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- $BFSA - Earnings Analysis: Strong operating cash flow and EBITDA growth.

By sagebytes in Markets —

Business Model

Befesa generates revenue through its two business units: Steel Dust and Aluminium Salt Slags recycling services. It manages and recycles around 1.9 million tonnes of residues annually, with a production of around 1.7 million tonnes of new materials, which Befesa reintroduces in the market.

Revenue Sources

  • Steel Dust Recycling: Revenue from recycling steel dust from electric arc furnace (EAF) steel production.
  • Aluminium Salt Slags Recycling: Revenue from recycling aluminium salt slags and spent pot linings (SPL).
  • Secondary Aluminium Recycling: Revenue from producing secondary aluminium alloys.

Income Statement Analysis

  • Revenue increased by 4.9% year-over-year from €1,180.6m to €1,239.0m.
  • Adjusted EBITDA increased by 17.2% year-over-year from €182.0m to €213.4m.
  • Net profit decreased by 12.3% year-over-year from €58.0m to €50.8m.

Balance Sheet Analysis

  • Total assets increased by 1.7% year-over-year.

Cash Flow Analysis

  • Operating cash flow rose significantly by 30.1% year-over-year, reaching a record level.

Capital Allocation

The business plan and capital allocation will focus on deleveraging and executing approved capex projects, with growth investments concentrated on the low-risk expansions at Palmerton and Bernburg, which are designed to capture growth in key markets. In line with Befesa’s dividend policy (40-50% of earnings payout), the proposed dividend for the AGM on 19 June 2025 is €0.64 per share

Management Commentary

Adj. EBITDA FY24 at €213m, up 17%. All-time-high quarterly EBITDA in Q4 24 at €62m

Expecting strong double-digit EBITDA growth and leverage below x2.5 for 2025

Palmerton expansion as expected with 1st kiln already in operation

China remains subdued

Overall Sentiment: Positive, confident about the outlook for 2025, which is underpinned by higher zinc hedges, steel dust volume growth in the US, and continuing operational improvements.

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.