Business performance in the Business Units

Business Unit Primary Copper

Business Unit Primary Copper Production Key figures

    T 017
     
in € million 2014/15
operating
2013/14
operating
     
Revenues 5,914 6,109
EBIT 271 150
EBT 256 130
Capital expenditure 70 82
Depreciation and amortization (86) (82)
Operating ROCE 31.1 % 16.9 %
Avg. number of employees 2,730 2,737
     
Prior-year figures have been adjusted.

Business performance and earnings trend

Business Unit (BU) Primary Copper produces pure copper cathodes from copper concentrates and recycling materials and processes intermediates from other smelters. The BU also produces and markets precious metals, sulfuric acid and iron silicate.

The main production sites are Hamburg (Germany) and ­Pirdop (Bulgaria), which both have smelting facilities and copper tankhouses.

The earnings of BU Primary Copper are determined first and foremost by treatment and refining charges (TC/RCs) for processing raw materials and by revenues from precious metal and sulfuric acid sales.

Operating earnings in BU Primary Copper in fiscal year 2014/15 exceeded the previous year’s earnings very significantly. The very good results were based in particular on the higher treatment and refining charges for copper concentrates, higher refining charges for copper scrap and improved revenues from cathode premiums. High sulfuric acid revenues owing to good global demand and a very good metal yield made additional contributions to the earnings increase.

In addition to the positive market factors in fiscal year 2014/15, it should be taken into consideration that the extensive maintenance and repair shutdown at the Hamburg site in September/October 2013 and problems starting up the primary copper production facilities negatively affected the BU’s prior-year earnings.

In total, BU Primary Copper generated operating earnings before taxes (EBT) of € 256 million. Compared to the previous year, this is a € 126 million improvement in earnings and thus twice the prior-year level. The BU’s revenues were just below the previous year at € 5,914 million.

High treatment and refining charges for copper concentrates and copper scrap

The international copper concentrate market was characterized by a good supply overall during the fiscal year. Severe weather in Chile didn’t affect the mine output relevant for the market. The large mines in Latin America produced without any notable disruptions. Additional volumes from new projects came onto the markets as well. Treatment and refining charges for long-term business in 2015 therefore started at an improved level. In spot business, demand increased temporarily for concentrates of pure quality, which are necessary to mix with complex qualities. TC/RCs for this material thus declined somewhat in the course of the fiscal year but were still at a good level overall. The availability of more complex concentrates was better on the market and allowed for higher TC/RCs. 

Concentrate throughput

Chart: Concentrate throughput

Considering the favorable market environment for primary smelters, we secured a good concentrate supply for our smelting operations in Hamburg and Pirdop. At the same time, we were in a position to raise the TC/RCs in our contracts and to enter into additional long-term supply contracts. We also optimized our supplier portfolio further.

The availability of copper scrap, which is processed in the smelters in BU Primary Copper in addition to concentrate, was high during large parts of the fiscal year, so we were also able to secure a good supply and good refining charges in this area.

Good total demand for sulfuric acid benefits sales

The fiscal year started with weak global demand on the sulfuric acid market in an environment influenced by seasonal factors. Business revived afterward, due first and foremost to momentum from the fertilizer industry. The price level rose in the course of this development. However, the market circumstances changed at the end of the fiscal year and there was a surplus on the market. The higher prices couldn’t be maintained in this environment.

Good raw material supply leads to improved earnings

The good supply of copper concentrate, recycling materials and copper scrap ensured that our production facilities were utilized during the entire fiscal year. BU Primary Copper processed a total of 2.3 million t of copper concentrate (previous year: 2.2 million t). Sulfuric acid output was about 2.2 million t (previous year: 2.1 million t) based on the concentrate throughput. The copper scrap input in the BU amounted to 102,000 t.

The processed copper concentrate volume at the Hamburg site reached around 1.1 million t (previous year: 1.0 million t) and was therefore slightly above the previous year. It was 1.2 million t at the Pirdop site, the level of the previous year (1.2 million t).

At 615,000 t, cathode output in BU Primary Copper exceeded the previous year (594,000 t). The tankhouse in Hamburg produced 383,000 t of cathodes in the fiscal year (previous year: 362,000 t). At just around 232,000 t (2013/14: 233,000 t), the tankhouse in Pirdop reached roughly the same output volume as the prior year.

The silver output was 958 t (previous year: 1,000 t), slightly down on the prior year. Gold output increased somewhat from 43 t in the previous year to 45 t in fiscal year 2014/15.

Silver output

Chart: Silver output

Capital expenditure

Capital expenditure in BU Primary Copper amounted to € 70 million in the past fiscal year. The focus of the capital expenditure was the expansion of production capacities, improvement in environmental protection and infrastructure renovations at the sites belonging to the BU.

In Hamburg, the construction of the new lead refinery and the replacement of the tankhouse rectifier were the central capital expenditure projects. Extensive investments were made in infrastructure during the past fiscal year as well.

At our Bulgarian site in Pirdop, capital expenditure within the scope of the growth project Pirdop 2014 was concluded. The project Pirdop 2014 had a total budget of € 44 million and included measures to improve environmental protection and expand the primary smelter’s concentrate processing capacity. Furthermore, initial preparatory investments were made for the large-scale shutdown taking place in fiscal year 2015/16.

Capital expenditure in BU Primary Copper

Chart: Capital expenditure in BU Primary Copper

Business Unit Copper Products

Business Unit Copper Products Key figures

    T 018
     
in € million 2014/15
operating
2013/14
operating
     
Revenues 8,586 9,130
EBIT 138 61
EBT 130 55
Capital expenditure 41 47
Depreciation and amortization (44) (39)
Operating ROCE 12.9 % 6.0 %
Avg. number of employees 3,330 3,356
     
Prior-year figures have been adjusted.

Business performance and earnings trend

Business Unit (BU) Copper Products produces and markets high-quality copper products, such as continuous cast wire rod, shapes, pre-rolled and finished strip and specialty profiles, primarily from internally produced copper cathodes. We also use recycling copper to fabricate rolled products. Following the reorganization that went into effect on July 1, 2015, recycling and the Lünen and Olen sites belong to the Business Unit as well.

The AURUBIS ROD brand of continuous cast copper wire rod is the strongest copper product in the portfolio by ­volume. It exhibits high electrical conductivity, very good workability and an excellent surface and is therefore a preferred feedstock for the cable and wire industry as well as special semi-finished products. Aurubis is a world leader in this market segment and produces AURUBIS ROD with state-of-the-art plant technology at four sites: Hamburg (Germany), Olen (Belgium), Avellino (Italy) and Emmerich (Germany).

The AURUBIS SHAPES brand includes various continuous cast copper shapes as preliminary products for semi-­finished product fabricators and tube rolling mills. We are the European market leader in this product segment. Large piece weights, unique dimensions and special copper grades are our specialty. A significant part of our AURUBIS SHAPES output is directly delivered to our subsidiary Schwermetall Halbzeugwerk GmbH (50 % Aurubis holding), which produces pre-rolled strip for a number of semis fabricators worldwide.

Finished strip is produced in Stolberg (Germany), Pori ­(Finland) and Buffalo (USA). We fabricate shaped wire for the electrical industry in Stolberg. Moreover, Aurubis ­Belgium in Olen produces copper bars and profiles.

At the recycling plant in Lünen, we produce high-quality copper cathodes from a variety of recycling raw materials, including electrical and electronic scrap as well as other complex materials. The Olen site also has recycling activities and a tankhouse for the production of copper cathodes.

In addition to the cathode premium, another significant earnings component within BU Copper Products is the so-called shape surcharge for processing copper cathodes into copper products. In the recycling business, earnings are primarily generated through refining charges and the additional metal yield.

Overall, BU Copper Products generated operating earnings before taxes (EBT) of € 130 million in fiscal year 2014/15 (previous year: € 55 million).

This result is due first and foremost to good contributions from the Lünen and Olen facilities as well as the continued improvement in the performance of Business Line Rod & Shapes. Business Line Flat Rolled Products also improved its earnings in the course of ongoing restructuring. 

Product markets

European demand for copper products was initially restrained in the first quarter of fiscal year 2014/15. The markets developed more and more positively at the ­beginning of the second quarter.

While northern European demand stabilized at a good level, growth momentum primarily came from the recovering southern European markets. Despite the crises in Ukraine and the Middle East, the economic trend in the copper product business was robust. In contrast, the economic recovery in North America didn’t lead to a global increase in copper products.

The good ongoing European demand for wire rod was mainly supported by the key sectors during the entire fiscal year. On the other hand, the shapes and rolled products business weakened despite some positive momentum. 

Recycling markets

At the start of the fiscal year, the European markets for copper scrap reflected increasingly good availability, which led to a significant rise in refining charges. The decline in the copper price and growing uncertainty about the future price trend led to reduced willingness to sell among traders starting in the summer, though, so the supply for new business decreased. Attainable refining charges were scaled back but stayed at the level that was in place at the end of Q1 2014/15 until the end of the fiscal year. 

The market availability of complex recycling materials, which have lower amounts of copper and significant levels of ­additional non-ferrous and precious metals, was sufficient. The supply decreased slightly only at the end of the fiscal year. This raw material category includes industrial residues and electrical and electronic scrap, for example. 

Copper scrap input in the Group

Chart: Copper scrap input in the Group

Production

Good business performance in AURUBIS ROD

In largely stable markets in fiscal year 2014/15, Aurubis slightly increased the market shares in the continuous cast copper wire rod business that it had gained in the previous year. The high reliability of Aurubis as a business partner and the superior product quality were decisive for this development.

Aurubis produced a total of 764,000 t of AURUBIS ROD in the Group’s four rod facilities in fiscal year 2014/15. This is a 3 % increase compared to the previous year (742,000 t).

Continuous cast wire rod output

Chart: Continuous cast wire rod output

AURUBIS SHAPES declines slightly

In fiscal year 2014/15 we weren’t able to achieve the good prior-year deliveries of cakes and billets made of pure copper materials due to decreasing demand. This was partially compensated for by a stronger focus on specialty products and alloys.

All in all, AURUBIS SHAPES had an output of 170,000 t during the fiscal year, a 7 % decrease compared to the ­previous year (183,000 t).

Continuous cast shape output

Chart: Continuous cast shape output

Flat rolled product and specialty wire fabrication decreases somewhat during fiscal year

Specific programs to improve efficiency and enhance ­productivity and quality were carried out in Business Line Flat Rolled Products. In particular, Zutphen (Netherlands) made good progress with the copper strip line relocated from Sweden.

At 207,000 t, the output of flat rolled products and specialty wire in fiscal year 2014/15 was about 5 % down on the prior-year level (218,000 t). The production decline in the strip sector impacted the Buffalo plant, which had to reduce its production volume by 14 % to 95,000 t due to demand. In contrast, the European plants increased their production volume by 4 % to 112,000 t. Specialty wire output fell by 7 % owing to demand.

BL Bars & Profiles benefits from good demand

Output in BL Bars & Profiles increased to 11,400 t thanks to good demand and a good operating performance and is thus 28 % higher than the previous year (8,900 t).

Cathode output below expectations

Cathode output in BU Copper Products remained below expectations in fiscal year 2014/15. It was only 187,000 t in the Lünen plant (previous year: 193,000 t). In contrast, the tankhouse in Olen produced 336,000 t, just slightly below the ­prior-year output of 338,000 t.

Cathode output in the Group

Chart: Cathode output in the Group

Cathode output in the Group by sites

Chart: Cathode output in the Group by sites

Recycling trend varies

The copper scrap market had a good availability of volumes in fiscal year 2014/15, which allowed for a good processing level accordingly. The copper scrap input in BU Copper ­Products was 192,000 t.

The material throughput in the KRS reached 269,000 t in ­fiscal year 2014/15 and was thus significantly below the high prior-year level of 301,000 t, partially due to temporary ­shutdowns at the beginning and middle of the fiscal year. The modified mix of raw material input also had an impact.

Capital expenditure

Capital expenditure in BU Copper Products was € 41 million in fiscal year 2014/15.

There was no prominent capital expenditure in Business Line Rod & Shapes.

Capital expenditure in Business Line Flat Rolled Products focused on production facility maintenance. Improvements in efficiency and product quality were targeted and implemented in the process. In addition, specific individual capital expenditure projects were carried out to expand fabrication options and capacities.

There was no prominent capital expenditure in Business Line Bars & Profiles.

    Initial investments were made at the Olen site for ­infrastructure improvements and the new main building.

    Capital expenditure in BU Copper Products

    Chart: Capital expenditure in BU Copper Products