Planned maintenance shutdown affects Aurubis Q1 earnings

The Aurubis Group, headquartered in Hamburg, Germany, has generated operating earnings before taxes (EBT) of 31 million euros, approximately $32.6 million, during the first three months of its 2019/20 fiscal year 2019/20. This compares with 40 million euros, roughly $43.5 million, in the previous fiscal year.

Aurubis produces copper from copper concentrates and scrap and processes it into intermediate products.

The company says EBT was significantly influenced by the planned maintenance shutdown of its Hamburg plant, which occurred in October and November of last year.

“We successfully carried out the maintenance shutdown in Hamburg in the planned time frame and budget,” says Aurubis AG executive board chairman Roland Harings. “All of the planned investments and measures were accomplished. We, therefore, expect a considerable improvement in plant availability and a higher concentrate throughput.”

The shutdown had an impact that totaled nearly 34 million euros, or $37 million, on the company’s first-quarter results. Aurubis says the first quarter of its previous year was strained by nearly 25 million euros, or $27.2 million, because of unplanned shutdowns.

The company says lower sulfuric acid revenue also affected its most recent quarterly result because it made less of the mineral acid in light of the shutdown. Significantly weaker demand for shapes and flat-rolled products also affected Aurubis’ performance during the quarter.

A higher metal gain with increased precious metal prices and considerably higher refining charges for copper scrap led to positive effects during the quarter, the company notes.

Aurubis generated revenue of 2.7 billion euros, or $2.9 billion, during the first three months of the current fiscal year compared with 2.6 billion euros, or $2.82 billion in the first quarter of the previous year. This was primarily because of higher precious metal prices, according to the company.

Operating return on capital employed (ROCE), taking the operating EBT of the last four quarters into consideration, declined from 11.3 percent in Q1 of the previous fiscal year to 7.6 percent in the recently completed quarter because of the lower results in the past four quarters. The company says its net cash flow as at the end of Q1 2019/20 improved significantly, to -93 million euros, -$101 million, compared with Q1 2018/19, when Aurubis had -308 million euros, or -$335 million in net cash flow. In the first three months of the past fiscal year, the net cash flow was influenced by preparations for the planned shutdowns in 2018/19 and effects from unplanned shutdowns.

Aurubis achieved EBT of 93 million euros from continuing operations on an International Financial Reporting Standards (IFRS) basis compared with 12 million euros, or $13 million, in the first quarter of the previous year.

The company says the market environment continues to be challenging and the economic trend remains to be seen in part because of the impacts of coronavirus, which can’t be predicted.

Aurubis says it anticipates that treatment and refining charges (TC/RCs) for copper concentrates will remain significantly below the previous year in light of the current benchmark of $62 per ton, or 6.2 cents per pound. At the same time, the company says it is confident that it will have a good supply of copper concentrates.

In contrast to concentrate TC/RCs, Aurubis says it expects copper scrap refining charges to remain at a good level with a good supply situation. “Nevertheless, downward metal price trends could lead to a reduction in the copper scrap supply at short notice and thus to lower refining charges in the future,” the company says in its quarterly report.

Apart from the planned shutdown already carried out in Hamburg, two additional planned, legally mandated shutdowns are scheduled at the Lünen, Germany, site for April and September, the company notes. According to current plans, these shutdowns will have a 11 million euros, or $12 million, impact on its financial results.

When it comes to copper intermediates sales, Aurubis says it anticipates stable demand overall, which will nevertheless be at a fairly low level for copper shapes. Aurubis set the copper premium at $96 per ton for calendar year 2020, the level of the previous year. For the most part, the company says it expects to be able to implement this premium for its products.

The outlook for the current fiscal year is unchanged, according to the company.

Harings says, “Even with the challenging conditions on our markets at the moment, we can confirm our forecast for the fiscal year.”

The complete first-quarter report is available at www.aurubis.com/en/investor-relations/news-and-reports/interim-reports.

Regarding its acquisition of the Belgian-Spanish Metallo Group, Aurubis notes in the presentation given during its Feb. 13 conference call for analysts that it is still awaiting approval from the European Commission (EC), which it expects to receive in April. The EC has outlined a number of competition concerns concerning the purchase.