Recylex: Significant sales decrease

Consolidated sales totaled €365.0 million in 2018, down 19% compared to 2017. Consolidated sales for the fourth quarter of 2018 came to €83.5 million, down 26% on the same period of 2017.

Sebastian Rudow, Chairman and Chief Executive Officer of Recylex S.A., stated: “The contraction in our 2018 sales reflects the persistent difficulties in our Lead segment and decreased non-ferrous metals prices in euros. Our Lead segment had to contend with a sharp slowdown in its production linked with the change in the main furnace’s configuration. This challenging situation continues and is severely affecting our industrial and financial performances. Our top priority is to improve the combined operations of the lead segment’s two furnaces, which will require further technical adjustments in the first six months of 2019. Even so, our Zinc segment recorded a very healthy 2018 performance, which partly helped to offset the fall in zinc prices. The Special Metals segment’s strong performance reflects the efforts made by our teams, as well as better market conditions. Competition from virgin materials again held back the Plastics segment.”

In 2018, the Lead segment accounted for 65% of consolidated sales. Lead segment sales in totaled €236.6 million in 2018, down 27% on their 2017 level. In 2018, the segment’s performance was held back by:

– A lengthy scheduled shutdown at the Nordenham smelter in the first quarter of 2018, for maintenance and to prepare for the connection of the existing (BSF) furnace to the new reduction furnace,
– The slowdown in production in the second quarter of 2018 compared to the same period of 2017 as a result of the technical adjustments required to connect the main furnace to the new reduction furnace (commissioning began on June 28th 2018), which significantly lowered the main furnace’s2 utilization rate,
– The continued slowdown in the third and fourth quarter of 2018, despite some initial signs of improvement,
– The fall in lead prices (down 8% in 2018 compared to 2017).

2018 lead production came to 104,592 tonnes, down 15% relative to 2017. In the fourth quarter of 2018, lead production increased by 1% compared to the fourth quarter of 2017, owing in particular to a favorable base of comparison as the Weser-Metall lead smelter had carried out a very short maintenance shutdown in the fourth quarter of 2017. As a result, the Group decided to reduce its scrap battery purchases. The Group recycled 112,917 tonnes of scrap lead batteries in 2018, down close to 20% compared to 2017.

In the fourth quarter of 2018, Lead segment sales totaled €55.2 million, down 32% from €81.5 million in the same period of 2017. Following the commissioning of the new reduction furnace, by-products from the main furnace are now processed internally instead of being sold. Even so, most of these by-products were not processed in the fourth quarter of 2018 owing to the smelter’s technical difficulties. In addition, the increase in tolling3 volumes also pushed sales in the fourth quarter of 2018 down below their level in the same period of 2017. The slight improvement in production compared to the fourth quarter of 2017 failed to offset the impact of the sharp fall in lead prices during the period.

Weser-Metall GmbH, which operates the Group’s lead smelter in Nordenham, carried out a scheduled three-week maintenance shutdown in January 2019 (initially scheduled for the end of the second quarter of 2019) after advanced wear and tear was detected in the refractory bricks in its main furnace (BSF). Lead production at both furnaces resumed during January 2019. With current production levels remaining unsatisfactory, the Group still aims to improve the combined operations of the main furnace and the new reduction furnace. As a result, an additional maintenance shutdown of approximately one week is scheduled mid-2019 to implement further technical improvements to increase the main furnace’s availability.

In 2018, the Zinc segment accounted for 26% of consolidated sales. The segment recorded sales of €96.3 million in 2018, down 2% compared to 2017. Restated3 segment sales came to €121.7 million in 2018, down 3% compared to 2017. The segment’s sales held up well in 2018, with healthy production levels largely offsetting the impact of the maintenance shutdowns and of the fall in zinc prices.

Dust recycling sales mirrored trends in average zinc prices during 2018. Total Group Waelz oxide production came to 74,269 tonnes, representing a very small increase of 1% on the 2017 level. The Harz-Metall GmbH plant’s major maintenance shutdown is scheduled for the first quarter of 2019. Scrap zinc recycling sales edged below their 2017 level. Firm demand for oxides and zinc dust, and supportive business conditions in 2018 helped to make up for the fall in zinc prices. Norzinco GmbH’s zinc oxide and dust recycling production totaled 24,466 tonnes in 2018, up 2% compared to 2017.

Special Metals sales contributed 5% of the Group’s consolidated total in 2018. PPM Pure Metals GmbH’s sales increased 35% in 2018 to €19.2 million as a result of four consecutive quarters of improvement on 2017. Sales were boosted by the impact of its sales and marketing efforts across most of its businesses. Its arsenic sales volumes in particular recorded a strong increase, largely offsetting the small dip in prices. Germanium sales were healthy in a more supportive pricing environment, and trends in gallium sales were also encouraging. Likewise, the Special Metals segment’s sales posted a 21% increase in the fourth quarter of 2018 to reach €4.6 million.

The Plastics segment contributed 4% of the Group’s consolidated 2018 sales. The segment’s 2018 sales came to €12.9 million, down 5% on 2017. During 2018, the segment’s total production of recycled polypropylene dropped to 12,522 tonnes, down 6% on its 2017 level. Amid persistently tough market conditions, C2P S.A.S. in France posted almost stable sales compared to 2017 (down 1%). The key factor was growth in sales volumes, which largely offset the impact of the downturn in prices. Conversely, C2P Germany GmbH suffered another significant sales contraction (down 22%).