Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Befesa SA (WBO:BFSA, Financial) reported a 9% year-on-year increase in adjusted EBITDA for the first half of 2024, reaching EUR103 million.
- The company successfully extended the maturity of its debt to July 2029, reducing refinancing risks.
- Befesa SA (WBO:BFSA) completed the acquisition of the remaining 50% of Recytech, enhancing its leadership position in Europe.
- The company has extended its zinc hedging program until the first quarter of 2026 at record price levels, providing earnings visibility.
- Operational improvements in the US recycling operations have contributed positively to EBITDA.
Negative Points
- The aluminum salt slag business experienced a 19% year-on-year decrease in EBITDA due to lower aluminum metal margins.
- The company's operations in China remain challenging due to a weak real estate market, affecting plant utilization rates.
- Despite improvements, the zinc refining plant in the US is still in turnaround and ramp-up, with breakeven expected by year-end.
- Befesa SA (WBO:BFSA) faces ongoing pressure from lower zinc LME prices, impacting overall profitability.
- The company anticipates continued volatility in zinc prices, which could affect future earnings.
Q & A Highlights
Q: Can you provide an update on the synergy target in the US and what we can expect for the second half of the year?
A: We are targeting the last EUR10 million in synergies for the year, which aligns with our ongoing plans. This is the figure we have been managing for this year. - Javier Molina Montes, Chairman, Executive Director
Q: Can you give us a figure for the EBITDA contribution of the US operation for the first half?
A: We don't provide EBITDA breakdown by markets, but with the synergies and existing operations, we are on track with the initial plan from the acquisition in July 2021. The US target is EUR45 million to EUR55 million by year-end. - Rafael Perez, CFO
Q: What can we expect in terms of volume growth in the US in 2025?
A: We anticipate growth in the range of 50,000 to 60,000 tonnes, considering some projects for steelmakers are on hold or delayed. - Asier Zarraonandia Ayo, CEO
Q: Can you explain the reason for the delayed completion of Phase 2 and any risk of cost overrun?
A: The delay is minor, with the second kiln expected in Q3 2025. The project is on budget and on time. - Asier Zarraonandia Ayo, CEO
Q: How should we think about the margins for the aluminum business in the second half of the year?
A: The aluminum business margins are under pressure due to lower demand and competitive pricing. We expect some normalization in 2024 compared to the high margins in 2023. - Javier Molina Montes, Chairman, Executive Director
Q: Regarding China, how should we think about the second half of the year for utilization levels?
A: We expect Jiangsu to reach around 70% utilization for the year, with some growth from new client volumes. Overall, we anticipate breakeven contribution from China. - Javier Molina Montes, Chairman, Executive Director
Q: What is the expected EBITDA for the salt slag and secondary aluminum businesses for the year?
A: We expect around EUR44 million for the year, with strong performance in salt slag and lower contribution from secondary aluminum due to margin pressures. - Asier Zarraonandia Ayo, CEO
Q: Can you clarify the utilization in the US, considering the refurbishment of the first plant?
A: The plant is running with one kiln while the other is under refurbishment, and the total 70% utilization considers full capacity in the US. - Javier Molina Montes, Chairman, Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
