ALBA Seeks Closer Collaboration with Divisions

During its announcement on its quarterly figures, the environmental services firm ALBA Group, based in Cologne, Germany, has announced that its ALBA SE division will take steps to improve the collaboration between its steel and metals recycling division and the waste management and recycling business of the ALBA Group.

To accomplish this, both business areas are to be managed by Joachim Wagner, a member of ALBA Group’s board of directors and executive director of ALBA SE, with immediate effect, for the national regions of North and South.

"Our goal is to offer our customers all services from a single source. We will therefore increasingly present a comprehensive range of services from both business areas at our sites and coordinate logistics efficiently," says Axel Schweitzer, ALBA Group’s chairman. In doing so, the company is responding to the continued poor market development of the European steel industry.

"The mildly positive development of the European steel industry projected for the second half of 2013 has failed to materialize. The current business year is therefore one of the worst in the entire scrap metal industry since the start of the 90s," says Schweitzer. The steel industry is struggling with overcapacities, subdued demand and high pricing pressure. European steel makers are largely in the red. This situation has affected the business of the steel and metals recycling segment. The services segment also suffered the ever inadequate supervision of regulatory statutes of the Packaging Ordinance determined by law enforcement agencies.”

In deciding to have the two divisions work more closely together, ALBA notes that its steel and metals recycling segment has been operating in a persistently difficult market environment in the first three quarters of the current financial year with subdued demand and lower prices than in the first nine months of 2012. An increased scarcity of materials added to this. This situation was reflected in a clear decline in sales and earnings.

In fact, ALBA Group notes, the production of steel in Germany declined by 3.3 percent during the third quarter of the year, compared to the same time last year. Additionally, demand for steel scrap in the EU 27 and Turkey was subdued. A strong euro also rendered exports more difficult.

The low demand for steel scrap lead to low prices. The average price for leading scrap type 2 amounted to EUR 297.00 in the first three quarters of 2013, in comparison with EUR 324.52 in the first nine months of 2012.
The prices of nonferrous metals have been decreasing since the middle of February in spite of a short interim recovery and were at their lowest point this year at the end of June. The price of copper was even at its lowest point for three years in June. Prices recovered somewhat in the third quarter. The demand for nonferrous metals was below that of the same period in the previous year.

The steel and metals recycling segment continued the announced process of portfolio optimization in the third quarter. In order to be best positioned for further internationalization, a new export terminal was acquired in the port of Amsterdam, which created new export opportunities for steel scrap and non-ferrous metals. Amsterdam will replace the previous export terminal in Dordrecht and is expected to be in operation as of January 2014.

Meanwhile, the waste management costs of the company’s Interseroh dual system business unit increased due to the decline in licenses, and therefore paid by manufacturers and importers, quantities of sales packaging of competitors.

Developments in recovered paper and plastic prices have a direct influence on the course of business of business units through the marketing revenues of these individually. Low raw material sales revenues strained the results of highly marketed business units.

The management is continuing to expect difficult economic framework conditions for the steel and metals recycling segment. Prices of steel scrap are expected to decline slightly with demand remaining constant in the fourth quarter, while non-ferrous metals are expected to be at a continued low price level with demand also remaining constant. The situation of the procurement market will remain tense. The management is assuming a decline in sales as well as a clear decline in pre-tax earnings for the 2013 financial year in comparison with the previous year.
Margin pressure in the services segment will also continue in the future. All in all, the management is expecting a reduction in pre-tax earnings and a shift in sales to the benefit of unregulated business areas.

On the whole, ALBA SE is expecting a decline in sales as well as a clear reduction in pre-tax earnings for the 2013 financial year in comparison with the previous year.