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Befesa S.A.
Earnings Release • Nov 3, 2022
6215_10-q_2022-11-03_53299d2e-1765-4f0d-80b5-e3be76b93c16.pdf
Earnings Release
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Q3 2022 Statement
BEFESA
Befesa at a glance
Key figures – 9M/Q 3 20 2 2
| 9M 2022 | 9M 2021 | Change | Q3 2022 | Q3 2021 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Electric arc furnace steel dust (EAFD) throughput | 897,578 | 563,274 | 59.4 % | 267,917 | 222,606 | 20.4 % |
| Waelz oxide (WOX) sold | 311,270 | 192,569 | 61.6 % | 97,466 | 73,234 | 33.1 % |
| Salt slags and Spent Pot Linings (SPL) recycled | 239,840 | 302,988 | (20.8) % | 66,891 | 107,224 | (37.6) % |
| Secondary aluminium alloys produced | 121,941 | 142,353 | (14.3) % | 37,296 | 42,900 | (13.1) % |
| Zinc LME average price (€ / tonne) | 3,422 | 2,412 | 41.9 % | 3,245 | 2,538 | 27.9 % |
| Zinc blended price (€ / tonne) | 2,647 | 2,241 | 18.1 % | 2,596 | 2,220 | 16.9 % |
| Aluminium alloy FMB average price (€ / tonne) | 2,481 | 1,980 | 25.3 % | 2,327 | 2,012 | 15.7 % |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 857.9 | 574.2 | 49.4 % | 285.3 | 190.0 | 50.2 % |
| EBITDA | 181.1 | 128.7 | 40.7 % | 65.5 | 34.6 | 89.4 % |
| EBITDA margin | 21.1 % | 22.4 % | (130) bps | 22.9 % | 18.2 % | 474 bps |
| Adjusted EBITDA1 | 163.9 | 136.8 | 19.8 % | 45.9 | 42.7 | 7.6 % |
| Adjusted EBITDA margin1 | 19.1 % | 23.8 % | (472) bps | 16.1 % | 22.5 % | (637) bps |
| EBIT | 126.4 | 98.3 | 28.6 % | 46.0 | 22.8 | > 100 % |
| EBIT margin | 14.7 % | 17.1 % | (239) bps | 16.1 % | 12.0 % | 413 bps |
| Adjusted EBIT1 | 109.1 | 106.4 | 2.5 % | 26.5 | 30.9 | (14.4) % |
| Adjusted EBIT margin1 | 12.7 % | 18.5 % | (581) bps | 9.3 % | 16.3 % | (699) bps |
| Financial result | (20.9) | (7.9) | > 100 % | (8.6) | 2.3 | (476.3) % |
| Profit before taxes and minority interests | 105.5 | 90.4 | 16.7 % | 37.5 | 25.1 | 49.4 % |
| Net profit attributable to shareholders of Befesa S.A. | 87.2 | 61.5 | 41.8 % | 37.2 | 15.9 | > 100 % |
| EPS (in €)2 | 2.18 | 1.69 | 29.0 % | 0.93 | 0.40 | > 100 % |
| Total assets | 2,059.5 | 1,683.2 | 22.4 % | 2,059.5 | 1,683.2 | 22.4 % |
| Capital expenditures | 73.0 | 60.8 | 20.0 % | 18.8 | 16.8 | 11.9 % |
| Cash flow from operating activities | 78.3 | 73.9 | 5.9 % | 14.4 | 3.7 | > 100 % |
| Cash and cash equivalents at the end of the period | 139.1 | 200.7 | (30.7) % | 139.1 | 200.7 | (30.7) % |
| Net debt | 574.2 | 482.1 | 19.1 % | 574.2 | 482.1 | 19.1 % |
| Net leverage | x 2.56 | x 2.33 | x 0.23 | x 2.56 | x 2.33 | x 0.23 |
| Number of employees (as of end of the period)3 | 1,880 | 1,537 | 22.3 % | 1,880 | 1,537 | 22.3 % |
1EBITDA and EBIT adjusted for -€19.6m and -€17.3m in Q3'22 and 9M'22, respectively, mainly driven by Zinc refining acquisition impacts
2 9M'21 EPS is based on 36,370,474 weighted average number of shares;
Q3'21, Q3'22 and 9M'22 are based on 39,999,998 outstanding shares after the 5,933,293 shares emitted to partly fund the AZR acquisition in Jun'21
3 9M/Q3'22 headcount figures include 259 employees from US Zinc Refining operations
Highlights
• Adjusted EBITDA of €164 million in 9M'22 and €46 million in Q3'22,
+20% and +8% yoy respectively (9M'21: €137 million; Q3'21: €43 million); LTM at €225 million; Overall, Befesa's growth initiatives including US operations increasingly deliver results – even in the current volatile environment, which is characterised by inflationary pressures, mainly on the energy side, while metal prices declined qoq
- FY'22 EBITDA guidance range confirmed towards lower end, ≥€220 million, at least +11% yoy, mainly due to higher energy prices and China Zero COVID policy
- Zinc US operations delivered as expected in 9M/Q3; Driving progress on the integration and related synergies
- €139 million cash on hand at Q3'22 closing vs. €239 million at Q2'22; Balanced cash flow normalised for €50 million dividend distributed and \$47 million US zinc refining acquisition; Net leverage of x2.56 at Q3'22
- €50 million (€1.25 per share) dividends distributed, equal to 50% of FY'21 net profit
- US zinc refining asset acquired on 30 Sep 2022
- Paid \$47 million in cash, c.5x adjusted EBITDA multiple, for >\$500 million asset
- Opportunity to improve further, post current high inflation environment
- US zinc refining asset produces "green zinc", as it uses only recycled input (WOX) and processed under solvent extraction
- China expansion: Progress continued, finalising commissioning of 2 nd plant, Henan, in Q4
- Presenting details of new 5-year Sustainable Global Growth Plan (SGGP) at Befesa's 1 st Capital Markets Day on 8 November in London
Business review
Results of operations, financial position & liquidity
Revenue
Total revenue increased by 49.4% yoy to €857.9 million in 9M'22 (9M'21: €574.2 million) and by 50.2% to €285.3 million in Q3'22 (Q3'21: €190.0 million). The increase was primarily driven by volume growth in Steel Dust Recycling Services including the contribution from the US zinc operations, the stronger zinc and aluminium alloy market prices as well as the higher zinc hedging prices. These positive effects were partially offset by the unfavourable higher zinc treatment charge (TC), referenced at \$230 per tonne in 2022 (2021: \$159 per tonne), and the lower volumes treated in Aluminium Salt Slags.
EBITDA & EBIT
Total adjusted EBITDA in 9M'22 increased by 19.8% yoy to €163.9 million (9M'21: €136.8 million) and by 7.6% to €45.9 million in Q3'22 (Q3'21: €42.7 million).
Overall, even in this volatile environment Befesa was able to offset inflationary pressures, mainly energy, through higher prices.
The €27.1 million adjusted EBITDA improvement yoy in 9M'22 was mainly driven by the following components:
- Volumes (c. €26 million): higher in Steel Dust (€30 million), which includes the positive contribution from the US operations; lower in Aluminium Salt Slags driven by the current challenging European aluminium industry environment (-€4 million)
- Base metal prices (c. €51 million): higher zinc LME prices (€36 million); higher zinc hedging prices (€2 million); unfavourable higher zinc TC (-€12 million); higher aluminium FMB prices and aluminium metal margins (€25 million)
- Higher inflation, mainly energy cost, (c. -€50 million)
Total adjusted EBIT increased by 2.5% yoy to €109.1 million in 9M'22 (9M'21: €106.4 million) and decreased by 14.4% yoy to €26.5 million in Q3'22 (Q3'21: €30.9 million).
Total EBITDA and EBIT were adjusted for -€17.3 million and -€19.6 million in 9M'22 and Q3'22, respectively, mainly driven by impacts from the acquisition of the US zinc refining asset. Total reported EBITDA amounted to €181.1 million in 9M'22 (+40.7% yoy) and to €65.5 million in Q3'22 (+89.4% yoy). Total reported EBIT amounted to €126.4 million in 9M'22 (+28.6% yoy) and doubled to €46.0 million in Q3'22.
Financial result & net profit
Total net financial result in 9M'22 came in at -€20.9 million (9M'21: -€7.9 million). The yoy development is mainly due to €10.5 million positive net exchange difference in 9M'21 related to the \$460 million AZR acquisition.
Total net profit attributable to the shareholders in 9M'22 increased by 41.8% yoy to €87.2 million (9M'21: €61.5 million). This improvement was primarily due to the positive drivers impacting EBITDA and EBIT and the badwill recorded under "Other operating income" due to the preliminary PPA estimated in relation with the purchase of the US zinc refining company. Earnings per share (EPS) in 9M'22 increased by 29.0% yoy to €2.18 (9M'21: €1.69).
Financial position & liquidity
Gross debt increased by €18.6 million to €713.4 million at Q3'22 closing (year-end 2021: €694.7 million), explained primarily by local loans in China to fund the Henan plant.
Net debt at 30 September 2022 increased by 22% to €574.2 million (31 December 2021: €470.6 million). This is explained by the decrease in cash balance after the €50 million dividend distributed and the \$47 million paid to acquire the zinc refining asset.
The last-twelve-months (LTM) adjusted EBITDA of €224.6 million at Q3'22 incorporates full-twelve-rolling months of the US operations.
Net leverage of x2.56 at Q3'22 closing (year-end 2021: x2.16) due to the underlying higher net debt.
Befesa continues to be compliant with all debt covenants.
| 30 Sep | 31 December | |
|---|---|---|
| 2022 | 2021 | |
| Non-current financial indebtedness | 684.6 | 669.3 |
| + Current financial indebtedness | 28.8 | 25.4 |
| Financial indebtedness | 713.4 | 694.7 |
| – Cash and cash equivalents | (139.1) | (224.1) |
| – Other current financial assets1 | (0.1) | (0.1) |
| Net debt | 574.2 | 470.6 |
| LTM adjusted EBITDA2 | 224.6 | 217.8 |
| Net leverage ratio | x 2.56 | x 2.16 |
1 Other current financial assets adjusted by non-cash items
2 LTM adjusted EBITDA incorporates full-twelve-rolling months of the US operations
Operating cash flow in 9M'22 amounted to €78.3 million, 5.9% higher yoy (9M'21: €73.9 million).
The change in working capital decreased by €23 million yoy, primarily driven by seasonality and timing impacts similar to last year, e.g. increase in revenue and receivables, the majority of which is expected to reduce by the end of this year. In addition, impacts from timing of the Hanover insurance recovery.
Interests paid in 9M'22 increased by 11.7% yoy to €16.7 million (9M'21: €15.0 million) mainly as a result of the higher gross debt (€100 million TLB add-on to partially fund the AZR acquisition, and Chinese local loans), and because TLB interest payments are made quarterly in 2022 versus bi-annually in 2021.
In 9M'22, Befesa invested €75.7 million (9M'21: €57.2 million) to fund regular maintenance capex, the recovery of the Hanover plant and US operational excellence / synergies, as well as growth investments. The latter are mainly related to the second plant in China, partially funded through local loan. In addition, Befesa acquired the US zinc refining asset in September for \$47 million cash.
Dividends of €50 million (€1.25 per share) were distributed in July, equal to 50% of FY'21 net profit.
Total cash flow generated in 9M'22 amounted to -€85.0 million and cash on hand stood at €139.1 million. The €139.1 million cash balance together with the €75.0 million RCF, entirely undrawn, provides Befesa with more than €200 million liquidity.
Segment information
Steel Dust Recycling Services
Volumes of EAFD recycled in 9M'22 increased by 59.4% yoy to 897,578 tonnes (9M'21: 563,274 tonnes). In Q3'22, 267,917 tonnes of EAFD were recycled, up 20.4% yoy (Q3'21: 222,606 tonnes). With these volumes, Befesa's EAFD recycling plants ran at average load factors of 77% and 68% - in 9M and Q3, respectively – of the installed annual recycling capacity of c. 1,555,300 tonnes, including c. 620,000 tonnes from the acquired US recycling plants and 110,000 tonnes from the plant at Jiangsu, China. The Q3 load factor was impacted by the seasonal maintenance overhauls, especially of the larger European plants.
The volume of Waelz oxide (WOX) sold in 9M'22 increased by 61.6% yoy to 311,270 tonnes (9M'21: 192,569 tonnes) Revenue in the Steel Dust business increased by 75.4% yoy to €533.3 million in 9M'22 (9M'21: €304.1 million) and by 65.0% yoy to €179.5 million in Q3'22 (Q3'21: €108.8 million).
Adjusted EBITDA increased by 27.5% yoy to €131.0 million in 9M'22 (9M'21: €102.7 million) and by 7.4% yoy to €36.0 million in Q3'22 (Q3'21: €33.5 million). The yoy increases in adjusted EBITDA are primarily explained by the US operations, which are delivering as planned. The yoy higher zinc market prices offset the higher inflation, mainly energy cost, and the unfavourable zinc TC.
Adjusted EBIT came in at €88.8 million in 9M'22, up 3.9% yoy (9M'21: €85.5 million), following similar drivers explained referring to the EBITDA development, and at €20.5 million in Q3'22, a 21.1% decrease yoy (Q3'21: €26.0 million).
EBITDA and EBIT in Steel Dust Recycling Services were adjusted for -€20.3 million in 9M'22 and Q3'22, mainly driven by impacts from the acquisition of the US zinc refining asset. Reported EBITDA amounted to €151.3 million in 9M'22 (+52.6% yoy) and to €56.3 million in Q3'22 (+88.2% yoy). Reported EBIT amounted to €109.2 million in 9M'22 (+33.2% yoy) and to €40.8 million in Q3'22 (+82.4% yoy).
Aluminium Salt Slags Recycling Services Salt Slags subsegment
Salt slags and SPL recycled volumes in 9M'22 amounted to 239,840 tonnes, down 20.8% yoy (9M'21: 302,988 tonnes). Volumes recycled in Q3'22 amounted to 66,891 tonnes, 37.6% lower yoy (Q3'21: 107,224 tonnes). This development was explained by the Hanover plant shutdown in 2022. On average, Salt Slags recycling plants operated at 71% and 59% utilisation rates – in 9M and Q3, respectively – of the latest installed annual recycling capacity of 450,000 tonnes. Normalising for Hanover, utilisation rates would have averaged 100% and 83% in 9M and Q3, respectively.
Revenue in the Salt Slags subsegment increased by 23.7% yoy to €70.9 million in 9M'22 (9M'21: €57.3 million). In Q3'22, revenue improved by 48.1% yoy to €29.6 million (Q3'21: €20.0 million).
EBITDA increased by 38.4% yoy to €22.0 million in 9M'22 (9M'21: €15.9 million) and by 54.6% yoy to €7.3 million in
Q3'22 (Q3'21: €4.8 million). The yoy EBITDA increases were primarily driven by the higher aluminium alloy FMB prices, which averaged €2,481 per tonne in 9M'22, up 25.3% yoy (9M'21: €1,980 per tonne), and €2,327 per tonne in Q3'22, up 15.7% yoy (Q3'21: €2,012 per tonne). The positive effects from yoy higher aluminium market prices were partially offset by the higher inflation, mainly energy cost, and the lower volume.
EBIT increased by 70.9% yoy to €15.4 million in 9M'22 (9M'21: €9.0 million) and more than doubled yoy to €5.3 million in Q3'22 (Q3'21: €2.5 million), following similar drivers explained referring to the EBITDA development.
Secondary Aluminium subsegment
Aluminium alloy production volumes in 9M'22 amounted to 121,941 tonnes, 14.3% lower yoy (9M'21: 142,353 tonnes). In Q3'22, volumes amounted to 37,296 tonnes, down 13.1% yoy (Q3'21: 42,900 tonnes). This development was primarily driven by the current challenging European automotive and aluminium industry environment. Nevertheless, even under the current volatile market environment, Secondary Aluminium production plants overall operated at around 80% and 72% utilisation rate on average in 9M and Q3 of 2022, respectively.
Revenue in the Secondary Aluminium subsegment amounted to €290.0 million in 9M'22, up 18.7% yoy (9M'21: €244.3 million). In Q3'22, revenue remained flat yoy at €72.2 million (Q3'21: €72.0 million). The favourable aluminium alloy FMB prices was offset with the lower volumes.
EBITDA came in at €12.2 million in 9M'22, 32.7% lower yoy (9M'21: €18.2 million). In Q3'22, EBITDA decreased by 28.1% yoy to €3.2 million (Q3'21: €4.5 million). The yoy EBITDA development was mainly explained by the lower production of aluminium alloys, driven by the current lower European automotive and aluminium industry environment. The higher inflation / energy cost trends, with particularly high gas prices in Europe, were offset by the higher aluminium market prices as well as improved metal margins.
EBIT came in at €6.5 million in 9M'22, down 46.4% yoy (9M'21: €12.2 million), and at €1.5 million in Q3'22, down 42.3% yoy (Q3'21: €2.6 million), following similar drivers which impacted the EBITDA development.
Strategy
Hedging strategy
Befesa's hedging strategy is unchanged and continues to be a key element of Befesa's business model to manage the zinc price volatility and therefore improve the stability and visibility of earnings and cash flow across the economic cycle. Further details are available in Befesa's Annual Report 2021 on page 33.
Befesa's current hedging volume run rate is to hedge around 38 thousand tonnes of zinc per quarter or around 152 thousand tonnes per year.
The combined global hedge book in place as of the date of this Q3 Statement provides Befesa with improved pricing visibility up to January 2025, therefore for the following c. 2.5 years. The average hedged prices and volumes for each of the periods are:
| Pe rio d |
Ave ra g e he d g e d p rice (€ p e r to nne ) |
Zinc co nte nt in WOX he d g e d (to nne s) |
|---|---|---|
| 2021 | €2,151 | 120,013 |
| 2022 | c. €2,3751 | 155,818 |
| 2023 | c. €2,5001 | 150,955 |
| 2024 | c. €2,6001 | 152,400 |
1 FX US dollar/euro forward rates assumed are 1.05 for 2022, and 1.00 for 2023 and 2024
China expansion
Befesa's expansion in China continued to progress: the commissioning of Befesa's second plant in China, in Henan, is in progress and scheduled for completion in Q4, before the end of the year.
The two plants in Jiangsu and Henan are designed to recycle each 110,000 tonnes of EAFD per year and represent Befesa's 11th and 12th EAFD recycling sites globally, along with the existing sites in Europe, Turkey, South Korea and the US.
US operations
The US operations are delivering as planned and positively contributed to Befesa's 9M/Q3 earnings. The positive impact demonstrates the benefits of the acquisition of one of the US market leaders in EAFD recycling services and the success of Befesa's strategy of accelerating the expansion of its global footprint.
Befesa continues to drive progress on the integration and the related synergies of its US operations.
In September, Befesa acquired the remaining 93% stake in the zinc refining asset in the US from former American Zinc Recycling (AZR) owners. Befesa already owned 7% of the refining asset, as part of the acquisition of AZR which closed in August 2021. In addition, Befesa had an agreement contemplating the acquisition of the remaining 93% stake in the refining asset for a purchase price of \$135 million provided certain milestones were met. The current environment, characterised by high inflation and energy prices, provided Befesa with the opportunity to renegotiate the terms and conditions of the agreement favourably, hence reducing the acquisition price by 65% to \$47 million. As a result of the acquisition, Befesa welcomes 259 new colleagues.
The zinc refining plant is centrally located amongst Befesa's recycling plants in Rutherford County, North Carolina, producing WOX and processing WOX into Special High Grade (SHG) zinc in a state-of-the-art solvent extraction process. The zinc refining capacity is up to 140 thousand tonnes SHG "green zinc" production annually.
ESG
As of 30 September 2022, the ESG ratings from six wellknown international ESG rating agencies following Befesa were as follows:
Outlook 2022
Full year 2022 guidance confirmed towards the lower end of the range, including EBITDA at or above €220 million, equal to at least 11% yoy growth (2021: €197.6 million). This is mainly due to higher energy prices and China Zero COVID policy.
Interim consolidated financial statements as of 30 September 2022 (thousands of euros)
Statement of financial position
Assets
| Non-current assets: Intangible assets Goodwill Other intangible assets Right-of-use assets Property, plant and equipment |
611,612 106,315 717,927 |
573,151 |
|---|---|---|
| 104,418 | ||
| 677,569 | ||
| 30,983 | 30,335 | |
| 699,697 | 509,075 | |
| Non-current financial assets | ||
| Investments in Group companies and associates | 46 | 46 |
| Other non-current financial assets | 58,960 | 15,953 |
| 59,006 | 15,999 | |
| Deferred tax assets | 127,993 | 125,462 |
| Total non-current assets | 1,635,606 | 1,358,440 |
| Current assets: | ||
| Inventories | 99,478 | 67,477 |
| Trade and other receivables | 137,317 | 113,229 |
| Trade receivables from related companies | 1,802 | 917 |
| Accounts receivables from public authorities | 22,019 | 10,671 |
| Other receivables | 19,285 | 20,561 |
| Other current financial assets | 4,862 | 825 |
| Cash and cash equivalents | 139,129 | 224,089 |
| Total current assets | ||
| Total assets | 423,892 | 437,769 |
Statement of financial position (continued)
Equity and liabilities
| (€ thousand) | 30 September 2022 | 31 December 2021 |
|---|---|---|
| Equity: | ||
| Parent Company | ||
| Share capital | 111,048 | 111,048 |
| Share premium | 532,867 | 532,867 |
| Hedging reserves | (13,235) | (96,830) |
| Other reserves | 42,927 | (19,915) |
| Translation differences | 71,425 | (4,080) |
| Net profit/(loss) for the period | 87,248 | 99,745 |
| Equity attributable to the owners of the Company | 832,280 | 622,835 |
| Non-controlling interests | 14,033 | 8,712 |
| Total equity | 846,313 | 631,547 |
| Non-current liabilities: | ||
| Long-term provisions | 26,880 | 22,267 |
| Loans and borrowings | 669,958 | 653,571 |
| Lease liabilities | 14,659 | 15,756 |
| Other non-current financial liabilities | 27,212 | 56,700 |
| Other non-current liabilities | 4,121 | 4,621 |
| Deferred tax liabilities | 98,137 | 91,946 |
| Total non-current liabilities | 840,967 | 844,861 |
| Current liabilities: | ||
| Loans and borrowings | 19,520 | 17,791 |
| Lease liabilities | 9,232 | 7,612 |
| Other current financial liabilities | 58,008 | 75,650 |
| Trade payables to related companies | 763 | 1,436 |
| Trade and other payables | 197,849 | 151,414 |
| Other payables | ||
| Accounts payable to public administrations | 37,225 | 17,855 |
| Other current liabilities | 49,621 | 48,043 |
| 86,846 | 65,898 | |
| Total current liabilities | 372,218 | 319,801 |
| Total equity and liabilities | 2,059,498 | 1,796,209 |
Income statement
| (€ thousand) | 9M 2022 | 9M 2021 | Change | Q3 2022 | Q3 2021 | Change |
|---|---|---|---|---|---|---|
| Revenue | 857,876 | 574,212 | 49.4 % | 285,341 | 189,976 | 50.2 % |
| Changes in inventories of finished goods and work-in-progress |
(7,996) | 2,056 | - | (630) | 7,704 | - |
| Procurements | (407,600) | (257,744) | 58.1 % | (121,359) | (85,836) | 41.4 % |
| Other operating income | 43,933 | 4,490 | > 100 % | 27,644 | 1,601 | > 100 % |
| Personnel expenses | (93,215) | (71,722) | 30.0 % | (30,867) | (29,642) | 4.1 % |
| Other operating expenses | (211,860) | (122,592) | 72.8 % | (94,665) | (49,232) | 92.3 % |
| Amortisation/depreciation, impairment and provisions |
(54,762) | (30,393) | 80.2 % | (19,416) | (11,751) | 65.2 % |
| Operating profit/(loss) | 126,376 | 98,307 | 28.6 % | 46,048 | 22,820 | > 100 % |
| Finance income | 2,293 | 71 | > 100 % | 1,977 | 26 | > 100 % |
| Finance expenses | (17,809) | (18,346) | (2.9) % | (4,482) | (8,325) | (46.2) % |
| Net exchange differences | (5,356) | 10,362 | - | (6,053) | 10,573 | - |
| Net finance income/(loss) | (20,872) | (7,913) | > 100 % | (8,558) | 2,274 | - |
| Profit/(loss) before tax | 105,504 | 90,394 | 16.7 % | 37,490 | 25,094 | 49.4 % |
| Corporate income tax | (17,094) | (25,833) | (33.8) % | (2,461) | (8,065) | (69.5) % |
| Profit/(loss) for the period | 88,410 | 64,561 | 36.9 % | 35,029 | 17,029 | > 100 % |
| Attributable to: | ||||||
| Parent Company's owners | 87,248 | 61,518 | 41.8 % | 37,215 | 15,924 | > 100 % |
| Non-controlling interests | 1,162 | 3,043 | (61.8) % | (2,186) | 1,105 | - |
| Earnings/(losses) per share attributable to Parent Company's (in euros per share) 1 owners |
2.18 | 1.69 | 29.0 % | 0.93 | 0.40 | > 100 % |
1 9M'21 EPS is based on 36,370,474 weighted average number of shares; Q3'21, Q3'22 and 9M'22 are based on 39,999,998 outstanding shares after the 5,933,293 shares emitted to partly fund the AZR acquisition in Jun'21
Statement of cash flows
| (€ thousand) | 9M 2022 | 9M 2021 | Q3 2022 | Q3 2021 |
|---|---|---|---|---|
| Profit/(loss) for the period before tax | 105,504 | 90,394 | 37,490 | 25,094 |
| Adjustments for: | 33,267 | 37,936 | (13,288) | 8,773 |
| Depreciation and amortisation | 53,111 | 30,393 | 17,765 | 11,751 |
| Impairment losses | 1,651 | - | 1,651 | - |
| Changes in provisions | (1,787) | 189 | (1,047) | (521) |
| Interest income | (2,293) | (71) | (1,977) | (26) |
| Finance costs | 17,809 | 18,346 | 4,482 | 8,325 |
| Other profit/(loss) | (40,580) | (559) | (40,215) | (183) |
| Exchange differences | 5,356 | (10,362) | 6,053 | (10,573) |
| Changes in working capital: | (23,220) | (26,835) | (429) | (19,508) |
| Trade receivables and other current assets | (32,546) | (33,932) | 24,313 | (11,264) |
| Inventories | 2,434 | (9,890) | 5,035 | (10,368) |
| Trade payables | 6,892 | 16,987 | (29,777) | 2,124 |
| Other cash flows from operating activities: | (37,231) | (27,554) | (9,412) | (10,656) |
| Interest paid | (16,722) | (14,965) | (4,804) | (7,327) |
| Taxes paid | (20,509) | (12,589) | (4,608) | (3,329) |
| Net cash flows from/(used in) operating activities (I) | 78,320 | 73,941 | 14,361 | 3,703 |
| Cash flows from investing activities: | ||||
| Investments in intangible assets | (525) | (154) | (218) | (4) |
| Investments in property, plant and equipment | (75,216) | (57,022) | (18,007) | (14,045) |
| Collections from financial assets | - | 1,880 | - | 1,880 |
| (Acquisition)/Disposal of new subsidiaries | (44,965) | (373,694) | (44,965) | (373,694) |
| Investments/(Divestments) in other current financial assets | - | (46) | - | (3) |
| Net cash flows from/(used in) investing activities (II) | (120,706) | (429,036) | (63,190) | (385,866) |
| Cash flows from financing activities: | ||||
| Equity issuance | - | 330,603 | - | - |
| Cash inflows from bank borrowings and other liabilities | 21,787 | 122,071 | 1,908 | 104,037 |
| Cash outflows from bank borrowings and other liabilities | (14,024) | (4,341) | (2,347) | (1,278) |
| Dividends paid to shareholders | (50,000) | (46,800) | (50,000) | (46,800) |
| Net cash flows from/(used in) financing activities (III) | (42,237) | 401,533 | (50,439) | 55,959 |
| Effect of foreign exchange rate changes on cash & cash equivalents (IV) | (337) | (329) | (305) | (361) |
| Net increase/(decrease) in cash and cash equivalents (I+II+III+IV) | (84,960) | 46,109 | (99,573) | (326,565) |
| Cash and cash equivalents at the beginning of the period | 224,089 | 154,558 | 238,702 | 527,232 |
| Cash and cash equivalents at the end of the period | 139,129 | 200,667 | 139,129 | 200,667 |
Additional information Segmentation overview – key metrics
Steel Dust Recycling Services
| 9M 2022 | 9M 2021 | Change | Q3 2022 | Q3 2021 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| EAFD throughput1 | 897,578 | 563,274 | 59.4 % | 267,917 | 222,606 | 20.4 % |
| WOX sold | 311,270 | 192,569 | 61.6 % | 97,466 | 73,234 | 33.1 % |
| Zinc blended price (€ / tonne) | 2,647 | 2,241 | 18.1 % | 2,596 | 2,220 | 16.9 % |
| Total installed capacity2 | 1,555,300 | 1,555,300 | - | 1,555,300 | 1,555,300 | - |
| Utilisation (%)2 | 77.2 % | 81.0 % | (381) bps | 68.3 % | 77.7 % | (939) bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 533.3 | 304.1 | 75.4 % | 179.5 | 108.8 | 65.0 % |
| EBITDA | 151.3 | 99.2 | 52.6 % | 56.3 | 29.9 | 88.2 % |
| EBITDA margin | 28.4 % | 32.6 % | (423) bps | 31.4 % | 27.5 % | 387 bps |
| Adjusted EBITDA3 | 131.0 | 102.7 | 27.5 % | 36.0 | 33.5 | 7.4 % |
| Adjusted EBITDA margin3 | 24.6 % | 33.8 % | (922) bps | 20.1 % | 30.8 % | (1,076) bps |
| EBIT | 109.2 | 82.0 | 33.2 % | 40.8 | 22.4 | 82.4 % |
| EBIT margin | 20.5 % | 27.0 % | (648) bps | 22.7 % | 20.6 % | 217 bps |
| Adjusted EBIT3 | 88.8 | 85.5 | 3.9 % | 20.5 | 26.0 | (21.1) % |
| Adjusted EBIT margin3 | 16.7 % | 28.1 % | (1,147) bps | 11.4 % | 23.9 % | (1,246) bps |
Aluminium Salt Slags Recycling Services Salt Slags subsegment
| 9M 2022 | 9M 2021 | Change | Q3 2022 | Q3 2021 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Salt slags and SPL recycled | 239,840 | 302,988 | (20.8) % | 66,891 | 107,224 | (37.6) % |
| Total installed capacity | 450,000 | 450,000 | - | 450,000 | 450,000 | - |
| Utilisation (%)4 | 71.3 % | 90.0% | (1,876) bps | 59.0 % | 94.5% | (3,556) bps |
| Normalised utilisation (%)4 | 100.2 % | 92.1% | 809 bps | 82.9 % | 91.5% | (854) bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 70.9 | 57.3 | 23.7 % | 29.6 | 20.0 | 48.1 % |
| EBITDA | 22.0 | 15.9 | 38.4 % | 7.3 | 4.8 | 54.6 % |
| EBITDA margin | 31.0 % | 27.7 % | 328 bps | 24.8 % | 23.8 % | 104 bps |
| EBIT | 15.4 | 9.0 | 70.9 % | 5.3 | 2.5 | 107.3 % |
| EBIT margin | 21.7 % | 15.7 % | 600 bps | 17.8 % | 12.8 % | 510 bps |
Secondary Aluminium subsegment
| 9M 2022 | 9M 2021 | Change | Q3 2022 | Q3 2021 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Secondary aluminium alloys produced | 121,941 | 142,353 | (14.3) % | 37,296 | 42,900 | (13.1) % |
| Aluminium alloy FMB price (€ / tonne)5 | 2,481 | 1,980 | 25.3 % | 2,327 | 2,012 | 15.7 % |
| Total installed capacity | 205,000 | 205,000 | - | 205,000 | 205,000 | - |
| Utilisation (%)6 | 79.5 % | 92.8 % | (1,331) bps | 72.2 % | 83.0 % | (1,085) bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 290.0 | 244.3 | 18.7 % | 72.2 | 72.0 | 0.3 % |
| EBITDA | 12.2 | 18.2 | (32.7) % | 3.2 | 4.5 | (28.1) % |
| EBITDA margin | 4.2 % | 7.4 % | (322) bps | 4.5 % | 6.2 % | (177) bps |
| EBIT | 6.5 | 12.2 | (46.4) % | 1.5 | 2.6 | (42.3) % |
| EBIT margin | 2.2 % | 5.0 % | (273) bps | 2.1 % | 3.6 % | (153) bps |
Note: Segment splits, revenue and earnings contributions do not take into account corporate nor the inter-segment eliminations.
1 EAFD throughput does not include stainless steel dust treated volumes
2 Total installed capacity in Steel Dust does not include 174,000 tonnes per year of stainless-steel dust recycling operations; Utilisation represents EAFD processed against annual installed recycling capacity
3Steel EBITDA and EBIT adjusted for -€20.3m in Q3'22 and 9M'22 mainly driven by Zinc refining acquisition impacts
4 Utilisation represents the volume of salt slags & SPL recycled against annual installed capacity;
Utilisation normalised for Hanover plant shutdown in 2022
6 Utilisation represents the volume of secondary aluminium alloys produced against annual installed production capacity
5 Aluminium Scrap and Foundry Ingots Aluminium pressure diecasting ingot DIN226/A380 European Metal Bulletin Free Market Duty paid delivered works
Financial calendar
| Tuesday, 8 November 2022 | 1 st Capital Markets Day (hybrid) |
|---|---|
| Thursday, 3 March 2023 |
Preliminary Year-End Results 2022 & Conference Call |
| Thursday, 23 March 2023 |
Annual Report 2022 |
| Thursday, 4 May 2023 |
Q1 2023 Statement & Conference Call |
| Thursday, 15 June 2023 |
Annual General Meeting |
| Thursday, 27 July 2023 |
H1 2023 Interim Report & Conference Call |
| Thursday, 26 October 2023 |
Q3 2023 Statement & Conference Call |
Notes: Befesa's financial reports and statements are published at 7:30 am CEST Befesa cannot rule out changes of dates and recommends checking them at the Investor Relations / Investor's Agenda section of Befesa's website www.befesa.com
IR contact
Rafael Pérez
Director of Investor Relations & Strategy Phone: +49 (0) 2102 1001 0 email: [email protected]
Published: 27 October 2022
All Befesa publications are available in the Investor Relations / Reports and Presentations section of Befesa's website www.befesa.com
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Disclaimer
This report contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such statements reflect the current views of Befesa and its affiliates or of such third parties with respect to future events and are subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Befesa and its affiliates to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others: changes in general economic, political, governmental and business conditions globally and in the countries in which Befesa and its affiliates do business; changes in interest rates; changes in inflation rates; changes in prices; changes to national and international laws and policies that support industrial waste recycling; legal challenges to regulations, subsidies and incentives that support industrial waste recycling; extensive governmental regulation in a number of different jurisdictions, including stringent environmental regulation; management of exposure to credit, interest rate, exchange rate and commodity price risks; acquisitions or investments in joint ventures with third parties; inability to obtain new sites and expand existing ones; failure to maintain safe work environments; effects of catastrophes, natural disasters, adverse weather conditions, unexpected geological or other physical conditions, or criminal
or terrorist acts at one or more of Befesa's plants; insufficient insurance coverage and increases in insurance cost; loss of senior management and key personnel; unauthorised use of Befesa's intellectual property and claims of infringement by Befesa of others' intellectual property; Befesa's ability to generate cash to service indebtedness changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Befesa and its affiliates do not assume any guarantee that the assumptions underlying forward-looking statements are free of errors nor do they accept any responsibility for the future accuracy of the opinions expressed herein or the actual occurrence of the forecasted developments. No representation (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein or otherwise resulting, directly or indirectly, from the use of this document.
This report is intended for information only and should not be treated as investment advice. It is not intended as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this report nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This report may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of Befesa.
First nine-month period and third quarter 2022 figures contained in this report have not been audited or reviewed by external auditors.
This report includes Alternative Performance Measures (APM), including EBITDA, EBITDA margin, EBIT, EBIT margin, Adjusted EBIT, Adjusted EBIT margin, net debt and capital expenditures which are not measures of liquidity or financial performance under International Financial Reporting Standards (IFRS). EBITDA is defined as operating profit for the period (i.e. EBIT) before the impact of amortisation, depreciation, impairment and provisions. EBITDA margin is defined as EBITDA divided by revenue. EBIT is defined as Operating profit for the year. The Company uses EBIT to monitor its financial return after both operating expenses and a charge representing the cost of usage of both its property, plant and equipment and definite‑life intangible assets. EBIT margin is defined as EBIT as a percentage of revenue. These non-IFRS measures should not be considered in isolation or as an alternative to results from operating activities, cash flow from operating, investing or financing activities, or other financial measures of Befesa's results of operations or liquidity derived in accordance with IFRS. Befesa believes that the APM included in this report are useful measures of its performance and liquidity. Other companies, including those in the industry in which Befesa operates, may calculate similarly titled financial measures differently than Befesa does. Because all companies do not calculate these financial measures in the same manner, Befesa's presentation of such financial measures may not be comparable to other similarly titled measures of other companies. These APM are not audited.
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