Uptrend in earnings even stronger
Hamburg, 10 May 2005 – The positive trend in earnings at
Norddeutsche Affinerie AG (NA) has been further enhanced in
the 2nd quarter. Pre-tax earnings for the quarter amounted to € 23
million. This exceeds the previous year’s result by € 9 million.
Revenues also rose – mainly due to the very high copper prices
– to € 696 million (€ 643 million in the previous year).
The mines have increased their output of copper concentrates still
further on account of the high copper price. As a result, the treatment
and refining charges for the smelters have improved. However,
refining charges for copper scrap declined slightly. Demand for
copper products from the main customer industries remained at a
high level with good profit contributions.
Global copper demand is growing more strongly than the supply. The
International Copper Study Group (ICSG) expects there to be global
excess demand both in 2005 and 2006. „We are assuming that the
global copper shortage will continue with correspondingly stable
copper prices. Due to the good business trend in the 2nd quarter, we
are expecting business performance for fiscal year 2004/05 as a
whole to exceed the previous year’s results significantly“, said Werner
Marnette, Chief Executive Officer of Norddeutsche Affinerie AG.
In the 2nd quarter, 277,000 tonnes of copper concentrates (269,000 in
the previous year) were processed and 136,000 tonnes of copper
cathodes (138,000 tonnes in the previous year) were produced.
Compared with the record figures of the previous year, the output of
copper products remained mostly stable at a high level. The
production of wire rod and shapes amounted to 99,000 tonnes
(103,000 tonnes in the previous year) and 58,000 tonnes (63,000
tonnes in the previous year) respectively.
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The strip and wire output of NA’s subsidiary Prymetall has declined.
This was the result of the high copper prices and weak U.S. dollar in
addition to the seasonal impact of the winter months.
1st half-year 2004/05
NA Group revenues rose in the 1st half-year, primarily on account of
the metal prices. Product sales were hardly changed year-on-year at
a high level. Revenues increased to € 1,363 million (€ 115 million in
the previous year).
The gross profit improved by € 26 million to € 199 million compared
with the previous year (€173 million). This was particularly helped by
the full utilisation of NA’s higher processing capacity for copper
concentrates.
At € 90 million, personnel expenses were slightly up on the previous
year’s level (€ 88 million in the previous year). Depreciation and
amortisation decreased to € 26 million (€ 30 million in the previous
year).
Earnings before interest, taxes, depreciation and amortisation
(EBITDA) were generated in the amount of € 67 million, a significant
improvement year-on-year (€ 45 million in the previous year).
Earnings before interest and taxes (EBIT) totalling € 40 million
(€ 13 million in the previous year) were substantially higher. The
return on capital employed (ROCE) reached 13 %.
At € 35 million, the NA Group generated considerably higher earnings
before taxes than in the previous year (€ 8 million).
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NA’s results were impacted by the following factors in the 1st half of
fiscal year 2004/05:
•
The increased capacity of the concentrate processing facilities
was fully utilised.
•
Treatment and refining charges for concentrates on the spot
market have increased further.
•
Refining charges for copper scrap have improved year-on-year.
•
Sales of wire rod and shapes were almost unchanged at the
previous year’s high level.
The consolidated net income after minority interest was at a very
good level amounting to € 20 million for the 1st half-year (€ 4 million in
the previous year). This results in earnings per share of € 0.61 (€ 0.13
in the previous year).
Gross cash flow rose to € 55 million in the 1st half-year (€ 46 million in
the previous year) due to increased earnings after deduction of
income taxes.
Apart from maintenance measures, capital expenditure in the amount
of € 15 million (€ 13 million in the previous year) was mostly directed
into the modernisation of the precious metal processing facilities and
improvements in environmental protection in the secondary smelter
sector at NA AG in Hamburg as well as a material preparation plant in
Lünen.
The market for copper concentrates is still impacted by a
considerable oversupply. The stocks of concentrates worldwide have
further increased as a result of stoppages for general repairs at
various smelters. Accordingly, treatment and refining charges
(TC/RCs) on the spot market have risen further and currently amount
to some US$ 200 per tonne and cents 20 per lb of copper. TC/RCs
under long-term agreements will not be renegotiated in the market
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until a few months time; a significant increase is, however, expected
there as well.
The market for copper scrap and alloy scrap reflected the tough
competition from Europe and overseas. Refining charges for copper
scrap declined slightly and are too low in relation to the current
copper price. Nevertheless, all the recycling facilities could be kept
fully supplied with raw materials. The recycling business with
industrial waste continues to develop well.
After having completed most of the performance enhancement
programmes, the NA Group is now intensively examining further
growth possibilities and has developed possible scenarios. One of the
first steps is the relocation of NA’s concentrate transhipment from the
Hamburg harbour to the Elbe port of Brunsbüttel from 2007 onwards.
Quite apart from cost reductions, this will also result in the optimal
preparation of the mixtures for concentrate processing.
NA is also working on alternative concepts for a safe and costeffective energy supply. This must be optimised long-term. Thus,
investigations are continuing into the greater use of process energy.
Electricity formation from steam arising during the copper production
process is already being implemented. Additionally produced steam
can likewise replace natural gas in heating processes. NA is still
looking into the possibility of erecting a power plant with an output of
100 MW at the Hamburg production site.
The weak U.S. dollar is weighing on our customers’ export trade
despite the good economic trend in North America and Asia. The
sluggish economic trend in Euroland has slightly weakened the
European products markets in the last few months. Nevertheless, we
expect sales of continuous cast wire rod and shapes to be good in the
2nd half-year due to our stable order situation. We are assuming that
our core markets will pick up as well in the coming months which will
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immediately result in strong demand for NA’s copper products due to
the low level of stocks.
The NA Group had a total of 3,161 employees at the end of March
2005 (3,189 in the previous year).
Disclaimer
Forward-looking Statements
This information contains forward-looking statements based on current assumptions
and forecasts. Various known and unknown risks, uncertainties and other factors
could have the impact that the actual future results, financial situation or
developments differ from the estimates given here. We assume no liability to update
forward-looking statements.
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Consolidated key figures
(IFRS)
Fiscal year
2003/04
Fiscal year
2003/04
Fiscal year
2004/05
12 months
6 months
6 months
Revenues
€m
2,481
1,115
1,363
Gross profit
€m
388
173
199
Personnel expenses
€m
180
88
90
Depreciation and amortisation
€m
70
30
26
EBITDA
EBIT
Earnings before taxes
Net income
€m
€m
€m
€m
129
58
47
25
43
13
8
4
67
40
35
20
Earnings per share
€
0.76
0.13
0.61
Gross cash flow
€m
118
46
55
Capital expenditure
€m
28
13
15
2,607
2,397
3,180
3,206
3,256
3,160
Copper price (average)
Number of employees (average)
US$/t
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