May 15, 2020 / 5:20 AM / 15 days ago

Aurubis upbeat on annual outlook despite coronavirus risks

HAMBURG (Reuters) - Aurubis AG, Europe’s largest copper producer, posted on Friday a drop in quarterly profit but confirmed its annual earnings forecast despite the market uncertainty and economic fallout from the coronavirus crisis.

FILE PHOTO: Copper pipes are pictured during a double distillation at a distillery in France, October 30, 2017. REUTERS/Regis Duvignau/File Photo

Operating earnings before taxes (EBT) in the second quarter ended March 31 dropped 5% to 60 million euros ($64.82 million) from the previous year, the Germany-based company said.

Aurubis, however, reaffirmed its full-year operating EBT outlook of between 185 million and 250 million euros.

“Despite the increasingly challenging raw material and sales markets, we can confirm our forecast for fiscal year 2019/20 thanks to our very robust business model and strong starting position in particular,” Chief Executive Roland Harings said in a statement.

Much of Europe went into the coronavirus-led lockdown in late March just as the quarter was ending.

“Considering the COVID-19 pandemic, we have steered Aurubis through the crisis well so far,” Harings said. “By implementing measures very early on, we were able to effectively protect our employees’ health, prevent infection chains and continued production without limitations.”

Production at all sites was at a good level in the second quarter, it said.

Overall smelter availability in the new financial year is expected to be better than 2019. Last year, the company’s second-quarter numbers were hit by smelter shutdowns.

Aurubis still expects to source sufficient supplies of its raw materials copper concentrates (ore) and copper scrap despite the coronavirus-induced disruption to economies.

Though treatment and refining charges for concentrates (TC/RCs) are under pressure, refining charges for copper scrap are still at a high level, it said.

TC/RCs are paid to copper smelters to refine concentrate into metal and are a key part of the copper refiners’ income.

“On the sales markets for copper products, the negative effects of ongoing production shutdowns in customer industries are intensifying,” it said. “Aurubis assumes that demand for wire rod and shapes products will be weaker in the next few months.”

Earlier this month, Aurubis won the European Union competition approval for its 380 million euro acquisition of Belgian-Spanish metal recycling group Metallo as part of an acquisition-led expansion into other metals alongside copper. Along with copper, Metallo produces a range of other metals including tin and lead.

The acquisition will give Aurubis “new growth momentum and strengthen its path to becoming a multi-metal provider,” Aurubis said.

Reporting by Michael Hogan, Editing by Riham Alkousaa and Sherry Jacob-Phillips

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