Aurubis AG Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jason Fairclough - Bank of America - Analyst : Good afternoon and thanks for the call, folks. Just a couple of quick ones from me. First, could you talk a little bit about your contract book? I'm just thinking about how quickly it rolls off if we have an extended period here of low TC/RCs. And then second, maybe a little bit shorter term, how do we think about profit weighting between the first half of this year and the second half? Should we expect lower profits into the second half?

Question: Jason Fairclough - Bank of America - Analyst : Can I just follow up on the contract book? It's an annual contract book and obviously you have a September year end, so you're protected one quarter into next year. But as a hypothetical exercise, let's say that TC/RC's benchmark came from [80 and 0.08] and it was down at [60 and 0.06]. Would you see the full impact of that change, or do you have protection beyond that?

Question: Jason Fairclough - Bank of America - Analyst : And sorry, that impact is per quarter or on a full year basis?

Question: Jason Fairclough - Bank of America - Analyst : Total year.

Question: Jason Fairclough - Bank of America - Analyst : Yeah, and so sorry -- just to finish up, and last one I promise. If we look at spot TC/RCs at zero, does that mean that your business can actually take spot TC/RCs at zero? It's fine? You still have some profit?

Question: Jason Fairclough - Bank of America - Analyst : Okay, all right, that's great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 12:00PM, NAFG.DE - Q2 2024 Aurubis AG Earnings Call

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Yeah, hey, good afternoon, all. My first question is also on the concentrate market. And here, I just wanted to pick your brain on whether you think that we may be running into a scenario where the benchmark may potentially even be abolished, and you may just enter like a different business system with your customers and suppliers? That's my first question. Then maybe in relation to that, are you basically foreseeing any forced shutdowns anywhere outside China at this point?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Thanks for those comments. That also leads me to my next question. I think you recently gave an interview where you said that I think the industry may potentially have to consider a larger degree of trade protection also for the Western markets here. So what do you exactly think needs to happen?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay. And then moving over to the recycling market, I think you mentioned that you started to see a couple of indicators basically suggesting that we may be at an inflection point. So what's really driving that confidence? I guess conceptually, given where metal prices are, one would also believe that the value in the scrap pool has just risen so much that there also should at some point be a larger degree of supply from that scrap pool. But what at this point is driving those screenshots of the easing situation?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Great. And my last question is actually probably would have been one for Mr. Verhoeven, but it's actually on cash flow and working capital. So sorry that I'm throwing that at you, but from my perception, I think the cash flow and the working capital in particular has developed quite a bit better than what you indicated, I guess, in the last conference call. So what are the net debt levels you're envisaging until the end of the year and have those numbers basically changed versus what you were hoping for earlier?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Understood. Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Hi, Ioannis Masvoulas from Morgan Stanley. Thanks for taking the questions. First one, going back to the outlook for recycling and the fact that you pointed the increased competition for scrap from Asian players, how should we expect that to develop into the second half, assuming the concentrate market remains even tighter? Would Asian players pull more scrap units to make up for the limited concentrate availability or not? And if that's the case, could it be an incremental negative effect for your business beyond just the exposure to treatment charges? Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. Thank you for that. And second question, again, on recycling. If we look at the EBT in the first half of the fiscal year, you delivered EUR75 million. And that suggests that you're tracking well into the upper half of the guidance range, and you could potentially beat the upper half. Could you comment whether you're being too conservative here? Or if there are any headwinds in the second half beyond the maintenance impact? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 12:00PM, NAFG.DE - Q2 2024 Aurubis AG Earnings Call

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. And sorry, can you remind us the ramp up cost of your budgeting for enrichment in the current fiscal year?

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Great, very clear. And very last one from me. We've seen several companies in the US receiving grants, including for investments in copper recycling. Do you expect the Aurubis to benefit from US policy support in the short term? If not, is it more of a medium-term or long-term prospect, just trying to figure out why Aurubis would not have benefited from these grants, given your very significant investment in the country over the past couple of years?

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. Thanks again.

Question: Maxime Kogge - ODDO BHF - Analyst : Yeah, good afternoon. So first question is on the guidance upgrade, because last time you said you were rather targeting the low end of the guidance. Now it's a mid-range, so it's very positive, but is it fair to consider that it's mostly driven by metal prices that have developed quite well over the recent months? Is it the major driver? Because at the same time, you seem to be a bit more muted on the wire rod [sales]. I think you said last time that they would be higher than last year, and now they will be at the same level. So that's my first question.

Question: Maxime Kogge - ODDO BHF - Analyst : Okay, and a second one is on the fraud that you suffered, I mean, the criminal activity that you suffered last year. I think you still had to precisely determine what share of it related to theft, what share related to a collusion, and what share related to perhaps something else. Where do you stand in that respect? When are you going to finally determine actually the various drivers behind this?

Question: Maxime Kogge - ODDO BHF - Analyst : Okay, that's very clear. And just last one on TC/RC for concentrate, sorry to ask you that, but we have some negative prices actually over the past few weeks, and this was something that was not imaginable until very recently. And would you expect some smelters to accept to pay miners actually to get the concentrate? And yourself, would you be ready to pay for concentrate? I know you're not very active on the spot market, but I would be curious to have your view on that.

Question: Maxime Kogge - ODDO BHF - Analyst : All right. Thank you.

Question: Daniel Major - UBS Investment Bank - Analyst : Hi there. Can you hear me, okay?

Question: Daniel Major - UBS Investment Bank - Analyst : Great. Thanks. Yeah, just one key question, really. You said that the current suite of projects are on track. I think previously you indicated there's EUR440 million for the first phase, EUR300 million for the second phase of the Richmond project. Is that second phase still in line with budget? Obviously, the first phase is nearly complete. Are you still confident in the guidance there for phase 2?

Question: Daniel Major - UBS Investment Bank - Analyst : Great. And then just one last one, if I may. You provided some sensitivity earlier around the treatment charge. Can you provide the same for the copper price? What does $0.10 a pound, $100 a ton, whatever you want to quote, can you give any sensitivity on that through the metal result?

Question: Daniel Major - UBS Investment Bank - Analyst : Perfect. Thanks so much

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : Hi, thank you for taking my question. I would just have a question regarding the TC/RCs for the quarter that has just ended. If I have it correctly in mind, the benchmark was 80 and 8, which is lower than the previous year. So I'm a bit surprised that you reported higher TC/RCs for at Aurubis compared to the previous year. Could you maybe explain the dynamic behind that? That would be great. Thank you.

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : All right. So that would mean that we'll be lower than for the next quarter. Is that right?

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : Okay. Thank you.