LUXEMBOURG (dpa-AFX) - Low prices for zinc and high treatment and refining charges are thwarting the profit plans of industrial recycler Befesa. Operating earnings before interest, taxes, depreciation and amortization (adjusted Ebitda), adjusted for special effects, are likely to reach only around 180 million euros this year due to the burdens, the company announced in Luxembourg on Thursday. Previously, management had held out the prospect of 200 to 230 million euros. The new forecast is still below analysts' expectations. But Befesa CEO Javier Molina held out the prospect of a significant improvement in the coming year. On the stock exchange, the news was received positively after a brief irritation.

In the first minutes of trading, the Befesa share lost almost nine percent, but quickly made up the losses. Most recently, it was the second-largest gainer in the MDax, the index of medium-sized companies, with a price increase of a good four percent to 26.82 euros. However, the share had lost a lot of value in recent months and was still trading around 40 percent cheaper than at the turn of the year.

The zinc refining business in the USA at least allowed the industrial recycler's sales to grow - thanks to an acquisition in October 2022. In the third quarter, sales also increased as a result by 8 percent to 289 million euros. Adjusted operating profit, however, fell by 8 percent to 42 million euros. Over the first nine months, it fell by 17 percent to 137 million euros.

The Group was particularly hard hit by low zinc prices, which so far this year are 27 percent lower than a year earlier. Together with high treatment and refining charges and higher prices for coking coal, they put pressure on profit margins. The Group was only able to partially offset the negative impact through better hedging of zinc prices, lower energy costs and synergies. The ramp-up of some plants had an expensive impact as a special effect, causing third-quarter net income to slump by 80 percent to just over 7 million euros.

But Befesa CEO Molina expects things to improve: "We see upside for 2024: the normalization of coking coal prices, a more favorable combination of treatment and refining charges, better zinc hedges, growth in the U.S. business and a positive earnings contribution from China." Management maintains its positive medium-term outlook. The Group aims to continue growing, focusing on decarbonization of the economy and e-mobility./lfi/stw/mis