UPDATE 1-Aurubis sees stable fiscal year, hints at expansion plans

Aurubis AG, Europe's largest copper producer, on Wednesday posted a 42% slump in its annual earnings following scheduled maintenance shutdowns at major smelting plants but said it expects the new fiscal year to be stable.

The company proposed a dividend of 1.25 euros per share for the 2018-19 fiscal year, down from 1.55 euros in the previous year. Operating full-year earnings before taxes (EBT) slumped 42% to 192 million euros ($211.62 million) following smelter shutdowns for maintenance and modernization plus costs to end an investment program, Aurubis said.

"Aurubis expects results in the new fiscal year at a similar level to the current fiscal year 2019/20," it said. "The Aurubis group expects an operating EBT of between 185 million euros and 250 million euros and an operating ROCE (return on capital employed) of between 8% and 11%." The company previously said scheduled maintenance shutdowns to be undertaken in late-2019 at its main plants in Hamburg and Luenen in Germany would impact earnings.

In June, Aurubis also stopped its future Complex Metallurgy project to expand its raw material processing capability because of higher-than-expected costs. "The past fiscal year was a transitional year for Aurubis," said CEO Roland Harings who took over in July. "We invested in the company's future with planned maintenance shutdowns, but unplanned shutdowns and other turbulent events affected the previous fiscal year negatively."

Based on industry forecasts, Aurubis said it expects stable copper demand, although product demand from the automotive sector will continue to be restrained. Chinese copper smelters have agreed a 23% cut in annual treatment and refining charges (TC/RCs) for 2020. TC/RCs are paid by mines and other concentrate owners to copper smelters to refine concentrate (ore) into metal and are a key part of the copper refiners' income.

"The level for 2020 annual contracts on the copper concentrate market will likely be substantially lower than the prior-year level in light of the November 2019 benchmark," Aurubis said. European Union competition regulators in November opened an investigation into Aurubis' planned 380 million euro acquisition of Belgian-Spanish metal recycling group Metallo.

Aurubis said it expects approval from the EU competition regulator about the Metallo deal by April 2020. Harings hinted at further international expansion. He said he sees "fantastic opportunities" in the global recycling of complex raw materials.

"In this context, we will once again take a closer look at growth opportunities abroad," Harings said. ($1 = 0.9073 euros)