Buoyant scrap copper supply aids Aurubis' big earnings boost

SEATTLE (Scrap Monster): Aurubis, world’s largest copper recycler came out with better-than-expected quarterly earnings. The operating earnings during Jan-Mar ’17 quarter rose significantly higher, beating analyst expectations. The sharp jump was mainly aided by strong supply of copper scrap on account of high metal prices during the three-month period.

Aurubis reported nearly 30% jump in operating pretax profit (EBT) during the second quarter ending March 2017. The EBT rose to 100 million euros during the quarter, when matched with 77 million euros during the corresponding quarter a year before. The sales during the quarter rose 27% to 2.966 billion euros. Consolidated net operating profits surged higher by one-third to 76 million euros. The operating EBT and revenues were well above the average forecasts of 90.6 million euros and 2.66 billion euros respectively.

According to Aurubis, the strong result was driven primarily by healthy raw material markets. Higher metal prices boosted copper scrap supply, it noted. Further, copper concentrate treatment and refining charges (TC/RCs) also remained high, on increased processing of complex ore. The company attained high throughput levels in concentrate processing, despite shutdown in Hamburg. The sales of preliminary products surged higher on account of increased demand for flat rolled products. Moreover, strong US dollar prices during the quarter turned favorable for the company, as significant part of Aurubis’ income is dollar-based.

On the other hand, ongoing global surplus in sulfuric acid market impacted the company’s revenues during the quarter. The drop in cathode premium by $6 to $86 too impacted the result. On the flip side, demand for copper wire rod declined during Q2.

Aurubis’ revenues during the first half of the fiscal year were up by € 703 million to € 5,428 million, when compared with € 4,725 million during the corresponding half of the fiscal prior to this. The operating EBT during the first half of fiscal year 2016/17 jumped higher marginally from € 113 million to € 118 million. Also, the negative measurement effects of € 26 million in Q1 were fully offset during the second quarter.

Going forward, the company does not expect far-reaching changes in raw material or product markets during the remaining half of the fiscal. The high output from mines is likely to ensure supply of copper concentrates. The company’s expertise in processing of complex raw materials will fetch high refining charges. The improved market situation of sulfuric acid is likely to have positive impact on earnings beginning third quarter of the fiscal, the company hoped. It also expects the demand for wire rod, strip products and shapes to remain stable. Although scrap copper supply is expected to remain strong in the coming months, price decline in short term could result in tightened market, Aurubis warned.

The copper concentrate throughput of the company’s Pirdop smelter in Bulgaria rose 7% year-on-year to 651,000 tonnes during the first half of fiscal 2016-’17. Sulfuric acid output registered 8% jump over the previous year to 664,000 tonnes. Cathode output has edged higher marginally by 1%. During second quarter alone, the copper concentrate and sulfuric acid output has jumped higher by 7% each. On the other hand, cathode output has declined marginally by 2% during the second quarter of the fiscal.