during the previous year.

The company management noted that optimized input mix by the company resulted in improved treatment and refining charges for copper concentrates. The ongoing strength of the US dollar and robust sales of rod and shapes also influenced the earnings positively. On the other hand, several factors including weak copper scrap and sulfuric acid markets had negative impact on the results. The two-month long repair and maintenance shutdown in Pirdop, Bulgaria too had adverse effect, it noted. A total of 52 companies participated in the shutdown. The shutdown also involved capital expenditure of € 44 million.

The prior-year earnings included positive extraordinary effects of about € 32 million, which mainly resulted from low precious metal inventories at the end of the third quarter. The Aurubis Group’s revenues in the first three quarters of fiscal year 2015/16 reached € 7,076 million, when compared with € 8,467 million during the previous year. The company attributed the reduction in revenues to lower copper prices.

The company stated that the copper scrap market volumes continued to remain weak during the nine-month period of the current fiscal due to several factors including market volatility and low copper prices. Traders were seen unwilling to part with copper scrap inventories held by them, mainly in anticipation of recovery in scrap market conditions. The refining charges for copper scrap continued to decline during this period. The copper scrap supply shortage was mainly offset by blister copper, it added.

Aurubis further noted that it continues to expect treatment and refining charges to be at a good level. On the other hand, sulfuric acid prices are not expected to see recovery soon. Also, copper scrap markets are unlikely to witness sustainable recovery in the near term. However, rise in metal prices could have a positive impact in this area. The demand for rod and shapes products is expected to remain stable at almost the previous year’s level. The demand for strip products too is expected to remain stable at low levels. The ongoing strength in US dollar could contribute to positive earnings contribution, as a large portion of the company’s income is based on the US dollar. Also, the improvement projects initiated recently are likely to deliver significant earnings impact in future fiscal years. For the whole fiscal 2015/16, the company expects to generate good results. However, this will be significantly lower when compared with the record results reported during the entire 2014/15.