Aurubis still on the road to success

The Aurubis Group generated operating earnings before taxes (EBT) of € 211 million in the first nine months of fiscal year 2016/17 (previous year: € 148 million). Group revenue also increased by approximately € 1,113 million to € 8,189 million due to higher metal prices.

The operating EBT development can especially be traced back to higher concentrate throughputs, despite the legally mandated maintenance shutdown in Hamburg in the first quarter of the fiscal year. However, the previous year’s comparative figure was also influenced by a major shutdown, namely in Pirdop (Bulgaria). Similarly, relatively high treatment and refining charges for copper concentrates due to Aurubis’ advantageous input mix also bolstered the results. High refining charges for copper scrap with a good supply further contributed to the results. In addition, Aurubis profited from a high metal gain with high metal prices as well as from the US dollar exchange rate, which was advantageous for the company during the reporting period.

The oversupply of sulfuric acid on the global market (especially in the first half of the current fiscal year) and the resulting weak profits put pressure on the EBT. The lower cathode premium also had an impact.

Increased demand for flat rolled products also lead to higher sales of shapes, their preliminary products. Conversely, sales of wire rod were weaker than in the previous year.

Operating ROCE (taking the operating EBIT of the last 4 quarters into consideration) rose to 13.0 % (previous year: 11.2 %).

Aurubis’ EBT on the basis of IFRS amounted to € 371 million (previous year: € 98 million). 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.

„The third quarter, with an operating EBT of € 93 million, was extraordinarily good“, summarized Jürgen Schachler, Chief Executive Officer of Aurubis AG. 

Especially the performance in Bulgaria, where we were able to process complex materials since the shutdown in the previous year, contributed positively to the results. Additionally, we took advantage of the good scrap supply and achieved high refining charges. The efficiency enhancement program also contributed to the good results.

The efficiency enhancement program is a part of the ONE Aurubis transformation program, with which the requirements for achieving the Vision 2025 will be accomplished, which Aurubis introduced in March 2017. Aurubis wants to increase the EBITDA by more than € 200 million by fiscal year 2019/20. More than 80 % of the annual target of around € 30 million has already been reached, with significant contributions from the Hamburg and Lünen plants, as well as the Business Line Flat Rolled Products.

In addition to the improved results achieved by the efficiency enhancement program, other ONE Aurubis projects are also forging ahead. At present, the company is adjusting its strategy to the Vision 2025. Subject to Supervisory Board approval, this will be introduced on December 13, 2017 during the presentation of the fiscal year figures. A primary strategic element thereby will be the internal growth project “Future Complex Metallurgy”, which includes an expansion of processing more complex raw materials, shortening throughput times for precious metals and making possible an optimized output of additional metals.

Aurubis is likewise now working out the details of a new organizational structure, which will be more closely to the value-added processes in the company. These should take effect at the beginning of the next fiscal year on October 1, 2017.

Outlook

Overall, Aurubis expects a continued stable to good market situation in the raw material and product markets. The company anticipates satisfactory smelting and refining charges for copper concentrates until the end of the fiscal year, although these are currently under pressure on the global marketplace. Aurubis’ core competency of processing complex concentrates is helping to maintain a higher standard. The largest copper recycler in the world sees good supply on the copper scrap market, with correspondingly high refining charges in the coming months.

Aurubis expects a slight recovery for sulfuric acid revenues, as long as the improved development in the sales markets continues.

Stable sales are currently emerging for wire rod, which will however be below the previous year. Conversely, Aurubis expects strip product and shapes demand slightly above the previous year’s level.

Despite the currently weakening US dollar, the Group expects continued positive contributions due to its hedging strategy.

Jürgen Schachler confirms the forecast for the whole year once again: “We expect significantly higher operating earnings before taxes and a slightly higher ROCE compared to the previous year.”

You can find here the complete report on the first nine months of fiscal year 2016/17.