Negative Points

• Aurubis Richmond's ramp-up is taking longer than expected due to technical challenges, leading to a one-year shift in its mid-term earnings profile and a lower EBITDA contribution than originally targeted.

• Concentrate markets remain very challenging, with spot TC/RCs declining further and expected to stay under pressure, potentially impacting future contract negotiations.

• Net cash flow was significantly negative at minus EUR28 million for the nine months, impacted by a temporary inventory buildup related to strategic projects.

• Free cash flow before dividends was minus EUR365 million, significantly below the prior year, though management expects a reversal by fiscal year-end.

• The equity ratio declined to 49% from 56% due to increased balance sheet total, and operating ROCE in the CSP segment fell to 15.5% from 17.6%.

• The company had to adjust its raw material feed mix at Richmond, leading to less favorable commercial terms and lower revenues than initially planned.

Q & A Highlights

Q: What are the key drivers behind the company's guidance for a flat operating EBT in Q4, despite positive factors like higher sulfuric acid contributions and metal prices? A: Steffen Hoffmann (CFO) explained that while Q4 should be in a similar ballpark as Q3, the guidance reflects two main headwinds. First, TC/RCs for copper concentrates are expected to have a more visible negative impact in Q4 versus Q3. Second, costs are typically more pronounced in the last quarter of the fiscal year due to seasonality. He reiterated that the company sees itself at the upper end of the guidance range, sending a constructive message for Q4.

Q: What are the main reasons for the extended ramp-up and reduced mid-term earnings target for Aurubis Richmond, and what is the new expected EBITDA contribution? A: Toralf Haag (CEO) stated that the primary cause is technical issues during the ramp-up of Phase 1, which are typical for a greenfield expansion. The company has also had to adapt its technical capabilities to a feed mix that differs from Europe. Steffen Hoffmann (CFO) added that the mid-term EBITDA contribution is now expected to be in "healthy territory" but below the previous target, with a "double-digit million-euro gap" from the original figure. The company expects to achieve EBITDA breakeven next fiscal year.

Q: Given the reduced profitability target for Richmond, does it still make sense to build another recycling smelter in the US, and how does this impact the company's growth strategy? A: Toralf Haag (CEO) affirmed that the company's long-term view on the US market remains unchanged, driven by strong copper demand from data centers, energy infrastructure, and defense. He noted that while the mid-term return on capital is a factor, the company also considers long-term strategic synergies. Steffen Hoffmann (CFO) added that future projects would likely seek to become eligible for attractive US government support, which could help bridge any financial gaps.

Q: Can you provide more detail on what has changed regarding the raw material mix at Aurubis Richmond, and is there any policy that could improve flexibility? A: Toralf Haag (CEO) explained that the effects are interconnected and the market remains dynamic. The company has built a clearer view of which raw material qualities fit best in the current operational phase. The most profitable scenario involves more complex materials with higher precious metal content, and the company is seeing some unfavorable deviations in this mix. Steffen Hoffmann (CFO) added that if the US government further restricts the export of recycling materials, it would increase the availability of more complex materials domestically, which would be conceptually positive for the company.

Q: Can you quantify the expected contribution from sulfuric acid in Q4 and for the full fiscal year, and what is the contract versus spot pricing split? A: Steffen Hoffmann (CFO) indicated that Q4 should see a "small double-digit figure" upside from sulfuric acid compared to Q3, with the full fiscal year contribution expected to be in the ballpark of EUR180 million. Toralf Haag (CEO) clarified that for the current fiscal year, around 85% of sulfuric acid sales are contracted, limiting spot price exposure. However, for the next fiscal year, a larger portion of contracts are being negotiated at higher prices, which should provide a benefit.

Q: With the lowered Richmond target, which other strategic projects are outperforming to help the company maintain its EUR260 million mid-term EBITDA improvement target? A: Steffen Hoffmann (CFO) highlighted several projects contributing to the target. The Complex Recycling Hamburg (CRH) is a "very successful project" that has just started. The tankhouse expansion in Pirdop is another key project with upside from increased cathode production. Additionally, the ASPA and BOB projects in Belgium are already ramped up and delivering according to plan, helping to offset the Richmond setback.

Q: Do you see a risk that the entire concentrate market shifts to index-based pricing, and how will the tight TC/RC environment affect negotiations for calendar year 2027? A: Toralf Haag (CEO) acknowledged that the negative TC/RC environment will play a role in negotiations for 2027. However, he noted that miners are also looking to secure sulfuric acid supply, which is scarce, and these two markets are intertwined. This gives Aurubis a good basis for negotiations. He emphasized that the company is not linked to spot prices for long-term contracts and expects to secure better terms than the current spot market.

Q: Given the year-to-date free cash flow of minus EUR365 million, how will the company achieve at least breakeven free cash flow for the full year? A: Steffen Hoffmann (CFO) explained that the company has a clear plan to reduce working capital, including destocking inventory and selling copper products into the market. He also noted that cash CapEx is likely to be below EUR600 million, lower than the original target, which will support free cash flow. These factors, combined with the expected reversal of temporary inventory buildups, give the company confidence in achieving its target.

Q: Can you confirm whether TC/RCs can go below zero, and what is the current contribution of TC/RCs to the group's gross margin? A: Steffen Hoffmann (CFO) noted that TC/RCs for the primary side (CSP segment) currently represent only 12% of the segment's gross margin. Toralf Haag (CEO) stated that while the company always differentiates itself from the spot market, if spot levels become "super negative," it cannot rule out that contract terms could be zero or slightly below. However, the company's terms will always be significantly better than the spot market.

Q: With CapEx now expected to be below EUR600 million, will the savings be moved to next year's budget, or is this a sustainable cut? A: Steffen Hoffmann (CFO) stated that the company's ambition is to bring the CapEx curve down, and next year's spending should not be above this year's level. This suggests the reduction is part of a broader trend as the strategic investment program winds down, rather than a simple deferral of spending.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .