Befesa S.A. ('Befesa'), the leading providerof hazardous waste recycling services enabling the circular economy within the steel and aluminium industries, delivered a total revenue of EUR615m and an adjusted EBITDA of EUR95m in H1 2023.
Total revenue increased by 8% yearon-year to EUR615.5 million (H1 2022: EUR572.5 million), primarily attributable to the contribution from the US zinc refining operations. However, adjusted EBITDA 2023 stood at EUR94.7 million, a 20% decline compared to H1 2022 with EUR118.0 million. This decrease was primarily driven by lower zinc LME prices, as well as by the unfavourable increase in zinc TC (19% year-on-year).
The persistently high coke price was more than offset by lower gas and electricity prices. Regarding volumes, the throughput of electric arc furnace (EAF) steel dust experienced a 6% decline yoy to 592 kt, with an average capacity utilisation of around 71%. This reduction was primarily driven by the US operations and the earthquake in Turkey. The recycled volumes of Salt Slags and SPL (Spent Pot Lining) slightly declined by 1% yoy to 171 kt, with an average capacity utilisation of around 73%. Secondary aluminium alloys volumes saw a 3% increase yoy, reaching 87kt, with an average capacity utilisation of around 86%. On base metal prices, zinc LME market prices decreased by 25% or more than EUR880 per tonne yoy to average EUR2,624 per tonne in H1 2023 but were partially offset by higher zinc hedging prices.
Zinc TC was set at $274 per tonne for the full year 2023 (2022: $230 per tonne). Aluminium alloy market prices were down 12% yoy to average EUR2,243 per tonne. With regards to energy prices, after reaching an all-time-high level in Q1 2023, Befesa's coke price started to moderate in Q2 2023 (-3% versus Q1 2023). However, the average coke price in H1 2023 is still around 25% above that of H1 2022 and around 90% above the average levels of 2019-2021. This negatively impacted on the Steel Dust operations. Conversely, gas and electricity prices decreased further in Q2 2023, back to 2021 average levels, which had a positive impact on the Aluminium Salt Slags operations. In H1 2023, Befesa's operating cash flowamounted to EUR42.0m (H1 2022: EUR64.0m). Liquidity remained at more than EUR200m, with cash on hand of EUR143.5m at H1 closing (EUR161.8m at year-end 2022). Net leverage amounted to x2.96 (x2.56 at year-end 2022). Javier Molina, Executive Chair of Befesa, commented: 'We achieved a solid performance in H1, despite a very challenging macroeconomic environment.
This demonstrates Befesa's robust business model and supports our confidence in long-term growth. Our performance was affected by various temporary external factors, including unfavourable zinc and aluminium prices, zinc treatment charges, and persistently high coke prices. We expect a stronger H2 based on a recovery in zinc prices, continued decreased coke prices andbetter volumes. We are committed to rigorously execute ourgrowth projects, with a focus on refurbishing the Palmerton plant in the USA and our third plant in China which will position us strongly for the years ahead.
Sustainable Global Growth Plan (SGGP)
Befesa's Sustainable Global Growth Plan is progressing as planned. In theUSA, Befesa continues the gradual improvement of the performance of its zinc refining operations in Rutherford County, North Carolina. The refurbishment of the plant in Palmerton, Pennsylvania, is on track, and it will continue during the rest of 2023 and 2024 to benefit from and support the incremental EAF steel dust volumes expected in the US market over the coming years. Befesa's expansion in China continued to progress, with the start of operations at the second Chinese plant, in Henan. The two existing Chinese plants inJiangsu andHenan areoperating andwill contribute to earnings in H2 2023. Furthermore, Befesa is preparing its next EAF steel dust recycling plant - the third in China and thirteenth globally - in the province of Guangdong.
Outlook
Befesa expects a stronger overall second half of the year. This confidence is mainly based on the temporary nature of the external pressures, including an expected recovery in zinc prices, a reduction of coke price, and improved volumes. As a result, Befesa confirms its full-year guidance, with 2023 EBITDA expected at between EUR200m and EUR230m ( -7% to +7% yoy).
Webcast
Befesa will host a webcast on its H1 2023 results at 9.00CEST on 27 July 2023. Further details, a replay and other events are available on Befesa's website: www.befesa.com
About Befesa
Befesa is a leading player in the circular economy, providing environmental, regulated services to the steel and aluminium industries with facilities located inGermany, Spain, Sweden, France, as well as in Turkey, SouthKorea, China andtheUS. Through its two business units,Steel DustandAluminium Salt Slags recycling services, which are a critical part of the circulareconomy, Befesa managesandrecycles around 1.8 million tonnes of residues annually, with a production of above 1.5 million tonnes of new materials, which Befesa reintroduces in the market, reducing the consumption of natural resources. Further information is available on the Company's website: www.befesa.com
Contact:
Tel: +49 2102 1001 0
Email: irbefesa@befesa.com
BEFESA S.A. 
