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Aurubis Cuts Profit Forecast on Europe Copper Demand Drop

Aug. 13 (Bloomberg) -- Aurubis AG, the world’s largest copper smelter, cut its full-year profit forecast as it expects “volatile” metal pricing amid subdued demand in Europe.

Earnings for the 12 months through September will be “significantly down,” Hamburg-based Aurubis said today in a statement. That compared with an earlier prediction of “satisfactory results.” The company foresees copper prices at about $7,000 a metric ton “for the foreseeable future.”

The net loss in the fiscal third quarter ended June 30 totaled 247 million euros ($329 million) compared with net income of 6 million euros a year earlier, Aurubis said. Earnings were hurt by inventory values and hedging contracts affected by price declines, it said. Copper for three-month delivery on the London Metal Exchange rose 0.4 percent to $7,281.50 a ton at 9:06 a.m. local time, paring the drop this year to 8.2 percent.

“The third-quarter loss was a valuation loss based on the copper price,” Amit Pansari, a Bangalore-based analyst at Societe Generale, said on the telephone today. “We expect it is a one-off and not going to be repeated as things on the operational level look good.”

Aurubis, which is also second only to Chile’s Codelco in production of refined copper, expects the metal’s scrap markets “to be tight for now” because of questions over pricing stemming mainly from U.S. Federal Reserve policy decisions and slowing economic growth in China, it said. Treatment charges, or the prices customers pay Aurubis for handling copper, will be “at a good level” the rest of this year, the company said.

Stock Rises

Aurubis rose as much as 1.3 percent to 43.40 euros and was trading up 1.1 percent at 10:09 a.m., reversing a drop of as much as 3.6 percent earlier today. The stock has declined 19 percent this year, valuing the company at 1.95 billion euros.

Third-quarter revenue fell 15 percent to 2.92 billion euros, Aurubis said. The copper-smelting company reported on Aug. 1 that the pretax loss was 336 billion euros. Aurubis “will look confidently to the new fiscal year,” when a maintenance project that has closed a plant is completed and capacity is added.

“For the next year, we are positive as we expect improvement of the product market and treatment charges,” Societe Generale analyst Pansari said.

To contact the reporter on this story: Weixin Zha in Frankfurt at wzha2@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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