Sunday, October 1, 2023

Aurubis and Salzgitter present new perspectives after alleged fraud -September 19, 2023 at 3:17 p.m.

(New: Salzgitter adjusts his outlook)

HAMBURG (dpa-AFX) – The Aurubis copper group suffers from alleged fraud by some scrap suppliers and weighs several hundred million euros. After taking stock, the Hamburg company and its main shareholder Salzgitter made new forecasts for the current year. After the cases were announced, both groups initially withdrew their predictions. Both stocks rose Tuesday afternoon.

Aurubis expects expenses of around 150 million euros, according to the Hamburg company MDax. The announced extraordinary inventory of metal stocks revealed a deficit of 185 million euros that will weigh on the current financial year 2022/23 until the end of September. Insurance compensation and possible collection of money from offenders should further reduce this sum by around 30 million euros. Therefore, and taking into account the economic evolution of the fourth quarter, Aurubis expects an operating profit before taxes of between 310 and 350 million euros for 2022/23.

Aurubis shares rose on the news and led the MDax in the afternoon, up 3.4 percent to €69.68. “With the ad hoc press release, the uncertainty is dispelled for the moment and the chapter is closed for the capital market. The damage is not even a negative surprise,” commented stock expert Frederik Altmann of Alpha Wertpapierhandel.

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At the end of August, the Hamburgers had noticed considerable deviations from the theoretical stocks with regard to metal stocks, as well as deviations in special samples of certain raw material deliveries in the recycling area. This should be a consequence of other criminal acts that exceed the cases published in June 2023, he said. He had contacted the national judicial police office.

At the time, the group also suspended its annual forecast for a pre-tax operating profit of between €450 million and €550 million. The stock then fell by almost a fifth to 62.50 euros, but had already recovered well recently.

In the context of the new Aurubis forecasts, Salzgitter AG also presented new perspectives. The steel producer owns around 30% of the stake and also suspended its annual profit target due to Aurubis uncertainties.

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Salzgitter now expects earnings before interest, taxes, depreciation and amortization of between €650 million and €700 million by 2023. Before the suspension, the company had forecast between €750 million and €850 million. Profit before tax is expected to reach between €200 and €250 million, up from €300 and €400 million previously announced.

The share, which is listed in the SDax small-cap segment, rose 1.6 percent to 24.76 euros.

According to Aurubis, “it is now proven that deliveries and samples of raw materials from the recycling sector that contained high levels of precious metals were manipulated to the detriment of Aurubis.” Therefore, excessive invoices would have been paid, despite the usual safety standards in the sector. However, it has not yet been possible to say which suppliers are affected. The company appealed to the National Judicial Police Office, which continues its investigation.

However, it can be ruled out that Aurubis customers and deliveries to them are affected by fraud, he added.

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To prevent a repeat of the incident, the group’s CEO, Roland Harings, wants to implement “process improvements and other security measures.” Details on this could be given on December 6 when the annual figures are published.

As Aurubis had recently pointed out, the financial damage will not have an impact on expansion plans. As has long been known, the Hamburg company wants to invest around 1.1 billion euros in the USA, Bulgaria and Germany until 2026. The largest contribution to the profits of the current growth projects should then come from the recycling in Richmond (USA), where production is expected to begin later in 2024. In the United States, scrap metal recycling is booming.

And battery recycling, increasingly important in the era of electromobility, is also at the center of Aurubis’ concerns. The review is ongoing. But the decision should only be made in the medium term./mis/knd/nas/mis

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