Europe’s largest copper producer, Aurubis AG, has reported better-than-expected first-half core profit, thanks to lower electricity and gas prices. The company’s operating earnings before taxes (EBIT) rose 2% to 243 million euros ($260.96 million) in the first half of the year, beating the consensus estimate of 233 million euros.
However, Aurubis’ group revenue for the first half declined by 6% to 8.25 billion euros, roughly in line with expectations of 8.27 billion euros. The revenue drop was mostly due to lower copper prices and a decrease in copper shape sales, such as bars and sheets, particularly from the construction sector.
The company also reported a 7% decline in second-quarter revenue to 4.35 billion euros. Lower sulfuric acid sales and reduced refining charges for the processing of recycling materials also contributed to the revenue decline.
Despite the revenue drop, Aurubis’ first-half results were boosted by “considerably higher” treatment and refining charges (TC/RCs) stemming from increased copper concentrate throughput at its sites. Miners pay TC/RCs to smelters like Aurubis to process copper concentrate into refined metal, offsetting the cost of the ore.
Aurubis reiterated its guidance for the year, even as it said an increase in global smelting capacity and limited growth in concentrate supply from the mining industry would likely hold down TC/RCs for the year. The company noted that its long-term contracts meant it had “limited” exposure to developments in the spot market.
The company’s shares had closed almost 11% lower last Friday after analysts at UBS warned that low TC/RCs would hit its earnings. However, the better-than-expected first-half results, driven by lower energy costs, have helped offset these concerns.