Luxembourg - Befesa S.A. ('Befesa'), the leading provider of hazardous waste recycling services enabling the circular economy within the steel and aluminium industries, delivered total revenue of EUR904 million and adjusted EBITDA of EUR137 million in 9M 2023.
Total revenue increased by 8% to EUR904.2 million in 9M (9M 2022: EUR840.6 million) and by 8% to EUR288.7 million in Q3 (Q3 2022: EUR268.0 million). The increase in revenue was primarily attributable to the contribution from the US zinc refining operation. However, adjusted EBITDA decreased by 17% to EUR136.7 million in 9M (9M 2022: EUR163.9 million) and by 8% to EUR42.0 million in Q3 (Q3 2022: EUR45.9 million).
The EBITDA decrease was primarily driven by lower zinc LME prices, the unfavourable increase in zinc TC (19% yoy) and higher coke prices, partially offset by better zinc hedges, lower energy prices and synergies. Regarding volumes, the throughput of electric arc furnace (EAF) steel dust remained roughly flat at 890 kt in 9M 2023 (-1% yoy) and increased to 297 kt in Q3 2023 (+11% yoy), with an average capacity utilisation of around 70%, and a mixed performance across Befesa's markets: In Europe, EAF steel dust treated volumes stayed at solid levels, despite challenging steel production levels. In China, volumes remained impacted by the real estate crisis. The zinc refining plant in North Carolina ran at high utilisation levels with a focus on gradually improving profitability. The recycled volumes of aluminium salt slags increased by 7% to 258 kt in 9M 2023 and by 30% to 87 kt in Q3 2023, with an average capacity utilisation of around 73%. Secondary aluminium alloys volumes increased by 3% to 126 kt in 9M 2023 and by 4% to 39 kt in Q3 2023, with an average capacity utilisation of around 80%.
The yoy volume increase in Aluminium Salt Slags was primarily driven by the resumption of operations of the Hannover plant in 2023. On base metal prices, zinc LME prices were persistently low compared to prior year and averaged EUR2,493 per tonne in 9M 2023 (-27% yoy) and EUR2,232 per tonne in Q3 2023 (-31% yoy). Higher zinc hedging prices partially compensated the lower zinc LME prices. Zinc TC was set at $274 per tonne for the full year 2023 (2022: $230 per tonne). Aluminium alloy prices averaged EUR2,186 per tonne in 9M 203 (-12% yoy) and EUR2,074 per tonne in Q3 2023 (-11% yoy). Energy prices had a mixed impact on Befesa in 9M 2023. After reaching all-time-high levels in the first half of 2023, Befesa's coke price started to reduce in Q3 2023 (-4% vs Q2 2023). However, the average coke price in 9M 2023 was still around 15% above that of in 9M 2022 and around 85% above the average level of 2019-2021. This had an adverse effect on the Steel Dust operations. Conversely, gas and electricity prices in Q3 2023 continued at around 2021 average levels, which had a positive impact on the Aluminium Salt Slags operations.
In 9M 2023, Befesa's operating cash flow amounted to EUR63.7 million (9M 2022: EUR78.3 million). Liquidity remained at more than EUR150m, with cash on hand of EUR81 million at Q3 closing (EUR162 million at year-end 2022). Net leverage amounted to x3.38 (x2.56 at year-end 2022). Javier Molina, Executive Chair of Befesa, commented: '2023 has been a challenging year, affected by a convergence of temporary external factors, from high zinc treatment charges and low zinc prices to all-time-high coke prices and some operational delays in the US and China. The improvement in the macroeconomic environment that we expected for H2 2023 has not occurred and now, we expect the current challenging conditions to continue throughout the rest of the year. However, going into 2024, we see tailwinds driven by the reversal of many of the 2023 headwinds, such as coke price normalisation, more favourable zinc TC and LME price combination, better zinc hedges, growth in our US business, and a positive contribution from China. We are committed to rigorously execute our growth projects, which will position the company strongly for the years ahead.'
Financial calendar
The financial calendar is available in the Investor Relations / Investor's Agenda section of Befesa's website.
About Befesa
Befesa is a leading player in the circular economy, providing environmental, regulated services to the steel and aluminium industries with facilities located in Germany, Spain, Sweden, France, as well as in Turkey, South Korea, China and the US. Through its two business units, Steel Dust and Aluminium Salt Slags recycling services, which are a critical part of the circular economy, Befesa manages and recycles 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.
Contact:
Email: irbefesa@befesa.com
Tel: +49 2102 1001 0
BEFESA S.A. 
