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Befesa S.A.
Earnings Release • Oct 26, 2023
6215_10-q_2023-10-26_8b78c7ea-e666-4a7f-a472-07dd08c4d01e.pdf
Earnings Release
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Q3 2023 Statement
BEFESA
Befesa at a glance
Key figures
| 9M 2023 | 9M 2022 | Change | Q3 2023 | Q3 2022 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Electric arc furnace (EAF) steel dust throughput | 889,724 | 897,578 | (0.9) % | 297,389 | 267,917 | 11.0 % |
| Waelz oxide (WOX) sold | 301,048 | 311,355 | (3.3) % | 103,815 | 97,466 | 6.5 % |
| Salt slags and Spent Pot Linings (SPL) recycled | 257,817 | 239,840 | 7.5 % | 86,741 | 66,891 | 29.7 % |
| Secondary aluminium alloys produced | 125,770 | 121,941 | 3.1 % | 38,619 | 37,296 | 3.5 % |
| Zinc LME average price (€ / tonne) | 2,493 | 3,422 | (27.1) % | 2,232 | 3,245 | (31.2) % |
| Zinc blended price (€ / tonne) | 2,448 | 2,647 | (7.5) % | 2,385 | 2,596 | (8.1) % |
| Aluminium alloy FMB average price (€ / tonne) | 2,186 | 2,481 | (11.9) % | 2,074 | 2,327 | (10.9) % |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 904.2 | 840.6 | 7.6 % | 288.7 | 268.0 | 7.7 % |
| EBITDA | 125.5 | 181.1 | (30.7) % | 34.7 | 65.5 | (46.9) % |
| EBITDA margin | 13.9 % | 21.5 % | (766) bps | 12.0 % | 24.4 % | (1,239) bps |
| Adjusted EBITDA | 136.7 | 163.9 | (16.6) % | 42.0 | 45.9 | (8.5) % |
| Adjusted EBITDA margin | 15.1 % | 19.5 % | (437) bps | 14.5 % | 17.1 % | (257) bps |
| EBIT | 64.5 | 126.4 | (48.9) % | 14.1 | 46.0 | (69.4) % |
| EBIT margin | 7.1 % | 15.0 % | (790) bps | 4.9 % | 17.2 % | (1,229) bps |
| Adjusted EBIT | 77.2 | 109.1 | (29.3) % | 22.1 | 26.5 | (16.7) % |
| Adjusted EBIT margin | 8.5 % | 13.0 % | (444) bps | 7.6 % | 9.9 % | (223) bps |
| Financial result | (24.4) | (20.9) | 16.9 % | (4.8) | (8.6) | (44.1) % |
| Profit before taxes and minority interests | 40.2 | 105.5 | (61.9) % | 9.3 | 37.5 | (75.1) % |
| Net profit attributable to shareholders of Befesa S.A. | 27.6 | 87.2 | (68.4) % | 7.3 | 37.2 | (80.4) % |
| EPS (in €) | 0.69 | 2.18 | (68.4) % | 0.18 | 0.93 | (80.4) % |
| Total assets | 1,930.9 | 2,059.5 | (6.2) % | 1,930.9 | 2,059.5 | (6.2) % |
| Capital expenditures | 83.0 | 73.0 | 13.7 % | 29.2 | 18.8 | 55.0 % |
| Cash flow from operating activities | 63.7 | 78.3 | (18.7) % | 21.7 | 14.4 | 51.4 % |
| Cash and cash equivalents at the end of the period | 80.8 | 139.1 | (41.9) % | 80.8 | 139.1 | (41.9) % |
| Net debt | 633.4 | 574.2 | 10.3 % | 633.4 | 574.2 | 10.3 % |
| Net leverage | x3.38 | x2.56 | x 0.82 | x3.38 | x2.56 | x 0.82 |
| Number of employees (as of end of the period) | 1,769 | 1,880 | (5.9) % | 1,769 | 1,880 | (5.9) % |
Highlights
- Revenue increased by 8% to €289 million in Q3 and by 8% to €904m in 9M, mainly driven by the zinc refining operations
- Adjusted EBITDA decreased by 8% to €42 million in Q3 and by 17% to €137 million in 9M, mainly driven by lower zinc LME prices and unfavourable zinc treatment charges (TC)
- US: Zinc refining plant at high utilisation level and focused on improving profitability; Refurbishment of steel dust plant in Palmerton, Pennsylvania, on track to capture growth in 2025
- China: Real estate crisis impacting volume; Plants running at lower-thanexpected utilisation; Expansion into third province, Guangdong, adjusted to macro situation
- Outlook: Expecting Q4 in line with Q3 and full-year adjusted EBITDA for 2023 to be around €180 million; Expecting to return to the growth path in 2024; Positive mid-term outlook intact
Business review
Results of operations, financial position & liquidity
Revenue
In 9M 2023, total revenue increased by 7.6% yoy to €904.2 million (9M 2022: €840.6 million) and by 7.7% to €288.7 million in Q3 2023 (Q3 2022: €268.0 million). The increase was primarily attributable to the contribution from the zinc refining operation in the US.
EBITDA & EBIT
In 9M 2023, total adjusted EBITDA decreased by 16.6% yoy to €136.7 million (9M 2022: €163.9 million) and by 8.5% to €42.0 million in Q3 2023 (Q3 2022: €45.9 million). Overall, this development was primarily driven by lower zinc LME prices (-27% yoy), the unfavourable increase in zinc TC (19% yoy) and higher coke prices, partially offset by better zinc hedges, lower energy prices and synergies.
Detailed by volume, price, and cost components, the €27 million decrease in 9M 2023 is explained by:
- Volumes (c. €8 million): Solid steel dust volumes in Europe plus the contribution from China, partially offset by lower performance in the remaining geographies of Steel Dust (€5 million); Aluminium Salt Slags with yoy higher volumes driven by Hanover back in operations (€3 million).
- Metal prices (c. -€52 million): 27% lower zinc LME prices (-€45 million), partially offset by higher zinc hedging prices (€10 million); 19% higher zinc treatment charges (TC) at \$274 per tonne for the full year 2023 (-€8 million); 12% lower aluminium FMB prices and lower metal margins (-€10 million).
- Cost / other (c. €16 million): Lower costs, mainly through lower gas and electricity prices, and the positive impact from productivity and synergies were partially offset by higher coke price.
Total adjusted EBIT decreased by 29.3% to €77.2 million in 9M 2023 (9M 2022: €109.1 million) and by 16.7% to €22.1 million in Q3 2023 (Q3 2022: €26.5 million).
Total EBITDA and EBIT were adjusted for €11.2 million and €12.6 million, respectively, in 9M and adjusted for €7.3 million and €8.0 million, respectively, in Q3 2023. These adjustments were mainly driven by impacts from the ramp up of some facilities. Total reported EBITDA amounted to €125.5 million in 9M 2023 (-30.7%) and to €34.7 million in Q3 2023 (-46.9%). Total reported EBIT amounted to €64.5
million in 9M 2023 (-48.9%) and to €14.1 million in Q3 2023 (-69.4%).
Financial result & net profit
Total net financial result decreased by 16.9% to -€24.4 million in 9M 2023 (9M 2022: -€20.9 million). This decrease was primarily driven by two factors: on the one hand, the higher margin applicable to the Term Loan B (TLB), which increased in December 2022 by 25 bps to Euribor plus 200 bps due to the increase on the leverage ratio. On the other hand, the yoy higher Euribor, increasing from 0% in 9M 2022 to 1%—4% (depending on runtime) applicable in 9M 2023. These negative effects were partially offset by the positive effect from the liquidation of the variable-to-fix-interest rate swap in place for 50% of the €636 million extended TLB notional.
Total net profit attributable to shareholders decreased by 68.4% in 9M 2023 to €27.6 million (9M 2022: €87.2 million). This development was primarily due to the aforementioned negative drivers impacting EBITDA and EBIT. As a result, earnings per share (EPS) in 9M 2023 decreased accordingly by 68.4% to €0.69 (9M 2022: €2.18) and in Q3 2023 to €0.18 (Q3 2022: €0.93).
Financial position & liquidity
Gross debt at 30 September 2023 remained stable at €714.3 million (31 December 2022: €710.8 million).
Net debt at 30 September 2023 increased by 15.4% to €633.4 million (31 December 2022: €549.0 million). This is mainly explained by the decrease in cash balance, after the €50 million dividend payment made in July and the €84 million capex spent.
Net leverage of x3.38 at Q3 2023 closing (year-end 2022: x2.56) based on the underlying net debt of €633.4 million and LTM adjusted EBITDA of €187.5 million.
Befesa continues to be compliant with all debt covenants.
| 30 September | 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Non-current financial indebtedness | 676.6 | 677.4 |
| + Current financial indebtedness | 37.7 | 33.3 |
| Financial indebtedness | 714.3 | 710.8 |
| – Cash and cash equivalents | (80.8) | (161.8) |
| – Other current financial assets1 | (0.1) | (0.1) |
| Net debt | 633.4 | 549.0 |
| LTM Adjusted EBITDA | 187.5 | 214.6 |
| Net leverage ratio | x3.38 | x2.56 |
1 Other current financial assets adjusted by hedging valuation and restricted deposits
Operating cash flow in 9M 2023 decreased by 18.7% to €63.7 million (9M 2022: €78.3 million).
The change in working capital impacted operating cash flow by €36 million in 9M 2023. The higher working capital consumption was very much driven by seasonality/timing impact, similar to last year, the majority of which is expected to reduce by the end of 2023. Interests paid in 9M 2023 increased by 26.7% to €21.2 million (9M 2022: €16.7 million) and taxes paid in 9M 2023 decreased by 23.4% to €15.7 million (9M 2022: €20.5 million).
In 9M 2023, Befesa's cash capex was €84.0 million (9M 2022: €120.7 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 Palmerton plant refurbishment and the remaining expenditures in the Henan plant.
Dividends of €50.0 million or €1.25 per share were distributed in July 2023.
After funding working capital, interests, taxes, capex and dividends, total cash flow in 9M 2023 amounted to -€80.9 million. Cash on hand stood at €80.8 million, which together with the €75.0 million RCF, entirely undrawn, provides Befesa with more than €150 million liquidity.
Segment information Steel Dust Recycling Services
In 9M 2023, volumes of EAF steel dust recycled decreased by 0.9% to 889,724 tonnes (9M 2022: 897,578 tonnes). The performance across Befesa's markets was mixed: in Europe, EAF steel dust treated volumes grew at solid levels despite the challenging steel production levels. In China, volumes increased but lower than expected affected by the real estate crisis. In Q3 2023, volumes of EAF steel dust recycled increased by 11.0% to 297,389 tonnes (Q3 2022: 267,917 tonnes) primarily driven by the solid performance in Europe and the contribution from China. With these volumes, Befesa's EAF steel dust recycling plants ran at an average load factor of 70% in 9M and Q3 2023.
The volume of Waelz oxide (WOX) sold decreased by 3.3% to 301,048 tonnes in 9M 2023 (9M 2022: 311,355 tonnes), primarily driven by the US operations and the earthquake in Turkey. In Q3 2023, the volumes of WOX sold increased by 6.5% to 103,815 tonnes in Q3 2023 (Q3 2022: 97,466 tonnes).
The zinc refining plant in North Carolina ran at high utilisation levels with a focus on gradually improving profitability.
Revenue in the Steel Dust business increased by 13.5% to €605.3 million in 9M 2023 (9M 2022: €533.3 million) and by 12.7% to €202.3 million in Q3 2023 (Q3 2022: €179.5 million). This development was primarily attributed to the contribution from the US zinc refining operation.
Adjusted EBITDA in the Steel Dust business decreased by 22.3% to €101.8 million in 9M 2023 (9M 2022: €131.0 million) and by 3.9% to €34.6 million in Q3 2023 (Q3 2022: €36.0 million).
In 9M 2023, adjusted EBITDA decreased by 29.2 million due to the lower zinc LME prices (-27% yoy), partially offset by higher zinc hedging prices, the unfavourable zinc TC at \$274 per tonne (+19% yoy), the higher coke prices (+14% yoy), partially offset by the positive impact from productivity and synergies as well as from the solid steel dust volumes in Europe plus the contribution from China. Consequently, adjusted EBITDA as a percent of revenue stands at 17% in 9M 2023 compared to 25% in 9M 2022. The yoy profitability decrease was due to two effects: firstly, the impact of the items affecting EBITDA as explained above, and secondly, a change in the business mix with the incorporation of the zinc refining operation which bring high volume of revenue and lower EBITDA margin.
Adjusted EBIT in the Steel Dust business decreased by 38.0% to €55.1 million in 9M 2023 (9M 2022: €88.8 million) and by 8.8% to €18.7 million in Q3 2023 (Q3 2022: €20.5 million), following similar drivers explained referring to the EBITDA development.
Aluminium Salt Slags Recycling Services Salt Slags subsegment
Salt slags and SPL recycled volumes increased in 9M 2023 by 7.5% to 257,817 tonnes (9M 2022: 239,840 tonnes) and by 29.7% to 86,741 tonnes in Q3 2023 (Q3 2022: 66,891 tonnes). This development was primarily driven by the Hanover plant back in operations in 2023. On average, Salt Slags recycling plants operated at 73% of the latest installed annual recycling capacity of 470,000 tonnes in 9M and Q3 2023.
Revenue in the Salt Slags subsegment increased by 5.3% to €60.4 million in 9M 2023 (9M 2022: €57.4 million) and by 19.4% to €19.1 million in Q3 2023 (Q3 2022: €16.0 million).
EBITDA in the Salt Slags subsegment decreased by 13.8% to €19.0 million in 9M 2023 (9M 2022: €22.0 million) and by 37.0% to €4.6 million in Q3 2023 (Q3 2022: €7.3 million). The positive impact from lower energy prices was offset by lower aluminium alloy FMB prices.
EBIT in the Salt Slags subsegment decreased by 21.7% to €12.1 million in 9M 2023 (9M 2022: €15.4 million) and by 53.0% to €2.5 million in Q3 2023 (Q3 2022: €5.3 million), following similar drivers explained referring to the EBITDA development.
Secondary Aluminium subsegment
Aluminium alloy production volumes increased in 9M 2023 by 3.1% to 125,770 tonnes (9M 2022: 121,941 tonnes) and by 3.5% to 38,619 tonnes in Q3 2023 (Q3 2022: 37,296 tonnes). Secondary Aluminium production plants overall operated at around 82% and 75% utilisation rate on average respectively in 9M and Q3 2023.
Revenue in the Secondary Aluminium subsegment amounted to €271.2 million in 9M 2023, down 5.2% (9M 2022: €286.2 million). In Q3, revenue decreased by 10.9% yoy to €76.0 million (Q3 2022: €68.5 million). Higher volumes were offset with the lower aluminium alloy FMB prices.
EBITDA in the Secondary Aluminium subsegment increased by 35.3% to €16.6 million in 9M 2023 (9M 2022: €12.2 million). The EBITDA improvement was mainly explained by the higher volumes and the lower costs – primarily through the lower gas and electricity prices–, partially offset by the lower aluminium metal margins. In Q3, EBITDA stayed flat at €3.2 million.
EBIT in the Secondary Aluminium subsegment increased in 9M 2023 by 67.4% to €10.9 million (9M 2022: €6.5 million), following similar drivers which impacted the EBITDA development. In Q3, EBIT stayed flat at €1.5 million.
Strategy
Hedging
Befesa's hedging strategy is unchanged and continues to be a key element of Befesa's business model, providing zinc price visibility, lowering the impact from zinc price volatility and therefore improving the stability and visibility of earnings and cash flow across the economic cycle. Further details are available in the Befesa Annual Report 2022 (pages 38—39).
Befesa's current hedging volume run rate is to hedge around 38,000 tonnes of zinc per quarter or around 152,000 tonnes per year.
The combined global hedge book in place as of the date of this Q3 2023 Statement provides Befesa with improved zinc price visibility up to July 2025, therefore for the following two years, at increasing hedging average prices: around €2,400 per tonne in 2023, around €2,500 per tonne in 2024 and around €2,650 per tonne for the first half of 2025.
Growth
Befesa's Sustainable Global Growth Plan (SGGP) is progressing as planned despite the challenging macroeconomic environment.
In the US, the refurbishment of the plant in Palmerton, Pennsylvania, is on track. This will continue for the remainder of 2023 and 2024, and it will allow Befesa to improve the profitability levels and to capture the incremental EAF steel dust volumes expected in the US market for 2025.
In China, with regards to the third plant in the province of Guangdong, Befesa continues its negotiations with major steelmakers in the region to secure EAF dust supply. Despite the current market challenges, Befesa sees a strong growth opportunity in China and is optimistic in the midterm.
ESG
As of 30 September 2023, ESG ratings from six renowned international ESG rating agencies following Befesa are available:
| 30 September 2023 |
|||
|---|---|---|---|
| B / Prime |
|||
| #181 430 / |
|||
| 103 #7 / |
|||
| BBB | |||
| 12% Top |
|||
| 15% Top |
In Q3 2023, Befesa submitted for the first time the CDP (Carbon Disclosure Project) questionnaire, disclosing data regarding environmental performance and risks.
Positive mid-term outlook intact: Befesa's diversified
growth plan is supported by the favourable macro trends in decarbonisation and electric vehicles over the next few years, across the core businesses and markets in which Befesa holds a leading position. Befesa is rigorously executing and cautiously managing the timing of its growth projects, aligned with macroeconomic and market-specific developments.
Board of Directors
In October 2023, the Board of Directors of Befesa has appointed Mrs Soledad Luca de Tena as Independent Director by co-optation to fill the position on the Board of Directors following the resignation of Mr Romeo Kreinberg earlier this year, subject to ratification by the next General Meeting of Befesa S.A. in June 2024. Mrs Luca de Tena brings extensive executive and governance experience to Befesa and currently serves as Board member in Vocento, one of the largest media groups in Spain. Additionally, Mrs Luca de Tena is Vice Chair of the mutual insurance company Asepeyo and serves in the board of several nonprofit organisations. Based on the appointment, the proportion of women on the Befesa Board of Directors has increased up to 38%.
Outlook
2023: The current macroeconomic and market-specific challenges have caused a combination of temporary pressures in 2023, including unfavourable high zinc TC, lower zinc prices, all-time-high coke prices, and lower than expected steel dust volumes in China. These headwinds are expected to continue throughout the remainder of the year. Consequently, Befesa expects Q4 to be in line with Q3 and full-year adjusted EBITDA for 2023 to be around €180 million (previously: €200—€230m, which had been forecast on the basis of higher zinc prices).
2024: The return to the growth path is expected in 2024, as many of the headwinds that Befesa is facing in 2023 should subside in 2024 due to the temporary nature of the external pressures. The year 2024 should see a more favourable combination of zinc treatment charges and prices, a normalisation of coke price, coupled with improved zinc hedging prices and the contribution from the US zinc refining and Chinese operations.
Consolidated financial statements
as of 30 September 2023 (thousands of euros)
Statement of financial position
Assets
| (€ thousand) | 30 September 2023 | 31 December 2022 |
|---|---|---|
| Non-current assets: | ||
| Intangible assets | ||
| Goodwill | 589,568 | 587,853 |
| Other intangible assets | 105,013 | 106,114 |
| 694,581 | 693,967 | |
| Right-of-use assets | 32,702 | 30,895 |
| Property, plant and equipment | 715,158 | 682,809 |
| Non-current financial assets | ||
| Investments in Group companies and associates | 45 | 45 |
| Other non-current financial assets | 47,499 | 44,521 |
| 47,544 | 44,566 | |
| Deferred tax assets | 96,792 | 103,647 |
| Total non-current assets | 1,586,777 | 1,555,884 |
| Current assets: | ||
| Inventories | 94,129 | 102,539 |
| Trade and other receivables | 105,599 | 107,591 |
| Trade receivables from related companies | 342 | 1,039 |
| Accounts receivables from public authorities | 23,460 | 19,566 |
| Other receivables | 23,919 | 26,898 |
| Other current financial assets | 15,846 | 1,342 |
| Cash and cash equivalents | 80,815 | 161,751 |
| Total current assets | 344,110 | 420,726 |
| Total assets | 1,930,887 | 1,976,610 |
Statement of financial position (continued)
Equity and liabilities
| (€ thousand) | 30 September 2023 | 31 December 2022 | ||
|---|---|---|---|---|
| Equity: | ||||
| Parent Company | ||||
| Share capital | 111,048 | 111,048 | ||
| Share premium | 532,867 | 532,867 | ||
| Hedging reserves | 37,788 | (2,573) | ||
| Other reserves | 95,915 | 37,340 | ||
| Translation differences | 15,957 | 20,197 | ||
| Net profit/(loss) for the period | 27,552 | 106,220 | ||
| Interim dividend | - | - | ||
| Equity attributable to the owners of the Company | 821,127 | 805,099 | ||
| Non-controlling interests | 24,439 | 14,153 | ||
| Total equity | 845,566 | 819,252 | ||
| Non-current liabilities: | ||||
| Long-term provisions | 17,528 | 18,518 | ||
| Loans and borrowings | 658,565 | 663,448 | ||
| Lease liabilities | 18,028 | 13,988 | ||
| Other non-current financial liabilities | - | 12,875 | ||
| Other non-current liabilities | 8,753 | 7,831 | ||
| Deferred tax liabilities | 105,932 | 107,633 | ||
| Total non-current liabilities | 808,806 | 824,293 | ||
| Current liabilities: | ||||
| Loans and borrowings | 29,022 | 23,038 | ||
| Lease liabilities | 8,708 | 10,298 | ||
| Other current financial liabilities | 16,005 | 38,223 | ||
| Trade payables to related companies | - | 1,573 | ||
| Trade and other payables | 166,142 | 198,870 | ||
| Other payables | ||||
| Accounts payable to public administrations | 26,610 | 14,220 | ||
| Other current liabilities | 30,028 | 46,843 | ||
| 56,638 | 61,063 | |||
| Total current liabilities | 276,515 | 333,065 | ||
| Total equity and liabilities | 1,930,887 | 1,976,610 |
Income statement
| (€ thousand) | 9M 2023 | 9M 2022 | Change | Q3 2023 | Q3 2022 | Change |
|---|---|---|---|---|---|---|
| Revenue | 904,190 | 840,583 | 7.6 % | 288,698 | 268,048 | 7.7 % |
| Changes in inventories of finished goods and work-in-progress | (7,074) | (7,996) | - | (4,397) | (630) | - |
| Procurements | (440,055) | (407,600) | 8.0 % | (136,107) | (121,359) | 12.2 % |
| Other operating income | 8,297 | 61,226 | (86.4) % | 700 | 30,980 | (97.7) % |
| Personnel expenses | (115,137) | (93,215) | 23.5 % | (40,654) | (30,867) | 31.7 % |
| Other operating expenses | (224,681) | (211,860) | 6.1 % | (73,504) | (80,708) | (8.9) % |
| Amortisation/depreciation, impairment and provisions | (60,993) | (54,762) | 11.4 % | (20,633) | (19,416) | 6.3 % |
| Operating profit/(loss) | 64,547 | 126,376 | (48.9) % | 14,103 | 46,048 | (69.4) % |
| Finance income | 10,322 | 2,293 | > 100 % | 4,343 | 1,977 | > 100 % |
| Finance expenses | (33,670) | (17,809) | 89.1 % | (12,892) | (4,482) | 187.6 % |
| Net exchange differences | (1,042) | (5,356) | - | 3,765 | (6,053) | - |
| Net finance income/(loss) | (24,390) | (20,872) | 16.9 % | (4,784) | (8,558) | (44.1) % |
| Profit/(loss) before tax | 40,157 | 105,504 | (61.9) % | 9,319 | 37,490 | (75.1) % |
| Corporate income tax | (12,540) | (17,094) | (26.6) % | (1,242) | (2,461) | (49.5) % |
| Profit/(loss) for the period | 27,617 | 88,410 | (68.8) % | 8,077 | 35,029 | (76.9) % |
| Attributable to: | ||||||
| Parent Company's owners | 27,552 | 87,248 | (68.4) % | 7,303 | 37,215 | (80.4) % |
| Non-controlling interests | 65 | 1,162 | - | 774 | (2,186) | - |
| Earnings/(losses) per share attributable to Parent Company's owners (in euros per share) |
0.69 | 2.18 | (68.4) % | 0.18 | 0.93 | (80.4) % |
Statement of cash flows
| (€ thousand) | 9M 2023 | 9M 2022 | Q3 2023 | Q3 2022 |
|---|---|---|---|---|
| Profit/(loss) for the period before tax | 40,157 | 105,504 | 9,319 | 37,490 |
| Adjustments for: | 83,843 | 33,267 | 27,882 | (13,288) |
| Depreciation and amortisation | 60,993 | 53,111 | 20,633 | 17,765 |
| Impairment losses | - | 1,651 | - | 1,651 |
| Changes in provisions | (990) | (1,787) | 2,650 | (1,047) |
| Interest income | (10,322) | (2,293) | (4,343) | (1,977) |
| Finance costs | 33,670 | 17,809 | 12,892 | 4,482 |
| Other profit/(loss) | (550) | (40,580) | (185) | (40,215) |
| Exchange differences | 1,042 | 5,356 | (3,765) | 6,053 |
| Changes in working capital: | (23,418) | (23,220) | (3,483) | (429) |
| Trade receivables and other current assets | 9,181 | (32,546) | (11,655) | 24,313 |
| Inventories | 7,613 | 2,434 | 9,125 | 5,035 |
| Trade payables | (40,212) | 6,892 | (953) | (29,777) |
| Other cash flows from operating activities: | (36,894) | (37,231) | (11,982) | (9,412) |
| Interest paid | (21,181) | (16,722) | (7,747) | (4,804) |
| Taxes paid | (15,713) | (20,509) | (4,235) | (4,608) |
| Net cash flows from/(used in) operating activities (I) | 63,688 | 78,320 | 21,736 | 14,361 |
| Cash flows from investing activities: | ||||
| Investments in intangible assets | (236) | (525) | (123) | (218) |
| Investments in property, plant and equipment | (83,740) | (75,216) | (30,608) | (18,007) |
| Collections from disposal of Group and associated companies, net of cash | 113 | - | - | - |
| (Acquisition)/Disposal of new subsidiaries | - | (44,965) | - | (44,965) |
| Net cash flows from/(used in) investing activities (II) | (83,863) | (120,706) | (30,731) | (63,190) |
| Cash flows from financing activities: | ||||
| Cash inflows from bank borrowings and other liabilities | 3,842 | 21,787 | (227) | 1,908 |
| Cash outflows from bank borrowings and other liabilities | (13,599) | (14,024) | (3,559) | (2,347) |
| Dividends paid to shareholders | (50,000) | (50,000) | (50,000) | (50,000) |
| Net cash flows from/(used in) financing activities (III) | (59,757) | (42,237) | (53,786) | (50,439) |
| Effect of foreign exchange rate changes on cash & cash equivalents (IV) | (1,004) | (337) | 133 | (305) |
| Net increase/(decrease) in cash and cash equivalents (I+II+III+IV) | (80,936) | (84,960) | (62,648) | (99,573) |
| Cash and cash equivalents at the beginning of the period | 161,751 | 224,089 | 143,463 | 238,702 |
| Cash and cash equivalents at the end of the period | 80,815 | 139,129 | 80,815 | 139,129 |
Additional information Segmentation overview – key metrics
Steel Dust Recycling Services
| 9M 2023 | 9M 2022 | Change | Q3 2023 | Q3 2022 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| EAF steel dust throughput | 889,724 | 897,578 | (0.9) % | 297,389 | 267,917 | 11.0 % |
| WOX sold | 301,048 | 311,355 | (3.3) % | 103,815 | 97,466 | 6.5 % |
| Zinc blended price (€ / tonne) | 2,448 | 2,647 | (7.5) % | 2,385 | 2,596 | (8.1) % |
| Total installed capacity | 1,693,026 | 1,555,300 | 8.9 % | 1,693,026 | 1,555,300 | 8.9 % |
| Utilisation (%) | 70.3 % | 77.2 % | (690) bps | 69.7 % | 68.3 % | 135 bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 605.3 | 533.3 | 13.5 % | 202.3 | 179.5 | 12.7 % |
| EBITDA | 94.5 | 151.3 | (37.6) % | 31.1 | 56.3 | (44.8) % |
| EBITDA margin | 15.6 % | 28.4 % | (1,277) bps | 15.4 % | 31.4 % | (1,602) bps |
| Adjusted EBITDA | 101.8 | 131.0 | (22.3) % | 34.6 | 36.0 | (3.9) % |
| Adjusted EBITDA margin | 16.8 % | 24.6 % | (775) bps | 17.1 % | 20.1 % | (295) bps |
| EBIT | 46.3 | 109.2 | (57.6) % | 14.5 | 40.8 | (64.5) % |
| EBIT margin | 7.7 % | 20.5 % | (1,282) bps | 7.2 % | 22.7 % | (1,558) bps |
| Adjusted EBIT | 55.1 | 88.8 | (38.0) % | 18.7 | 20.5 | (8.8) % |
| Adjusted EBIT margin | 9.1 % | 16.7 % | (756) bps | 9.2 % | 11.4 % | (217) bps |
Aluminium Salt Slags Recycling Services
Salt Slags subsegment
| 9M 2023 | 9M 2022 | Change | Q3 2023 | Q3 2022 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Salt slags and SPL recycled | 257,817 | 239,840 | 7.5 % | 86,741 | 66,891 | 29.7 % |
| Total installed capacity | 470,000 | 470,000 | - | 470,000 | 470,000 | - |
| Utilisation (%) | 73.3 % | 68.2% | 511 bps | 73.2 % | 56.5% | 1,676 bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 60.4 | 57.4 | 5.3 % | 19.1 | 16.0 | 19.4 % |
| EBITDA | 19.0 | 22.0 | (13.8) % | 4.6 | 7.3 | (37.0) % |
| EBITDA margin | 31.4 % | 38.3 % | (695) bps | 24.2 % | 45.8 % | (2,160) bps |
| EBIT | 12.1 | 15.4 | (21.7) % | 2.5 | 5.3 | (53.0) % |
| EBIT margin | 20.0 % | 26.9 % | (690) bps | 13.0 % | 32.9 % | (1,997) bps |
Secondary Aluminium subsegment
| 9M 2023 | 9M 2022 | Change | Q3 2023 | Q3 2022 | Change | |
|---|---|---|---|---|---|---|
| Key operational data (tonnes, unless specified otherwise) | ||||||
| Secondary aluminium alloys produced | 125,770 | 121,941 | 3.1 % | 38,619 | 37,296 | 3.5 % |
| Aluminium alloy FMB price (€ / tonne) | 2,186 | 2,481 | (11.9) % | 2,074 | 2,327 | (10.9) % |
| Total installed capacity | 205,000 | 205,000 | - | 205,000 | 205,000 | - |
| Utilisation (%) | 82.0 % | 79.5 % | 250 bps | 74.7 % | 72.2 % | 256 bps |
| Key financial data (€ million, unless specified otherwise) | ||||||
| Revenue | 271.2 | 286.2 | (5.2) % | 76.0 | 68.5 | 10.9 % |
| EBITDA | 16.6 | 12.2 | 35.3 % | 3.2 | 3.2 | (0.5) % |
| EBITDA margin | 6.1 % | 4.3 % | 183 bps | 4.2 % | 4.7 % | (48) bps |
| EBIT | 10.9 | 6.5 | 67.4 % | 1.5 | 1.5 | (2.9) % |
| EBIT margin | 4.0 % | 2.3 % | 175 bps | 1.9 % | 2.2 % | (27) bps |
Note: Segment splits, revenue and earnings contributions do not take into account corporate nor the inter-segment eliminations.
Financial calendar
| 29 February 2024 |
Preliminary Year-End Results 2023 & Conference Call |
|---|---|
| 21 March 2024 |
Annual Report 2023 |
| 25 April 2024 |
Q1 2024 Statement & Conference Call |
| 20 June 2024 |
Annual General Meeting |
| 25 July 2024 |
H1 2024 Interim Report & Conference Call |
| 31 October 2024 |
Q3 2024 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
Phone: +49 (0) 2102 1001 0 email: [email protected]
Published: 26 October 2023
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Disclaimer
This quarterly statement 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 quarterly statement 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 quarterly statement nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This quarterly statement may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of Befesa.
Third quarter and first nine-month period 2023 figures are unaudited.
This quarterly statement 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 quarterly statement 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.
Befesa S.A. 68-70, Boulevard de la Pétrusse L-2320 Luxembourg Grand Duchy of Luxembourg www.befesa.com