Earnings Release • Nov 10, 2014
Earnings Release
Open in ViewerOpens in native device viewer
Suresnes, November 10, 2014: the Recylex Group (NYSE Euronext Paris: FR0000120388 - RX) has today reported its sales for the nine-month period to September 30, 2014 and for the third quarter of 2014. They came respectively to €327.4 million, up 6% on the level posted in the same period of 2013, and to €106.9 million, up around 1% on the third quarter of 2013.
The breakdown in consolidated sales in the nine months to September 30, 2014 by business line was as follows:
| (€ million) | Nine months to September 30, 2014 |
Nine months to September 30, 2013 |
Change (%) |
|---|---|---|---|
| Lead | 245.3 | 233.8 | +5% |
| Zinc* | 51.3 | 48.7** | +5% |
| Special Metals | 17.6 | 14.5 | +21% |
| Plastics | 13.2 | 11.8 | +12% |
| Total | 327.4 | 308.8 | +6% |
*In accordance with IFRS 10 and IFRS 11 applicable from January 1, 2014, companies previously accounted for using proportionate consolidation are now accounted for under the equity method. As a result, the consolidated sales presented above do not include those of 50%-owned Recytech SA in the Zinc segment.
**2013 data restated for companies accounted for under the equity method in line with IFRS 10 and IFRS 11.
"The sales growth achieved in the first nine months of 2014 reflects the more favorable trends in metal prices during the third quarter of 2014. Even so, the macroeconomic uncertainties at the beginning of the fourth quarter of 2014 triggered major corrections in the financial markets and commodity prices. Against this backdrop, we have made the decision to place renewed emphasis on our selective purchase policy of materials for recycling, in terms of both pricing and volumes. Notwithstanding the financing secured to complete the continuation plan which is maintained to date despite the latest legal proceedings launched against Recylex SA, our teams remain focused on meeting the challenges that lie ahead of us–restoring the Group's profitability, particularly in the Lead segment, and continuing the financing search to cover the cash requirements arising from the Group's operating cycle, as well as to finalize rehabilitation work at the L'Estaque plant."
Between January 2, 2014 and September 30, 2014, lead prices rose by 2%, while zinc prices increased by 19%.
However, the average lead price during the first nine months of 2014 dropped more than 4% below the level recorded in the same period of 2013, while the average zinc price rose by 9% on its level in the same period of 2013. Average prices in the nine months to 30 September were thus as follows:
| (€ per tonne) | At September 30, 2014 | At September 30, 2013 | Change (%) |
|---|---|---|---|
| Lead price | 1,571 | 1,633 | -4% |
| Zinc price | 1,581 | 1,450 | +9% |
Consolidated sales in the first nine months of 2014 came to €327.4 million, representing an increase of 6% on the same period of 2013.
During the third quarter of 2014, sales totaled €106.9 million, a very small increase of around 1% on the third quarter of 2013.
Lead: sales up 5%
Total production at the Weser-Metall GmbH lead smelter reflects all the lead produced and sold directly by this subsidiary plus the volumes produced under tolling agreements during the third quarter of 2014. However, these tolling volumes are no longer included in the segment's sales because they do not consist of lead sales. Conversely, Weser-Metall GmbH charges a treatment fee for these outsourced volumes. These agreements were put in place to reduce the subsidiary's working capital requirement.
During the first nine months of 2014, Lead sales accounted for 75% of consolidated sales.
In the period to September 30, 2014, they rose by 5% on the same period of 2013, reaching a total of €245.3 million.
This performance was primarily attributable to a favorable comparison base since there were no scheduled maintenance shutdowns at the Nordenham smelter in 2014 (compared with one 3 week maintenance shutdown in March 2013), which boosted the lead volumes produced, and to silver sales rise on the back of the treatment of more silver-rich concentrates during the first nine months of 2014 than in the same period of 2013 and also following inventory reductions in 2014.
During the period, the Nordenham smelter's production rose to 103,717 tonnes from 96,899 tonnes during the first nine months of 2013.
During the third quarter of 2014, sales recorded a decline of 6% to €78.3 million mainly because the Group pursued a more selective procurement policy concerning materials for recycling as prices remained at very high prices.
Zinc segment***: sales up 5%
Zinc sales accounted for 16% of the Group's consolidated total during the first nine months of 2014.
They totaled €51.3 million in the period to September 30, 2014, up 5% compared with the same period of 2013. Despite a slight contraction in processing volumes at the two businesses and less favorable business conditions, this growth was mainly driven by the increase in zinc prices over the period (9%) and in particular a clear rebound in zinc prices during the third quarter of 2014 (up 24% compared with the third quarter of 2013).
During the period, zinc oxide production totaled 18,931 tonnes, compared with 19,400 tonnes during the first nine months of 2013, and Harz-Metall GmbH's Waelz oxide production rose to 20,220 tonnes from 19,230 tonnes in the first nine months of 2013.
During the third quarter of 2014, sales totaled €17.6 million, representing an increase of close to 9% as a result of the same factors.
***As stated in previous reports, Recytech SA, a 50%-owned subsidiary in France specialized in Waelz oxide production, is now accounted for under the equity method in accordance with IFRS 10 and 11. Its sales are thus no longer included in the total for the Zinc segment shown in this press release.
Special Metals: sales up 21%
Special Metals sales contributed 5% of the Group's consolidated total in the period to September 30, 2014.
They increased by 21% during the first nine months of 2014 compared with the same period of 2013 to reach €17.6 million, chiefly as a result of non-recurring business in the third quarter of 2014.
During the third quarter of 2014, sales totaled €6.9 million, up from €3.3 million in the third quarter of 2013. The top line was boosted compared with the third quarter of 2013 by additional non-recurring sales of arsenic and of germanium in Asia.
Plastics: sales up 12%
Plastics sales accounted for 4% of consolidated sales in the first nine months of 2014.
During the first nine months of the year, they rose by 12% to reach €13.2 million. This performance was due to continued demand momentum in France and higher sales in Germany. During the period, the segment's total production of recycled polypropylene came to 11,948 tonnes, up from 10,378 tonnes in the nine months to September 30, 2013.
During the third quarter of 2014, sales came to €4.1 million, representing an increase of close to 14% compared with third quarter of 2013 as a result of the same factors.
As stated in its press release dated October 21, 2014, Recylex SA has been summoned by the liquidators of Metaleurop Nord SAS, with a view to being ordered to indemnify them in an amount of around €22 million, in its capacity as co-employer, for the statutory employment contract severance payments and indemnities paid to the former Metaleurop Nord employees in 2003 by the salary guarantee fund regime (AGS).
Recylex SA intends to defend itself vigorously against this claim and to protect its interests in connection with this latest action, which most likely follows on from the action for damages brought by the Recylex SA in 2013 against the same liquidators in a personal capacity.
As a reminder, the court-appointed liquidators of Metaleurop Nord SAS saw their previous legal proceedings against Recylex SA aiming at having the liquidation of Metaleurop Nord extended to Recylex SA and then for the repayment of Metaleurop Nord's liabilities, both dismissed at first instance, at appeal and in the Cour de cassation.
Please refer to the document summarizing the development of legal proceedings concerning Recylex SA and Metaleurop Nord SAS on the Recylex Group website (www.recylex.fr - News - Legal proceedings schedule).
As a reminder, Recylex SA entered into a loan agreement with Glencore International AG on October 13, 2014 under which Recylex SA may draw down up to €16 million. The main purpose of the loan is to enable Recylex SA to cover the final two installments due under its continuation plan.
Under the terms of the loan, the lender has a right of terminating the agreement early should an event affecting or likely to affect materially Recylex SA's financial position occur, such as a litigation concerning Recylex SA or/and its subsidiaries likely to have a negative outcome which would be significantly prejudicial for the Group.
In this regard, as of today and based on the current information available on this litigation, the lender has confirmed that it does not intend to terminate this loan agreement early on account of the latest legal action brought by the liquidators of Metaleurop Nord SAS. However, in case of negative developments in this legal proceeding, the lender could use this early termination right (thereby requiring immediate repayment of all amounts borrowed under said loan).
Now that this uncertainty has been dispelled, trading in Recylex shares will resume when the stock exchange opens on Tuesday November 11, 2014.
Moreover, since this loan covers neither the cash requirement for rehabilitating the L'Estaque site, nor that arising from the operating cycle, the financing search continues to finalize these rehabilitation works and to cover the projected requirements for the German business. Those requirements will increase with the major maintenance shutdown of the Nordenham smelter scheduled for the end of the first quarter of 2015.
As a reminder, trends in Recylex SA's cash position are closely linked to those of the cash position of its German subsidiaries (See sections E and F of Note 1 to the condensed consolidated financial statements at June 30, 2014).
Fourth-quarter 2014 sales: Thursday February 12, 2015
Disclaimer: This press release contains regulated quarterly financial information for the Recylex Group as defined in Article L. 451-1-2-IV of the French Monetary and Financial Code and Article 221-1 of the AMF General Regulation. This press release may contain forward-looking statements that do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets. These statements are by their nature subject to risks and uncertainties as described in the Company's annual report available on its website (www.recylex.fr). Further information about Recylex is available from its website (www.recylex.fr).
With operations in France, Germany and Belgium, Recylex is a European group specialized in lead and plastics recycling (mainly from automotive and industrial batteries), zinc recycling (from electric arc furnace dust and scrap zinc) and the production of special metals, primarily for the electronics industry.
A key player in the circular economy with long-standing expertise in urban waste recovery, the Group has close to 650 employees in Europe and generated consolidated sales of €438 million in 2013.
For more information about the Recylex Group go to: www.recylex.fr
*************************************
Press/Investor contact:
Gabriel ZEITLIN + 33 (0)1 58 47 29 89 [email protected]
| (€ per tonne) | First quarter 2014 |
Second quarter 2014 |
Third quarter 2014 |
First quarter 2013 |
Second quarter 2013 |
Third quarter 2013 |
|---|---|---|---|---|---|---|
| Lead price | 1,538 | 1,528 | 1,645 | 1,741 | 1,572 | 1,587 |
| Zinc price | 1,482 | 1,512 | 1,743 | 1,539 | 1,408 | 1,404 |
| (€ million) | First quarter 2014 |
Second quarter 2014 |
Third quarter 2014 |
First quarter 2013 |
Second quarter 2013 |
Third quarter 2013 |
|---|---|---|---|---|---|---|
| Lead | 87.0 | 80.0 | 78.3 | 69.4 | 81.3 | 83.1 |
| Zinc** | 17.5 | 16.2 | 17.6 | 17.4 | 15.1 | 16.2 |
| Special Metals | 4.9 | 5.8 | 6.9 | 5.0 | 6.2 | 3.3 |
| Plastics | 4.5 | 4.6 | 4.1 | 4.0 | 4.2 | 3.6 |
| Total | 113.9 | 106.6 | 106.9 | 95.8 | 106.8 | 106.2 |
*In accordance with IFRS 10 and IFRS 11 applicable from January 1, 2014, companies previously accounted for using proportionate consolidation are now accounted for under the equity method. As a result, the consolidated sales presented above do not include those of 50%-owned Recytech SA in the Zinc segment.
**2013 data restated for companies accounted for under the equity method in line with IFRS 10 and IFRS 11.
| (€ million) | At September 30, 2014 |
At September 30, 2013 |
Change (%) |
|---|---|---|---|
| Lead segment | 53.0 | 56.5 | -6% |
| Services to Group companies |
1.3 | 1 | +30% |
| Total sales | 54.3 | 57.5 | -6% |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.