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Aurubis Q1 Profit Drops; Confirms Full-year Forecast

Copper producer Aurubis AG (AIAGY.PK,AIAGF.PK) reported that its net income for the first-quarter of fiscal year 2018/19 dropped to 30 million euros from 60 million euros last year. Earnings per share were 0.67 euros, compared to 1.33 euros in the previous year. Meanwhile, the company confirmed full-year forecast due to good market environment and positive effects from efficiency improvement program.

Operating earnings before taxes or EBT for the first-quarter were 40 million euros compared to 79 million euros in the prior year.

The company said that the unscheduled shutdowns at Hamburg, Pirdop, and Lünen sites had a negative effect of approximately 25 million euros on earnings this year. As a result, Aurubis recorded lower throughputs of both copper concentrates and recycling materials. While refining charges for copper scrap were behind the very good levels of the prior-year quarter, they are still satisfactory at levels considerably above the long-term average.

Higher sulfuric acid revenues positively influenced the operating result in the first-quarter. The significantly increased sales prices more than compensated for output volumes, which were lower due to the shutdowns. Sales of copper rod and shapes products remained robust. A good metal gain and positive effects from the efficiency improvement program likewise supported the result.

IFRS consolidated earnings before taxes (EBT) from continuing operations totaled 12 million euros, compared to 160 million euros last year.

Revenues declined to 2.614 billion euros from the previous year's 2.872 billion euros, primarily due to the significantly lower copper price and a production-related decline in precious metal sales.

Aurubis expects a good copper concentrate supply and satisfactory treatment and refining charges until the end of the fiscal year. The multi-metal company also expects a fundamentally stable copper scrap market. The current low metal prices could nevertheless lead to a lower copper scrap supply and thus to lower refining charges. However, all of the facilities are already fully supplied at good conditions in the second-quarter 2018/19.

Aurubis expects robust, high demand for copper rod and shapes products. Reduced demand for flat rolled products from the automotive sector, which has been evident since fall 2018, is countered by growth momentum from other market segments, so a satisfactory sales situation can be anticipated in this area in the current fiscal year as well. The sales market for sulfuric acid, which is difficult to forecast, is sending signals pointing to a stable situation with high prices for the second-quarter of 2018/19.

For the current fiscal year, Aurubis expects capacity utilization to be slightly below the previous year due to multiple scheduled, legally mandatory maintenance shutdowns at the Lünen and Pirdop sites. This means a lower volume of copper concentrates processed and thus lower cathode output.

Aurubis will continue optimizing all areas of the company with the efficiency improvement program. The target for fiscal year 2018/19 is to achieve an additional € 60 million in project success compared to the base year 2014/15. The Group expects to reach this target.

On February 6, 2019, the European Commission prohibited the intended sale of Segment Flat Rolled Products (FRP) to Wieland-Werke AG. Aurubis said it can now review other strategic options for FRP.

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