Q1 2024 Statement
BEFESA
Q1 2024 StatementBefesa at a glance2
Befesa at a glance
Key figures
Q1 2024 | Q1 2023 | Change | ||||
Key operational data (tonnes, unless specified otherwise) | ||||||
Electric arc furnace (EAF) steel dust throughput | 303,114 | 287,069 | 5.6 % | |||
Waelz oxide (WOX) sold | 99,998 | 99,833 | 0.2 % | |||
Salt slags and Spent Pot Linings (SPL) recycled | 111,261 | 82,293 | 35.2 % | |||
Secondary aluminium alloys produced | 44,347 | 43,680 | 1.5 % | |||
Zinc LME average price (€ / tonne) | 2,256 | 2,916 | (22.6) % | |||
Zinc blended price (€ / tonne) | 2,400 | 2,633 | (8.8) % | |||
Aluminium alloy FMB average price (€ / tonne) | 2,277 | 2,301 | (1.0) % | |||
Key financial data (€ million, unless specified otherwise) | ||||||
Revenue | 298.3 | 322.0 | (7.3) % | |||
EBITDA | 45.3 | 49.3 | (8.1) % | |||
EBITDA margin | 15.2 % | 15.3 % | (13) bps | |||
Adjusted EBITDA | 48.6 | 50.1 | (3.1) % | |||
Adjusted EBITDA margin | 16.3 % | 15.6 % | 72 bps | |||
EBIT | 24.6 | 29.1 | (15.5) % | |||
EBIT margin | 8.2 % | 9.0 % | (80) bps | |||
Adjusted EBIT | 27.9 | 29.9 | (6.7) % | |||
Adjusted EBIT margin | 9.3 % | 9.3 % | 6 bps | |||
Financial result | (7.6) | (6.6) | 13.9 % | |||
Profit before taxes and minority interests | 17.0 | 22.5 | (24.2) % | |||
Net profit attributable to shareholders of Befesa S.A. | 9.4 | 15.2 | (37.7) % | |||
EPS (in €) | 0.24 | 0.38 | (37.7) % | |||
Total assets | 2,011.9 | 1,977.0 | 1.8 % | |||
Capital expenditures | 17.3 | 30.9 | (44.0) % | |||
Cash flow from operating activities | 14.5 | 19.8 | (26.5) % | |||
Cash and cash equivalents at the end of the period | 90.3 | 143.0 | (36.8) % | |||
Net debt | 621.7 | 571.6 | 8.8 % | |||
Net leverage | x3.45 | x2.81 | x 0.64 | |||
Number of employees (as of end of the period) | 1,819 | 1,865 | (2.5) % | |||
Q1 2024 Statement | Befesa at a glance | 3 |
Highlights
-
Revenue in Q1 2024 decreased by 7% yoy to €298 million (Q1 2023: €322
million), +8% vs previous quarter (Q4 2023: €276 million) - Adjusted EBITDA in Q1 2024 decreased by 3% yoy to €49 million (Q1 2023: €50
million), +7% vs previous quarter (Q4 2023: €45 million); Improved volumes, favourable decrease in zinc treatment charges (TC), better zinc hedges, lower energy prices and synergies were offset by lower zinc LME prices - Growth:
- US: Refurbishment of steel dust plant in Palmerton, Pennsylvania, on track to capture growth in 2025
- China: Monitoring market development; Cautiously progressing in the third province, Guangdong
- Europe: Moving forward with permits and commercial contracts for the Bernburg expansion project
- Outlook: 2024 guidance of €195 million to €235 million EBITDA, +7% to +29%
yoy (2023: €182 million)
Q1 2024 Statement
Business review Results of operations, financial position & liquidity
Revenue
Total revenue decreased by 7.3% to €298.3 million in Q1 2024 (Q1 2023: €322.0 million). The decrease was primarily attributable to the lower zinc LME prices, partially offset by the improved volumes, the favourable zinc TC and better zinc hedges.
EBITDA & EBIT
Total adjusted EBITDA decreased by 3.1% to €48.6 million in Q1 2024 (Q1 2023: €50.1 million). Overall, this development was primarily driven by lower zinc LME prices and aluminium metal margin, partially compensated by improved volumes, favourable decrease in zinc TC, better zinc hedges, and lower energy prices.
Detailed by volume, price, and cost components, the €1.5
Business review | 4 |
Total net profit attributable to shareholders decreased by 37.7% to €9.4 million in Q1 2024 (Q1 2023: €15.2 million). This development was primarily due to the aforementioned negative drivers impacting EBITDA and EBIT. As a result, earnings per share (EPS) in Q1 2024 decreased accordingly by 37.7% to €0.24 (Q1 2023: €0.38).
Financial position & liquidity
Gross debt at 31 March 2024 remained stable at €712.1 million (31 December 2023: €710.8 million).
Net debt at 31 March 2024 increased by 2.9% to €621.7 million (31 December 2023: €604.0 million). This is mainly explained by the decrease in cash balance.
Net leverage of x3.45 at Q1 2024 closing (year-end 2023: x3.32) based on the underlying net debt of €621.7 million and the LTM adjusted EBITDA of €180.4 million.
Befesa continues to be fully compliant with all debt covenants.
million decrease in Q1 2024 is explained by:
- Volumes (c. €5 million): Steel dust treated |
volumes in Europe, Turkey and the US continued |
at solid levels, partially offset by lower |
performance in China (€3 million); Aluminium Salt |
Slags with yoy higher volumes driven by Hanover |
back in operation (€2 million). |
- Metal prices (c. -€12 million): 23% lower zinc LME |
prices (-€17 million), partially offset by higher zinc |
Non-current financial indebtedness
-
Current financial indebtedness
Financial indebtedness
- Cash and cash equivalents
- Other current financial assets1
Net debt
LTM Adjusted EBITDA
Net leverage ratio
31 March 2024
674.9
37.2
712.1
(90.3)
(0.1)
621.7
180.4
x3.45
31 December 2023 672.7
38.1
710.8
(106.7)
(0.1)
604.0
182.0
x3.32
hedging prices (€4 million); 40% lower zinc TC at |
$165 per tonne for the full year 2024 (€6 million); |
lower aluminium metal margins (-€5 million). |
- Cost / other (c. €5 million): Lower costs, mainly |
through lower coke, gas and electricity prices. |
Total adjusted EBIT decreased by 6.7% to €27.9 million in Q1 2024 (Q1 2023: €29.9 million).
Total EBITDA and EBIT were adjusted for €3.3 million in Q1 2024. This adjustment was mainly driven by impacts from the ramp up of some facilities. Total reported EBITDA amounted to €45.3 million in Q1 2024 (-8.1% yoy). Total reported EBIT amounted to €24.6 million in Q1 2024 (-15.5% yoy).
Financial result & net profit
Total net financial result decreased by 13.9% to -€7.6 million in Q1 2024 (Q1 2023: -€6.6 million).
1 Other current financial assets adjusted by hedging valuation and restricted deposits
Operating cash flow in Q1 2024 decreased by 26.5% to €14.5 million (Q1 2023: €19.8 million).
The change in working capital impacted operating cash flow by €33.9 million in Q1 2024, primarily driven by the usual first quarter seasonality and timing impact. Taxes paid in Q1 2024 decreased by 96.3 % to €0.1 million (Q1 2023: €2.4 million).
In Q1 2024, Befesa's cash capex was €18.9 million (Q1 2023: €31.7 million) to fund regular maintenance capex, the US operational excellence / synergies, as well as growth investments. The latter are mainly related to the Palmerton plant refurbishment.
After funding working capital, interests, taxes and capex, total cash flow in Q1 2024 amounted to -€16.4 million. Cash on hand stood at €90.3 million, which together with
Q1 2024 Statement | Business review | 5 |
the €75.0 million RCF, entirely undrawn, provides Befesa with more than €150 million liquidity.
Segment information
Steel Dust Recycling Services
Volumes of EAF steel dust recycled increased by 5.6% to 303,114 tonnes in Q1 2024 (Q1 2023: 287,069 tonnes), primarily driven by the solid performance in Europe, Turkey and the US. In China, volumes continued to be affected by the weak real estate industry. With these volumes, Befesa's EAF steel dust recycling plants ran at an average load factor of 71% in Q1 2024 (Q1 2023: 69%).
The volume of Waelz oxide (WOX) sold stayed flat at 99,998 tonnes in Q1 2024 (Q1 2023: 99,833 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 decreased by 13.1% to €188.0 million in Q1 2024 (Q1 2023: €216.3 million). This development was primarily attributed to the lower zinc LME prices, partially offset by the improved volumes, the favourable zinc TC and the better zinc hedging prices.
Adjusted EBITDA in the Steel Dust business decreased by 2.7% to €36.0 million in Q1 2024 (Q1 2023: €37.0 million). This development was due to the lower zinc LME prices partially compensated by the favourable zinc TC, better zinc hedging prices, improved volumes, and the lower coke price. Adjusted EBITDA as a percent of revenue improved to 19% in Q1 2024, compared 17% in Q1 2023.
Adjusted EBIT in the Steel Dust business decreased by 3.6% to €20.5 million in Q1 2024 (Q1 2023: €21.3 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 by 35.2% to 111,261 tonnes in Q1 2024 (Q1 2023: 82,293 tonnes), primarily driven by the Hanover plant back in operation since Q2 2023. On average, Befesa's salt slags recycling plants operated in Q1 2024 at 95% of the latest installed annual recycling capacity of 470,000 tonnes (Q1 2023: 71%).
Revenue in the Salt Slags subsegment increased by 30.6% to €27.2 million in Q1 2024 (Q1 2023: €20.8 million) primarily driven by the improved volumes of salt slags and SPL treated.
EBITDA in the Salt Slags subsegment increased by 49.6% to €9.9 million in Q1 2024 (Q1 2023: €6.6 million), primarily driven by the improved volumes and the lower energy prices.
EBIT in the Salt Slags subsegment increased by 64.9% to €6.9 million in Q1 2024 (Q1 2023: €4.2 million), following similar drivers explained referring to the EBITDA development.
Secondary Aluminium subsegment
Aluminium alloy production volumes increased by 1.5% to 44,347 tonnes (Q1 2023: 43,680 tonnes). Befesa's secondary aluminium production plants overall operated in
Q1 2024 at 87% utilisation rate on average (Q1 2023: 86%).
Revenue in the Secondary Aluminium subsegment increased by 2.6% to €98.3 million in Q1 2024 (Q1 2023: €95.9 million). Higher volumes were partially offset with the lower aluminium alloy FMB prices.
EBITDA in the Secondary Aluminium subsegment decreased by 60.4% to €2.9 million in Q1 2024 (Q1 2023: €7.2 million). The EBITDA development was mainly explained by the lower aluminium metal margin partially compensated by the improved volumes and lower energy prices.
EBIT in the Secondary Aluminium subsegment decreased by 85.0% to €0.8 million in Q1 2024 (Q1 2023: €5.3 million), following similar drivers which impacted the EBITDA development.
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 2023 (pages 36-37).
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 Q1 2024 Statement provides Befesa with improved
Q1 2024 Statement
zinc price visibility up to July 2025, therefore for the following 14 months, at increasing hedging average prices: 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. Progress continues during 2024, enabling Befesa to improve profitability levels and to capture the anticipated increase in EAF steel dust volumes 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 recognises a significant growth opportunity in China and maintains a positive midterm outlook.
In Europe, with regards to the expansion of the secondary aluminium production capacity in the existing plant of Bernburg, Germany, Befesa is moving forward with the permits and commercial contracts. This project is in line with the expected growth of the demand for aluminium in Europe in the coming years driven by the EV penetration. Light-weight solutions are required to reduce emissions and, as a result, the aluminium content in cars will increase.
Business review | 6 |
Outlook
2024: Befesa expects the full year 2024 EBITDA at between €195 million and €235 million, +7% to +29% yoy (2023: €182 million). Earnings in 2024 will be positively impacted by the significantly lower zinc TC, set at $165 per tonne for 2024 (2023: $274 per tonne), coupled with improved zinc hedging prices. Moreover, 2024 should see also a normalisation of coke price, and the improvement in operational efficiency in the US recycling operations as well as China. The guidance range is mainly driven by the metal price volatility, the recovery pace of coke price and the contribution from the US and Chinese operations.
Positive mid-termoutlook: Befesa's diversified growth plan is underpinned by the favourable macro trends in decarbonisation and EV over the next few years, across the core businesses and markets in which Befesa holds a leading position. Befesa is rigorously executing and prudently managing the timing of its growth projects, aligning with macroeconomic and market-specific developments.
ESG
As of 31 March 2024, ESG ratings from six renowned international ESG rating agencies following Befesa are available:
Q1 2024 StatementConsolidated financial statements7
Consolidated financial statements
as of 31 March 2024 (thousands of euros)
Statement of financial position
Asset s
(€ thousand) | 31 March 2024 | 31 December 2023 | ||
Non-current assets: | ||||
Intangible assets | ||||
Goodwill | 635,026 | 629,643 | ||
Other intangible assets | 107,491 | 108,030 | ||
742,517 | 737,673 | |||
Right-of-use assets | 32,667 | 31,945 | ||
Property, plant and equipment | 708,963 | 702,660 | ||
Non-current financial assets | ||||
Investments in Group companies and associates | 26 | 26 | ||
Other non-current financial assets | 33,993 | 35,112 | ||
34,019 | 35,138 | |||
Deferred tax assets | 98,337 | 96,708 | ||
Total non-current assets | 1,616,503 | 1,604,124 | ||
Current assets: | ||||
Inventories | 107,668 | 101,089 | ||
Trade and other receivables | 114,932 | 75,818 | ||
Trade receivables from related companies | 561 | 409 | ||
Accounts receivables from public authorities | 20,595 | 20,726 | ||
Other receivables | 25,752 | 22,201 | ||
Other current financial assets | 35,550 | 14,626 | ||
Cash and cash equivalents | 90,325 | 106,692 | ||
Total current assets | 395,383 | 341,561 | ||
Total assets | 2,011,886 | 1,945,685 | ||
Q1 2024 Statement | Consolidated financial statements | 8 |
Statement of financial position (continued)
Equity and liabilities | ||
(€ thousand) | 31 March 2024 | 31 December 2023 |
Equity: | ||
Parent Co mpany | ||
Share capital | 111,048 | 111,048 |
Share premium | 532,867 | 532,867 |
Hedging reserves | 53,971 | 36,888 |
Other reserves | 155,010 | 96,490 |
Translation differences | (65) | (11,738) |
Net profit/(loss) for the period | 9,446 | 57,972 |
Equity attributable to the owners of the Company | 862,277 | 823,527 |
No n-contro lling interests | 55,623 | 53,829 |
To tal equity | 917,900 | 877,356 |
No n-current liabilities: | ||
Lo ng-term pro visions | 15,628 | 18,053 |
Lo ans and bo rrowings | 656,809 | 655,610 |
Lease liabilities | 18,114 | 17,080 |
Other no n-current financial liabilities | - | - |
Other no n-current liabilities | 6,637 | 6,707 |
Deferred tax liabilities | 119,839 | 113,845 |
To tal no n-current liabilities | 817,027 | 811,295 |
Current liabilities: | ||
Lo ans and bo rrowings | 28,297 | 28,798 |
Lease liabilities | 8,921 | 9,283 |
Other current financial liabilities | 39 | 2,229 |
Trade payables to related companies | - | - |
Trade and o ther payables | 187,098 | 171,084 |
Other payables | ||
Accounts payable to public administrations | 19,960 | 14,103 |
Other current liabilities | 32,644 | 31,537 |
52,604 | 45,640 | |
To tal current liabilities | 276,959 | 257,034 |
To tal equity and liabilities | 2,011,886 | 1,945,685 |
Q1 2024 Statement | Consolidated financial statements | 9 |
Income statement
(€ thousand) | Q1 2024 | Q1 2023 | Change |
Revenue | 298,347 | 322,002 | (7.3) % |
Changes in inventories of finished goods and work-in-progress | 60 | (1,201) | - |
Procurements | (140,809) | (159,240) | (11.6) % |
Other operating income | 2,451 | 3,147 | (22.1) % |
Personnel expenses | (37,006) | (38,476) | (3.8) % |
Other operating expenses | (77,754) | (76,939) | 1.1 % |
Amortisation/depreciation, impairment and provisions | (20,723) | (20,205) | 2.6 % |
Operating profit/(loss) | 24,566 | 29,088 | (15.5) % |
Finance income | 352 | 1,304 | (73.0) % |
Finance expenses | (10,177) | (8,345) | 22.0 % |
Net exchange differences | 2,272 | 410 | - |
Net finance income/(loss) | (7,553) | (6,631) | 13.9 % |
Profit/(loss) before tax | 17,013 | 22,457 | (24.2) % |
Corporate income tax | (5,914) | (8,456) | (30.1) % |
Profit/(loss) for the period | 11,099 | 14,001 | (20.7) % |
Attributable to: | |||
Parent Company's owners | 9,446 | 15,159 | (37.7) % |
Non-controlling interests | 1,653 | (1,158) | - |
Earnings/(losses) per share attributable to | 0.24 | 0.38 | (37.7) % |
Parent Company's owners (in euros per share) | |||
Q1 2024 Statement | Consolidated financial statements | 10 |
Statement of cash flows
(€ thousand) | Q1 2024 | Q1 2023 | ||
Pro fit/(lo ss) fo r the period before tax | 17,013 | 22,457 | ||
Adjustments fo r: | 25,687 | 23,209 | ||
Depreciation and amortisation | 20,723 | 20,205 | ||
Changes in provisions | (2,425) | (3,445) | ||
Interest income | (352) | (1,304) | ||
Finance costs | 10,177 | 8,345 | ||
Other profit/(loss) | (164) | (182) | ||
Exchange differences | (2,272) | (410) | ||
Changes in wo rking capital: | (28,067) | (23,494) | ||
Trade receivables and other current assets | (42,494) | (15,582) | ||
Inventories | (6,579) | (3,630) | ||
Trade payables | 21,006 | (4,282) | ||
Other cash flo ws from operating activities: | (87) | (2,378) | ||
Taxes paid | (87) | (2,378) | ||
Net cash flo ws from/(used in) operating activities (I) | 14,546 | 19,794 | ||
Cash flo ws fro m investing activities: | ||||
Investments in intangible assets | (627) | (224) | ||
Investments in property, plant and equipment | (18,298) | (31,497) | ||
Collections from disposal of Group and associated companies, net of cash | - | 113 | ||
Net cash flo ws from/(used in) investing activities (II) | (18,925) | (31,608) | ||
Cash flo ws fro m financing activities: | ||||
Cash inflows from bank borrowings and other liabilities | 398 | 3,948 | ||
Cash outflows from bank borrowings and other liabilities | (2,891) | (3,217) | ||
Interest paid | (9,417) | (6,840) | ||
Net cash flo ws from/(used in) financing activities (III) | (11,910) | (6,109) | ||
Effect of fo reign exchange rate changes on cash & cash equivalents (IV) | (78) | (838) | ||
Net increase/(decrease) in cash and cash equivalents (I+II+III+IV) | (16,367) | (18,761) | ||
Cash and cash equivalents at the beginning of the period | 106,692 | 161,751 | ||
Cash and cash equivalents at the end of the period | 90,325 | 142,990 | ||
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Disclaimer
Befesa SA published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 06:52:04 UTC.