Befesa’s adjusted EBITDA up 15 percent year over year

Luxembourg-based Befesa S.A., which provides hazardous waste recycling services to the steel and aluminum industries, has released its first-quarter 2025 results, posting a 3 percent increase in total revenue year over year to 308.4 million euros ($350 million) from 298.3 million euros ($338.5 million). The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 15 percent year over year to 55.8 million euros ($63.3 million) from 48.6 million euros ($55.2 million). Befesa says it achieved this growth despite scheduled maintenance shutdowns involving key assets and decreased volumes in its EAF and aluminum segments.

The company attributes favorable treatment charges (TC) for its recycling activities and strategically negotiated hedging price as driving EBITDA growth, though the average metal margin remained subdued.

“Our strong start to 2025 demonstrates the resilience of our business model and operational excellence in the face of scheduled maintenance activities,” Befesa CEO Asier Zarraonandia says. “The 15 percent increase in EBITDA underlines our ability to capitalize on favorable market conditions, particularly the historically low zinc treatment charges and robust zinc prices. With the Palmerton expansion progressing on schedule and our continued focus on operational efficiency, we are well-positioned to capture growth opportunities in our key markets. Our deliberate approach to capital allocation, emphasizing deleveraging and strategic investments in low-risk projects, will deliver sustainable value as we progress toward our 2025 targets.”

Befesa’s throughput of electric arc furnace (EAF) steel dust decreased by 9 percent year over year to 277,000 metric tons for 64 percent average capacity utilization resulting from planned maintenance shutdowns of large assets. “Despite this temporary impact, daily steel dust deliveries from EAF steel customers continued at good levels in line with FY24,” the company says, which adds that steel production in Europe remained low.

The first kiln at its Palmerton, Pennsylvania, plant in the U.S. continued ramping up during the quarter, with the second kiln on track for completion during this quarter, with the expansion allowing Befesa to capture the growing volumes of EAF steel dust in the US market. Turkey and South Korea continued to operate at regular levels, and operations in China remained subdued with plants running at 50 percent utilization affected by weak EAF steel production.

Given challenging market conditions in China, Befesa says it decided last year to pause its expansion plans in that region, allowing the company to concentrate resources on the more immediate and attractive growth opportunities in the U.S. and Europe.

Recycled volumes of salt slags from aluminum production decreased by 4 percent year over year to 107,000 metric tons, with capacity utilization of 93 percent. Secondary aluminum alloys volume decreased by 3 percent year over year to 43,000 metric tons, with capacity utilization at 81 percent. Challenging aluminum scrap market conditions and weakness in the European automotive sector affected secondary aluminum volumes.

Despite the current weakness in the European auto sector, the company is expanding secondary aluminum production capacity at its existing plant in Bernburg, Germany, with completion expected by Q2 2026, saying the project is aligned with the anticipated growth in demand for aluminum in Europe driven by increasing EV penetration and the automotive industry’s need for lightweight solutions to reduce emissions.

Befesa says zinc London Metal Exchange prices averaged $2,838 per metric ton in the quarter, a 16 percent increase over the first quarter of 2024. The zinc hedging price of 2,666 euros per metric ton and significantly lower zinc TC of $80 per metric ton compared with $165 in Q1 of 2024 offered additional tailwinds.

Energy prices for the quarter were mixed year over year, as coke prices decreased by 6 percent and electricity and gas prices rose.

Outlook

Recognizing that the political and economic environments are less predictable related to the uncertainty on tariffs, Befesa says it foresees limited direct impact on its business in the short term and the long-term drivers of the business as being intact, citing a strong local-for-local footprint in its operating regions.

Befesa forecasts full year 2025 EBITDA of between 240 million euros and 265 million euros ($272.4 million to $300.7 million), a 13 percent to 24 percent increase from 2024.  

The company adds that its earnings for the year will benefit from significantly lower zinc TC coupled with improved zinc hedging prices averaging. “Additional positive factors include enhanced operational efficiency in the U.S. refining plant and higher EAF dust volume in the U.S.. The guidance range accounts for potential metal price volatility, energy cost fluctuations and the evolving conditions in global steel and aluminum markets, Befesa adds.