Business and earnings expectations for the Aurubis Group

As indicated by the remarks about the overall economic trend and development on the markets relevant to our business, the Aurubis Group’s fiscal year 2016/17 will be accompanied by uncertainties that will impact our business activities.

We expect different developments in the two Business Units:

In BU Primary Copper, a maintenance shutdown that is legally mandated every three years was carried out in October/November 2016, which will strain the result of Q1 2016/17. We expect high plant availability for the rest of the fiscal year.

At the same time, we anticipate continued good availability of copper concentrates on the global market. Due to the commencement of new projects and expansions, the supply is expected to be satisfactory in 2017 as well. Supported by our broad position on the market and our supplier diversification, we are confident that we will be able to secure a good supply once again. We assess the expected treatment and refining charges as relatively high in light of the current market situation.

The likely development of the copper scrap supply can’t be gauged. Business in this area is conducted with short timelines, and is therefore dependent on influences that are difficult to forecast. The higher copper prices that are expected in some cases could nevertheless help improve the supply. Our broad market position absorbs supply risks in this case as well.

Sulfuric acid sales are also dependent on short-term developments. The terms of the contracts used are therefore also short. In addition, sales possibilities are very different from region to region, with varying conditions accordingly. Aurubis supplies the global sulfuric acid market, with a focus on Europe and South America. The relationship between local sales and exports fluctuates depending on market circumstances.

The sub-markets in BU Copper Products are mixed.

Sales of free cathode volumes on the market are oriented to the processing plans of our cathode production sector in the Group.

Adequate statements about the development of the copper product business in the new fiscal year are only possible to a limited extent since the negotiation season for 2017 sales contracts hasn’t ended yet. One factor that is already clear is the cathode premium Aurubis has established for European customers for the coming calendar year. This premium is related to annual contracts for cathodes and copper products and was reduced from US$ 92/t to US$ 86/t. This takes expected customer demand for annual contracts into account.

In light of the positive economic situation in the relevant sectors and the fact that it is not expected to undergo any larger slumps in 2017, we expect to be able to conclude the negotiation season for copper products with satisfactory contracts. Good customer relationships in our key markets support this. We will also continue expanding our business with new customers.

In copper scrap recycling, the same assumptions that were outlined in the statements on BU Primary Copper should be assumed in BU Copper Products as well. All in all, it can be said that a reliable overall assessment of the future copper scrap supply in 2017 isn’t possible. Likewise, it is not possible to make a long-term statement about the possibilities of using blister copper as a substitute. Due to our presence on the recycling and blister copper markets and our good relationships with suppliers, we are nevertheless confident that we will be able to secure the supply of copper scrap/blister copper in the Group. With the closing-the-loop approach, which we developed more intensively in the previous fiscal year, we want to utilize product customers as suppliers of production scrap. We will continue to pursue this approach in 2017.

Overall, there could be quarterly differences as in previous years. This is due to seasonal factors, but may also be caused by disruptions in equipment or operating processes. The business performance of the first quarter of a fiscal year in particular is shaped by special features related to the period, including reduced customer orders or changes in raw material deliveries. It is not possible to predict the individual influences of European and German energy and environmental policy, which is important for us.

At the end of fiscal year 2015/16, different initiatives were kicked off within the Group to strengthen Aurubis further. Aurubis is currently the market leader in many areas – these positions should at least be maintained, and even expanded in the long term. Three key initiatives were started for this purpose:

a) An opinion survey distributed to more than 1,000 employees

b) A diagnostic process based on financial and operating KPIs (key performance indicators), central processes, organizational structures and existing IT systems

c) Projects for in-depth continuous improvement.

We will present the initial results at our Annual General Meeting on March 2, 2017 and as the first half of 2017 goes on.

The future development and forecast for Aurubis AG coincides with the general statement on the Aurubis Group.