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violetkaipa | stock.adobe.com

Befesa sees year-over-year earnings growth in Q1

The company says it expects to deliver double-digit earnings growth in 2022, driven by its expansion projects.

Luxembourg-based Befesa S.A., a leading provider of hazardous waste recycling services to the steel and aluminium industries, says it has delivered its strongest quarterly results its 35-year history, with Q1 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 61.1 million euros, or $64.4 million. That figure was 25 percent greater than the company’s Q1 2021 EBITDA of 48.8 million euros, or $51.5 million, and supports a positive business outlook for the 2022 financial year, Befesa says.

The year-over-year positive earnings performance for the quarter primarily was driven by strong base metal prices and good volume performance, according to the company. This included the contribution from its U.S. zinc operations and initial volume from its first plant in China, which more than offset energy inflation and higher zinc treatment charges (TC) of $230 per metric ton. Overall plant use was at prepandemic levels of 88 percent for Steel Dust and 80 percent for Aluminium Salt Slags & SPL (spent potliner). Zinc London Metal Exchange (LME) prices averaged 3,337 euros per metric ton, or $3,518, in Q1 (up 46 percent compared with Q1 2021). Aluminum alloy prices also traded at the highest levels on record and were up 33 percent compared with Q1 2021 at 2,627 euros, or nearly $2,770, per metric ton.

During the first three months of 2022, Befesa says it continued its hedging rigor and sold more zinc volume forward, up to and including January 2025.  

Befesa’s expansion in China continued to progress while managing COVID restrictions. Its first plant in Jiangsu has been in commercial production since December of last year, selling waelz oxide (WOX). The commissioning of the second plant in Henan started in January of this year, with ramp-up expected in Q2 and commercial output scheduled for the second half of the year, according to the company.

Looking ahead, Befesa says it expects to deliver double-digit earnings growth again in 2022, driven by the execution of its expansion projects and supported by the resilience of its business, diversified global footprint and cash management. The company says it expects 2022 EBITDA to range from 220 million euros and 270 million euros, or $232 million to $285 million, for 11 percent to 37 percent year-over-year growth. The company says its wide guidance range is driven by market (volume), energy and base metal price volatility. 

Javier Molina, CEO of Befesa, says, “Our customers and our company face a market environment of very high volatility. Befesa fortunately entered this challenging year in the best financial and strategic shape. Our key growth initiatives in the U.S. and China are delivering. Our conservative hedging approach and long-term capital structure safeguard the proposed dividends and funding of our growth road map.”

Befesa has facilities in Germany, Spain, Sweden, France, Turkey, South Korea, China and the U.S. Through its two business units, Steel Dust and Aluminium Salt Slags recycling services, the company manages and recycles more than 2 million metric tons of residues annually.