Befesa reports earnings growth

Luxembourg-based Befesa S.A., a provider of hazardous waste recycling services for the steel and aluminum industries, reports earnings growth for its third quarter and first nine months of 2022.  

The company says its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter totaled 45.9 million euros, or $48.9 million, compared with 42.7 million euros in the third quarter of 2021, for an increase of 7.6 percent year over year. For the first nine months of this year, Befesa recorded 163.9 million euros, or $162 million, in EBITDA, an increase of 27 million euros, or 20 percent, compared with the same period in 2021. The company says the increases were driven by good volume performance in Steel Dust, including its U.S. operations, and overall high plant utilization levels of roughly 80 percent in both core businesses. Zinc market prices averaged 3,245 euros ($3,207) per metric ton in the recently completed quarter, up 28 percent year over year, while aluminum alloy prices were at 2,327 euros ($2,300) per metric ton (up 16 percent), offsetting inflation for the most part.

The company says its none-month figure and last 12 months trailing EBITDA of $225 million euros, or $222.4 million, indicates that its full-year results are expected to come in at around the bottom part of the guidance range of 220 million euros to 270 million euros ($217.4 million to $266.8 million) and deliver a new record year for Befesa with year-over-year growth of roughly 11 percent for the full year.

In September, Befesa acquired the remaining 93 percent stake in the zinc refining asset in the U.S. from former AZR owners. The current environment, characterized by high inflation and energy prices, provided Befesa with the opportunity to renegotiate the terms and conditions of the agreement, hence reducing the acquisition price by 65 percent to $47 million from $135 million.

Befesa’s expansion in China also progressed, with the commissioning of its second plant in Henan in progress and scheduled for completion before the end of this year.  

When Befesa reported its half-year results in July, it announced its sustainable global growth plan (SGGP), through which Befesa aims to invest roughly 500 million euros, or $494.1 millon, in growth projects. These projects will seize the opportunities that megatrends such as decarbonization and electric vehicle growth are generating in the steel and aluminum industries, enabling Befesa to target double-digit earnings growth on average over the next five years, the company says. The SGGP will be shared with Befesa’s shareholders and analysts at the company’s capital markets day in London Nov. 8.

Javier Molina, executive chair of Befesa, says: “In Q3, we continued to deliver solid EBITDA growth in a challenging market environment, confirming our guidance for the year and successfully completing the acquisition of the U.S. zinc refining operations.”