Aurubis AG Q3 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, everybody, thanks for the presentation. Look my question, I guess is about the TC/RCs and ultimately the concentrate book. I think what you've mentioned on the call is that you've got good visibility through the end of this fiscal year. So that's eight weeks. And I'm just wondering what happens after that TC/RCs right now are up from their lows. They're up to $4 a ton, but that's still well below the levels that you were signing contracts at a year or two ago. So could you give us some color on how we should think about the book on concentrates into next year, please?

Question: Jason Fairclough - Bank of America - Analyst : And I guess my question then, Roland, are you actually contracting now or are you actually waiting to contract to see what happens in the market?

Question: Jason Fairclough - Bank of America - Analyst : So sorry, just to finish then. So does that mean that you will wait before contracting or are you contracting on a rolling basis? How should we think about the direction of the realized TC/RCs into the next calendar year?

Question: Jason Fairclough - Bank of America - Analyst : Okay. I appreciate the color. Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Great. Thank you very much for the presentation. First question for me is on the EBT outlook for the current fiscal year. As there have been some press reports that Hamburg has faced some ramp-up challenges following completion of the maintenance in early July. Can you provide some color around this? And do you still think that the upper end of the EBT outlook is achievable for the current fiscal year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2024 / 2:00PM, NAFG.DE - Q3 2024 Aurubis AG Earnings Call Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Understood. Thank you very much for that. Second question on the recycling side, you -- I think you suggested that there has been a temporary improvement in scrap availability? Could you please confirm around that point? What are you seeing in the market right now? Are the Chinese smelters still bidding for scrap aggressively? Yes or no and what sort of first scrap are refining charges did you see in the spot market? Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. And maybe just a last one from me. On the ramp-up costs at Richmond, how much of that burden to your fiscal Q3 results? And are you still guiding to EUR30 million ramp-up impact cost during their current fiscal year?

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2024 / 2:00PM, NAFG.DE - Q3 2024 Aurubis AG Earnings Call

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Yeah. Good afternoon, everyone, and thanks for taking my questions as well. My first question is actually a quick follow-up on the secondary market business. Just could you please briefly let us know whether your realized scrap RCs will already start to improve in the course of your last fiscal year quarter, i.e., of the order backlog which you've got there, is that already indicating towards a higher profitability in the secondary business in Q4? That's my first question.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay, understood. Then just getting back on the primary business, could you maybe share with us the percentage of your volumes, which actually do have a benchmark component? And what would happen if there is no benchmark, would you basically just enter bilateral agreements? What would be the game plan here?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay, understood. That is very interesting. Maybe very last question. I mean, do you believe that there is a realistic chance that ultimately the smelting market may be forced into maybe the discussed benchmark of, say, $10 to $30. And I guess as you were pointing out, given your diversification of your business model, how confident would you be to say that you'll be able to compensate a large part, basically the possible hit you may be taking on the primary contract business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2024 / 2:00PM, NAFG.DE - Q3 2024 Aurubis AG Earnings Call

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay. Thank you. Thanks Mr. Harings and also all the best for your next steps wherever they may lead you.

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : Yeah. Thank you for taking my question. I was wondering, you obviously have the impressive CapEx program of EUR1.7 billion. Was wondering once Richmond is ramped up, could you give us an indication where the annual maintenance CapEx for the plan to be in maybe once you're through with all the CapEx program for the entire maintenance CapEx for Aurubis as a group? Thank you.

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

Question: Christian Obst - Baader-Helvea - Analyst : Thank you and good afternoon. I start with (inaudible) as operating expenses increased by approximately EUR75 million on a nine month basis. So how much of that was one-time because of legal severance of our your can you give us an indication? Is the first question.

Question: Christian Obst - Baader-Helvea - Analyst : Yeah. Then I come to the second question. Maybe it's a concerning the net financing, the net debt position increasing by approximately EUR600 million across our working capital increases and all the CapEx. So how much of that is structural for your ramp up, especially for the for the investment and positive start in the US., And, what kind of a guidance for the net financial position do you give for this year? And the CapEx guidance so for the next year, this is the second question.

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : And the working capital of EUR1.4 billion to EUR1.5 billion is also something which is than sufficient for the next year. And that is a phase of the ramp up or at the US.

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : And then another question also concerning the ramp-up in the US. Do you start with more, I would say, easy to treat material you're getting from your suppliers, something like the cables or whatsoever and then moving towards a more complex situation or the or directly starting with some kind of a complex mix to ramp up your facilities there?

Question: Christian Obst - Baader-Helvea - Analyst : And another one concerning also small, the US and all the investments you have are we have seen, of course, an increase of personnel cost by 12.5% on a year-on-year basis. Are you now in a situation where you have enough people on board or you are still in a hurry phase and we do expect more do you -- we have to expect more of an increase when it comes to personnel costs and number of employees?

Question: Cornelis Kik - Hauck AufhSuser Investment Banking - Analyst : Okay. Then thank you very much. And of course, also from my side, all the best for your future and everything we like to do going forward. Thank you.

Question: Maxime Kogge - ODDO BHF Corporate & Markets - Analyst : So following on the guidance, there was up to now a guidance for operating free cash flow at EUR500 million to EUR600 million this year are you still committed to it? And can you even target the upper half, like I mean, like for the EBT guidance?

Question: Maxime Kogge - ODDO BHF Corporate & Markets - Analyst : Okay. That make sense. And second question is on battery recycling. So this has become a tougher market. We have seen some of the players, interrupt opposes the plans. So how are you thinking of this of the market in that context. And as we see increasing substitution for NMC for LST -- NMC, does your on model work in that you -- in that new paradigm? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2024 / 2:00PM, NAFG.DE - Q3 2024 Aurubis AG Earnings Call

Question: Maxime Kogge - ODDO BHF Corporate & Markets - Analyst : Okay. Good to hear. And also on my side, are we should have success in your next endeavors.

Question: Daniel Major - UBS Investment Bank - Analyst : Most of my questions have been answered, but some. First one on recycling margins and outlook. You mention some tightening of the market and some downward pressure on the from the scrap funding charge. Can you give us any kind of expectations for 2025, particularly with the ramp up of Richmond? We're hearing some tightness in the market in the US because of the short squeeze on COMEX do you expect that to impact scrap availability and therefore your margins on Richmond as you ramp up into next year?

Question: Daniel Major - UBS Investment Bank - Analyst : Okay. Thanks. And then the next questions, follow up on the battery recycling strategy and comments. How much is the run rate of capital expenditure or broader expenditure on this growth option in the current fiscal year and your expectations for next year?

Question: Daniel Major - UBS Investment Bank - Analyst : Okay. So typically you expect to be ready to make an investment decision on the circa EUR0.5 billion battery recycling option within the next calendar year or calendar year '25?

Question: Daniel Major - UBS Investment Bank - Analyst : Okay. Thanks and just one very quick one, if I could. I think the second phase of Richmond latest CapEx guidance was about EUR300 million for Phase 2. I know you said that your overall group CapEx is still trending towards a EUR115 million you guided, but is that EUR300 million for the Phase 2 still the right estimate?

Question: Daniel Major - UBS Investment Bank - Analyst : Excellent. Thanks so much and good luck. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2024 / 2:00PM, NAFG.DE - Q3 2024 Aurubis AG Earnings Call

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Thank you very much. Thanks for taking the follow-ups. Just a couple from my side. Just starting first with the recycling operations. Again, if we were to take the top end of the EBT guidance range for MMR for this current fiscal year also to get a very small EBT for Q4 in the order of EUR10 million is that what you really expect for the division to deliver? Is this a function of the ramp-up losses at Richmond? Or is there anything else to take into account there? Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. Thank you. And second question on the hydrogen ready anode furnaces. Can you perhaps talk about what sort of price level of green hydrogen will be needed to get these furnaces to cost parity with using natural gas instead just to get a sense on the OpEx differential. Thank you.

Question: Ioannis Masvoulas - Morgan Stanley - Analyst : Very clear. Thanks for that. And Roland, the best of luck from my side as well to you and also to the new Aurubis Board. Thank you.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Yes, sorry, just a very quick follow-up. In terms of the ramp-up cost, we think we will be running at around EUR14 million , 15 million in the fourth quarter. Could you just please let us know how that will be rolling into the next year. What is the latest cost estimate you have for ramp-up costs for the Richmond plant in the new fiscal year is the [EUR50] million, is that like a run rate which was hit very quickly, some will it even go higher initially and then fade some color on that would be great.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay, understood. Thank you.