Aurubis AG (NDA) Earnings Call Transcript & Summary

Thank you very much. Ladies and gentlemen, my name is Angela Seidler. I'm leading the Investor Relations Communications and Sustainability department. I warmly welcome you on this very hot August afternoon. I'm sitting here together with my Board members, Roland Harings; and Rainer Verhoeven; and my colleagues from Investor Relations, Elke Brinkmann; and colleagues from controlling and accounting because we are all here to support for the Q&A session, which will be held after the presentation. Presentation starts today with Roland Harings. Please, go ahead.

Okay. Thanks, Angela. Hello. Good afternoon from my side, and welcome to our quarterly call. And again, as we discussed in the last quarter, we are still in very special times. And we, at Aurubis, are very pleased that we have so far continued to weather the crisis, the pandemic so successfully. I'm pleased to report that so far, we have been very little affected by COVID-19 effects, and we have been, with all the measures we have taken early in the process, been able to protect the health and safety of our employees, and by doing so, we were able to continue without any major disruption to production in our plants. The only noticeable, really, difference in the market was obviously in the product segment, but I will come to this in a later point. But all in all, with an operating EBT of EUR 133 million, we fulfilled market expectations. The corresponding ROCE of 8.5% based on the EBIT of the last 4 quarters, as is well known, was burdened by impairments of the FRP segment in the amount of more than EUR 50 million at the year-end of our last fiscal year 2018 and '19. Our net cash flow improved significantly from minus EUR 230 million to plus EUR 166 million this year. Here, we took advantage of high prices and sold precious metals, and also sales to China -- sale of cathodes to China had a positive impact. And in contrast probably to many of our industrial colleagues, we are able, despite the continued pandemic, to confirm our 2019-'20 forecast, which means operating EBT between EUR 185 million and EUR 250 million. Metallo is now included in these results for the first time, important just for 1 month of June as we had closing end of May and is also included in the current forecast. We will provide some more additional information in the course of this presentation. Another new aspect during this quarter was the placed ESG in German, Schuldschein, with this component of sustainability. This was the first time for our industry that this has been demonstrated that we connect our financials with our path of improving our sustainability and our footprint. The placement was very successful. We were able to collect EUR 400 million instead of the EUR 200 million we originally planned. Despite relatively good news for the quarter and for the first 9 months, our cost reduction program is important for us, and we are continuing to implement because global market conditions remain challenging and specifically in the light of the coronavirus, in particular. So we have and we will prepare Aurubis for the future. Looking now at our results. You see revenues have improved by 2% to EUR 8.896 billion. And this is mainly driven by higher precious metal prices, which compensated lower sales in the product area. Gross profit increased also by 2% from EUR 835 million to EUR 848 million. I would like to specifically highlight the performance in our smelter in Bulgaria, where we had a concentrate throughput in the last quarter of 353,000 tonnes, which is really something we would like to highlight that this stable and strong performance allowed us to have one of the -- not the best, but one of the very good quarters in our history in concentrate throughput. So operations have performed well despite all the challenges. The refining charges for copper scrap have also improved by the end of Q3. And also, we saw the availability of scrap also with the reopening of market and reduction of certain lockdown measures was better. In contrast, sulfuric acid prices declined sharply and only stabilized towards the end of the last quarter. Clearly, our product market and here, specifically, the rod demand was on a great pressure. And we saw the lowest number in April and May due to the lockdown of key industries in Europe. We have to note, and we saw some improvement in the last months slightly. And now we also -- and I come later to the outlook, we also see some improvement, but clearly not back to the level yet that we had enjoyed before. Looking now at the final numbers. That being said, we are very satisfied with our operating EBT, 6% better than last year and EUR 133 million compared to EUR 125 million for the same period before. If I look now at the main KPIs. All the numbers you see are very robust. And again, we are in special difficult times. We have a strong equity ratio still of 48.5% and a net financial position of only minus EUR 305 million. And again, this includes the acquisition of Metallo, meaning including Metallo, our debt ratio is only 0.7, still well better than our target of 3. Capital expenditure is higher than in previous years. Main investment, and we talked about in our last calls, was the major revamp shutdown of the plant in Hamburg, which we conducted in October this fiscal year. As stated before, the net cash flow increased now at EUR 166 million, mainly due to the precious metal sales, and we took the advantage of very high metal prices and also, as I mentioned, very strong demand for copper cathodes from China, which to some extent or to the most extent compensated the lower demand in products that we experienced in Europe. By the end of the year -- by the end of the fiscal year, we expect the cash flow to be very good again at prior year level. And to remind you, prior year level was at EUR 272 million. With this, I would like to hand over to Rainer Verhoeven, who will continue with the Metallo acquisition update.

Thanks, Roland. Welcome, everybody. Good afternoon, ladies and gentlemen. I'd like to give you a bit of an overview on what did we do here with Metallo and how to interpret the figures that you have been provided with our quarterly reporting. So after the closing, which happened end of May, we did the consolidation of the Metallo Group from the 1st of June onwards, which means in the figures that you are having in front of you, Metallo is only included for just 1 month. We'll continue with the integration, of course, as the calendar year is going further. We will conclude the integration process, which doesn't mean that we will have already lifted all synergy potentials, but we will conclude with the integration process probably by the end of the calendar year. We had mentioned earlier in our calls that we expect some EUR 10 million to EUR 15 million synergy potentials, which we would like to get in the first 3 years, which means on an annual basis, EUR 10 million to EUR 15 million. Following the closing, we now have the better opportunity and have a closer look at it. And we can state already now that we seem to have been a bit too conservative, which means we still see a clear upside potential above this EUR 15 million that we have stated earlier. If we go to the next page, you'll see an overview on the metal output, the metal sales, production and sales volumes in our metals. And here, we have highlighted, especially in the second column, the values for Metallo in June 2020. So what we want to do here is to explain a bit how are we approaching our multi-metal portfolio, our multi-metal strategy. Again, Metallo only for 1 month. The recycling input that you see with 23,000 tons multiplied by 12 gives us roughly the 315,000 tons on an annual basis of input materials, which are typically copper scraps, alloy scrap, metallic shredder, copper, iron scrap, tin, lead materials and other residues. There's only a low volume of -- on an annual basis, roughly 25,000 tons of cathodes here, which is mainly copper, nickel cathodes, so very special. Most of the output of Metallo is coming as so-called anodes and will, going forward, remain inside of the group. So we will use those anodes mainly internally. We'll then have roughly, on an annual basis, 10,000 tons of tin blocks, 24,000 tons of lead blocks, roughly 700 tons of copper, nickel met and further intermediates. So what you see here on this stage is the metal that it leaves the borders of the group, really from the company, which means ex Metallo, which means also that there is, of course, PGMs, like -- and gold and silver inside the internal materials, which will flow to other entities of the Aurubis Group. If we now go to the next page, you will see a rough idea on the purchase price reconciliation, which has been also shown on Page 29 of the quarterly report. So in total, we always -- we're talking about a purchase price of EUR 318 million. This purchase price was just an estimation. And as you can see from this page, the cash consideration here is at EUR 375 million only. That is the gross cash that has been paid. And at the same time, there was a cash position in Metallo at the time of acquisition of EUR 42 million, so that the net consideration is only EUR 333 million. This is due to the lockbox mechanism that we have used. We have then done our purchase price allocation. And you see here, for instance, intangible assets, which is, for instance, supplier relations, technology, patents, which have gone through a detailed, in-depth analysis, already audited. So these are the figures that we can see. Coming back to the EBITDA value of EUR 50 million that we had announced earlier and taking into consideration that we had a depreciation in Metallo of roughly EUR 23 million. This year, in total, we'll add about EUR 3 million to EUR 4 million per year. So the total depreciation will be EUR 26 million to EUR 27 million. Again, in the EBITDA, we have not included yet the synergies. Going to the next page, and Roland has already explained a bit about it, but I think it is a really success story. So therefore, we would like to still go into it a bit more in detail. Our ESG-linked Schuldschein was 2.5x oversubscribed. So it's -- there was a huge interest of roughly 90 investors, mainly domestic but also some international investors. We have good tenors here, from 3.5 to 7 years with fixed and variable portions, which leaves Aurubis enough flexibility going forward. For instance, potential FRP sale could be the need for some flexibility or even further growth opportunities. So with this good maturity profile that we have over the next, let's say, 7 years, and the net financial position of minus EUR 305 million, Aurubis is very well positioned. We have substantial amount of undrawn credit lines so we still have a certain firepower going forward. The interest for sure here is due to corona times, a bit higher than pre-corona. However, it's still a very favorable interest rate. And we linked it to our EcoVadis rating, which I would like to explain a bit on the next page. So Page #9. This is the sustainability ratings platform that Aurubis is rated on. And for sure, in the area of sustainability, we want to be the leader in our industry. Our customers, investors, employees and other stakeholders are very keen on seeing good results here. But not only this, we have European regulators, the European Union that is more and more focusing on sustainable finance. And the sustainable finance action plan is only one of the tools that we have to take into consideration going forward, also the efforts to reduce emissions and the regulations that we do see in the supply chain will become more important. If we look to the EcoVadis rating here as one example, we could improve our rating from 68 points 2019 to 72 points this year. So this is a great result, a great success. It doesn't make the Schuldschein cheaper at this point in time yet. Nonetheless, out of the 65,000 companies that are rated by EcoVadis, we are among the best 1% in our industry and among the best 5% all over the place. So this is really a good success. And as you can see then later on, this is not only marketing, but there's concrete actions behind it. And there is another measure which plays into this sustainability goals, which is the Copper Mark. And for that, I hand back to Roland.

Thanks, Rainer. I would like to talk about the Copper Mark and our commitment to develop the whole supply chain to more sustainability. The Copper Mark is a new quality seal for the copper sector. And what it really indicates is that this copper has been produced responsibly along the whole entire value chain. This mark or this process has been developed by the International Copper Association with the participation of 25 companies globally, mining, smelters and other manufacturers, and obviously, including Aurubis. For the time being, mines and smelters can be evaluated in a multistage process up to capital production on a voluntary basis. In a later step, processors, along the entire value chain, will be included. There are 32 different sustainability criteria risk readiness assessment of responsible materials initiative supply, and we are covering topics like compliance, child labor, environmental protection and, obviously, occupational safety. The whole Copper Mark is oriented to the United Nations' framework of these SDGs, the sustainable development goals. We have decided to start the launching of The Copper Mark within Aurubis in our plant in Pirdop in Bulgaria and have started the phase of a 6-month self-assessment of where we are. This will be followed by an assessment of external auditors. Today, the participation is voluntary. However, LME requires companies to fulfill sustainability standards by the end of 2023. Important, this Copper Mark has been developed with various stakeholders, including LME, and LME will accept The Copper Mark as the criteria. With this, moving now to the market to the next page. Clearly, you have heard from many companies' uncertainties in the global market are at a level we have hardly been confronted before with. In the last quarter, our demand in the copper market has been supported by a strong demand from China. However, the South American production has also been affected, and there is still some uncertainty in the near term supply. Having said this, clearly, we have been able to purchase, to organize all the necessary supply for our smelter network and even to the point that we can state high inventories and some safety stocks in our system so that we are convinced, we are sure that we can operate our smelters going forward without any disruption. Talking about the copper price. We have all been seeing this up and down. From March onwards, the situation has been continuously improving. And as we all know, the price is now at around USD 6,500. Supporting this increase in pricing is the significant drop in inventories that we have seen around the globe. Also stimulus packages like significant infrastructure investments in China are supporting the demand for the copper metal. These infrastructure investments or all infrastructure investments are typically copper intensive and that the investments in everything which is electricity based, we see a strong demand around the globe. Overall, coming to TC/RCs. As I mentioned, the supply situation for concentrate was good. It was good in Q3. And our outlook going forward, we are also confident of a stable and sufficient supply to the industry. There have been some disruption, some issues in mines in South America, which I think have been highlighted in the press. However, the mines, to our knowledge, and as you know, we are working closely with many of the large mines worldwide, the mines today have implemented distance and hygienic measures, which allow them to operate the mines close or at nameplate capacity. I won't talk about specific mines, which have been shut down, restarted. I think this is all well known. But again, we see a very good supply and an increasing supply of concentrates going forward, similar situation like we've seen before, it was more challenging. But again, I think our production numbers confirm that there was enough and high-quality concentrate available. Outlook for TC/RCs going forward. We have observed the spot rates. But with this nervousness, this uncertainty in the market, I wouldn't over-comment these kind of spot events. Again, we see the market as being well balanced going forward. Positive, I would like to report about the scrap RCs. We were well supplied at the beginning of the crisis, and we saw some reduced availability due to the lockdown of certain markets. We talked in the last quarter about no metal or no scrap coming from Southern Europe, France, Spain and Italy. As these economies have reopened, we see now an improvement in scrap availability. And as reported by CO2, the #2 scrap discount in Europe widens but are on a very attractive level between EUR 360 and EUR 400 per ton in July. And we confirm the good availability at good conditions in the market. A bit more difficult is the sulfuric acid market. Again, in the peak of the crisis, we saw some significant spot sales out of Asia, out of China into markets where we also supply sulfuric acid to, which led to significant price pressure. This has not been the case in the last weeks and in the last months of Q3. So it has stabilized with a slight upward trend on the pricing side. And probably due to a restart of the wider industry in China so that the local demand has already there recovered. As we stated in all our calls and our papers, as you know, any spot change price -- change of the spot market is not affecting us directly because we have long-term customer relationships, and it's only coming with some delay and only partially to our results. ACP, the copper -- the cathode market is supported by strong demand, solid demand from China. And the material, which was not required, the metal which was not required in the European market was demanded by the Chinese market and supported the ACP, which is, as you know, USD 96 this calendar year as it was last calendar year. Talking about the U.S. dollar. Our long position per year is around USD 600 million. Our scope, our objective is to hedge around 2/3 of this going forward. And for the current fiscal year, we have a rate of 68%, secured at 1.155. And already for the next fiscal year, we have secured 70% at a rate of 1.124. So we are well covered against significant fluctuation of the U.S. dollar by our risk management policy. With this, I would like to hand back to Rainer, who will talk about the segment reports.

Thanks, Roland. Yes, giving a bit an overview on where we are in the segments, starting with MRP. MRP includes all the smelter locations, which is Hamburg, Pirdop, Olen, Lunen, of course, also the rod and shape site and newly now Metallo since the 1st of June only for 1 month. I repeat it once again. What I can say so far and not only for that month, but for the month as well before, is that Metallo is as stable and on plan as Aurubis is. The operating EBT for the MRP Group is at EUR 195 million, which is significantly up compared to the previous year. This, despite the Hamburg shutdown, which we had in the Q1, which had an impact of EUR 35 million on our results. So you might ask why is that so? First of all, we had a very good concentrate throughput with 642,000 tons in Q3. But overall, also the year, we had operational stability. With significantly higher refining charges for copper scrap also compared to the last year, which also helped here, we had a good throughput in our KRS recycling facility in Lunen. And last but not least, a very good metal gain, especially with high precious metal prices. On the product side, Roland has mentioned it already, we had weak markets all over the place. If it's wire rod, if it's the shapes business, also cathode output, we had here the incident in Olen, which, however, we could overcome by producing blister copper, for instance. So therefore, we remain here cautiously optimistic also with regards to the order intake on the product side. If we then move to the next page and look to the flat-rolled business. The market for flat-rolled products is a particular challenge. So it's down compared to last year by about 15%; and compared to the year '17, '18, even 30%. So we are confronted with massive decreases in orders due to the coronavirus pandemic. And especially, this comes from the automotive industry, but not only from there. The entire market is under extreme pressure. And most, if not all, European competitors here in the flat-rolled business are struggling quite heavily. As a result, we were quite happy that, once again, we managed to avoid slipping into the right figures in Q3, thanks to the stringent cost management. However, going forward, negative figures cannot -- no longer be avoided. So therefore, we have adjusted our guidance. Market is not going further down. However, we are pretty much at -- it's not possible to further adjust costs downwards. Operating earnings before tax were at 0 as well as in the previous year. So flexibilization of costs has been coming to an end. Operating ROCE at minus 11.3%, still having the one-off effects from Q4 last year of EUR 51 million. This will for next quarter then look a bit better but still expecting a negative ROCE. That's it on the flat-rolled business, and we will move over then to our cost reduction program. And we call it the performance improvement program. As you know, the performance improvement for Aurubis becomes more important than ever. We are struggling with headwinds from the market, TC/RCs, assets, the product situation. So therefore, the continuation of our cost reduction remains absolutely necessary. We have identified a number of measures here to position ourselves more efficiently for the future. We are working mainly in the fields of improved maintenance, optimization of procurement and have better processes in the administrative areas. We are talking here mainly digitization, automation. Due to the coronavirus, we are a bit behind our schedule, the original schedule. But we are, let's say, making some pace here. And we are currently discussing with the employee representatives, bodies and their consultants. So the goal is to start the implementation of the measures as soon as we have an agreement with the works council here. Hopefully, that will be then in the next month. That means I hope to be more explicit in the next quarterly call, which is on the 9th of December, when we present the financials for the full fiscal year '19-'20. With that, I would like to hand back to Roland.

Yes. Thanks, Rainer. So summarizing our market outlook, I think I referred already in a couple of statements to this. So I will make it relatively brief. For our remaining month in the Q4, I can really state, we are well supplied at good conditions. And assuming a robust production similar to the demonstrated one in Q3, we are quite confident to meet market expectations here. This will be supported by, and I'm an optimist, I have to admit that we see some signs of recovery in the market space, that products that industry and you see that there is the order intake in the industry has been reported as being pretty strong. And this will lead, and we see this also now in our order books to improve demand. But again, very cautious not to the level that we enjoyed before the crisis, but it's not definitely not going further down assuming that the corona crisis will be managed as well as we did so far. And the politicians will continue to make reasonable steps forward. So with this, I think for -- I would even go beyond this Q4. The statement for supply, I would extend also for the last months of this calendar year. We see now supply for October, November, also being supported or being confirmed, so I would in an extent that we will not see any change of the way we do business in October, November going forward. Talking now about one very specific point, which you certainly have picked up in our press release. We have bought a small start-up company in Germany. And it's part of our strategy to improve the way we handle data, we extract data, we manage data in our company. And we have to admit, it's a kind of unexpected step within Aurubis. However, we saw this as a very important change to accelerate and catch up on the elements of digitalization that we probably have not put enough focus on in the past. With this platform, with this company, it's about 20 people. We will have an ability to connect, in the principle of Internet of Things, our plant, our machinery, our equipment, our sensors to a system and really work with the data, extract the data and improve the availability of our equipment, ensure the predictive maintenance; hence, reduced maintenance effort and surprises production and produce process -- and process raw materials even more effectively throughout the whole process chain. So it's, as I said, an unexpected, also for us a new step into this territory. But after we tested this platform, and we saw that this is going to deliver what we are looking for, we made this position to acquire this company. To put it in perspective, it's a mid-single-digit million investment. So it's small in comparison to the size of our company. The next change. So despite corona, we moved on with implementation of our strategy and also strengthening our team. We announced that Dr. Heiko Arnold will join us next week. He will start -- his official starting date is the 15th of August. So Monday, August 17, he will be on board. And I'm personally very pleased to welcome such an experienced senior manager in our Board, who worked in the chemical industry at a company, Lenzing, Austrian company, as a CTO before. And he has held many positions, key top positions in the chemical global company, BASF, in Asian sites. So he brings also a very global experience and global footprint to Aurubis. He will focus on plant availability, throughput performance and cost, environmental protection, all the things which are heart and core of our company. Mr. Bunger, who has been serving as COO for the last period, he will focus on projects in the multi-metal technology and will act as Chief Technical Officer going forward. So pleased to welcome Mr. Arnold to our team. Moving on to the forecast. Again, as we did last quarter, we confirm our forecast of an EBT between EUR 185 million and EUR 250 million for the fiscal year and an operating ROCE between 8% and 11%. Again, remarkable in these difficult case, but it shows and demonstrates the resilience, the strength of our business model and also the commitment and the loyalty of our people, keeping the company running even in very difficult days. I think we talked about the MRP and the FRP segment already. FRP, with this very, let's say, low quarter that we are facing now, again, some are shutdown in many regions plus corona, we were not able to mitigate this. And we want and ensure that this business will be able to restart when economy is coming back. So therefore, we took the conscious decision to have some negative results this quarter in order to be able to restart in the coming quarter. Perhaps a one-off statement. We have compensated, as you see, again, confirmation of our operating EBT for the total fiscal year. With some improvements and some effects that we had in our business, we were able to compensate the lower numbers of FRP going forward. And the consensus, which was taken on the 14th of July for the fiscal year was EUR 198 million, which I am looking at Angela, I'm not allowed to comment. Just make a statement here. But I think, yes, let's -- okay, let's go to the next page and talk about our priorities. Again, you have seen this all. It's just as a closing slide. But clearly, our focus is after a very good start despite difficult circumstances of the integration with Metallo we can -- we see that Metallo, the employees of Metallo, are very proud and happy to be part of Aurubis and that the integration on the technical, on the flow sheet, on the commercial, on the site is going extremely well. And as Rainer mentioned, this is our focus and we see more potential in the cooperation than we have stated in the initial phase. Clearly, operational excellence, keeping our people safe and healthy, not to be discussed. It's a no-brainer. And we are working despite difficult days on our growth projects. Developments are ongoing. Nothing to be announced today. And sustainability, you see the step forward. EcoVadis, a very nice proof that we are improving our system. And now there is a continued effort in making our company even stronger, even more resilient by implementing our cost reduction and efficiency program going forward. So I think quite pleased after this Q2 results to open the floor or give back to Angela. And I would like to thank you for your attention and for your interest in our company. And Angela, [indiscernible]

Yes. Thank you, Roland and Rainer. And I would open the floor now for Qs and As. And I would like the moderator to say what you have to do. I don't know exactly the combination you have to press, but he will probably do that.

[Operator Instructions] The first question comes from Bastian Synagowitz.

I've got a couple of questions. And just starting off with Metallo maybe. If I look at the numbers, and I think you mentioned that in the slides, it seems like you effectively paid EUR 50 million less than the EUR 380 million purchase price, which you announced earlier. So very well done on that. Just on the synergies, where you mentioned you'll see some upside, could you already let us know about any magnitude you see here in terms of the synergies? And have you also already been able to look into how far the new plasma technology, which you're bringing on board here is contributing to that? That is my first question.

No. Thanks. Roland speaking. Thanks for your question. And yes, the lockbox principle that we used for this acquisition paid out and we paid less. So it was even a better deal after closing. And to your second question, it's still too premature to discuss details of this. We are just 2 months in detail the evaluation of the synergies. And what we can state today, we are conservative with our range of 10% to 15%. We see a very attractive upside, but we will only disclose more numbers when they are solid when we have them all kind of double proof, and then we are going to announce them. So I'm sure you value this kind of, let's say, over -- I'd say, under-promise, over-deliver approach that we also use in this case.

Yes. No, absolutely. That's at least giving us a bit of an idea, and then we'll just wait for the next update. Then just moving over to your cash flow statement and CapEx guidance. I understand you've been cutting down your CapEx budget now to EUR 230 million versus the EUR 270 million earlier. Is this the right number which we should use as well for the years ahead? Or could you give us any guidance there already at this point?

Yes. It's Rainer. So the EUR 230 million, yes, we have cut back a bit. This is not due to corona. So we are going ahead with all our investment programs. There's still a lot in the pipeline. And this range also going forward is, for me, the right range that you could use for your models.

Okay. Perfect. Then one more question on FRP. If I read very carefully in your report, you say you are in advanced negotiations with regards to FRP, which sounds probably a notch more confident versus what you've been writing in the 6-month statements. Do I interpret this correctly? And are you still confident to finalize this in the current business year as well?

Yes. So I'm very confident, as I stated before, that we are going to sell FRP, and we will find the right investor going forward. I have to admit that we made good progress. But due to all these travel restrictions and the difficulties to really start any DD process, I wouldn't make any commitment here about the detailed timing. Interest is there. Discussions are ongoing, but certain things have been really slowed down with the COVID-19 crisis. Yes. So this fiscal year -- no, we are in August. No, this fiscal year, we will not have any kind of final signature going forward. But again, confidence level is extremely high, and there is a high level of activity. But again, certain elements couldn't be executed, that you would do them in a normal sales process due to travel restrictions and the known issues.

Okay. Very clear. Then I do have a very last question, and I promise that will be the last one. So just looking at the market and the metal prices, we've obviously been seeing a very strong price dynamic in several of your key metals, which you're exposed to. Could you please let us know how far this has contributed to your performance and will be contributing this year? And would you have been able to stick to the current guidance as well without the price dynamics, which we are seeing on the market?

So that is, of course, a thing that I can answer best, I guess, because we have been talking about the metal result quite often. And you know that Aurubis is always a bit silent here. What we can say is, yes, we have contributed -- or the metal prices have contributed very much to our results in this financial year. And our results would have looked completely different without such high metal prices, but we are not commenting anything on the details here. We have been quite benefiting from the high metal prices.

Yes. But if you -- I think if I may add too, Rainer. As we explained, we have -- the advantage and the strength of our business model is that we have very, very strong pillar in our earning model, in our result model. One of them is the metal. But the good throughput is, one, metal availability of concentrate, it's good availability of scrap, recycling rate. So let's be not distracted by 1 element. It's really the combination of many pillars that are supporting our business.

And the next question comes from Jatinder Goel.

A couple of questions, please. Since you've now closed Metallo, are you now open to doing more acquisitions? Most companies and probably Aurubis also that it's not a seller's market and the FRP has been difficult. But is it a buyer's market? And are you now open given Metallo is closed? And if so, how does it interplay with your buyback strategy? If you do buy something, then would you put that buybacks on hold? I believe you haven't done much since April, but it will be good to have some clarification there. And second question just on your EBT guidance for FY '20. Is there any merit in keeping top end of the guidance given your 9 months into the quarter -- into the year and, well, pretty much mid of August now, so you only have about 6, 7 weeks to go?

No, thanks for your question. It's Roland taking your question. Yes, we have just closed Metallo end of May, and we are in the midst of integration and evaluating the synergies. And as we stated, Metallo will become an integral part of our flow sheet given the synergies or the effects we see with this. So we are very busy and focused on delivering on Metallo. This does not mean we are not looking around, but we are not really actively pursuing now other targets on the acquisition side. So therefore, focus is on Metallo, it's on running our company, it's on the cost improvements that we have launched and also on the sales of FRP. These are the key strategic initiatives that we are running today besides the normal daily business that we are doing. So therefore, if something attractive comes along, we have the firepower, we have, let's say, the track record that we can do all the larger acquisitions. But in the moment, there is nothing really close to be announced. Regarding your question in guidance, I would refer to the market consensus. The range EUR 185 million to EUR 250 million and with the guidance of EUR 189 million or the consensus of EUR 189 million, I think this gives you EUR 190 million. I think it's not overstated...

EUR 198 million.

EUR 198 million? Sorry, EUR 198 million just the colleague is telling you, EUR 198 million. And as I just joked a bit, probably not too off.

Yes. Maybe Jatinder, one more addition, you asked also on the buyback, the share buyback probably you were referring to. And for sure, we do that only if that is accretive to our shareholders. At the moment, the share price hopefully stays today above 60. So therefore, that would be quite expensive buyback. So we will be buying back when we think it makes sense to our shareholders. And for the moment, we are not buying back.

Mr. Obst, you can talk now.

Yes. Okay. First of all, I'd like to have some kind of an idea concerning the cash flow development in Q4. You gave some kind of guidance saying, okay, we can reach operating cash flow at the level of last year's level. But when it comes to your inventories, you stated that you sold a lot of precious metals, of course, to reach the current earnings. Do you still have some buffer in your in your portfolio, in your inventories? And do you like to keep that buffer? Or can we expect that you are selling more of precious metals and more of your metal and inventory in Q4? So what is the framework and the guidance for the last quarter when it comes to inventories and to CapEx? This is the first question.

So hello, Mr. Obst. Rainer Verhoeven here. So with regards to the cash flow and to the precious metals, the situation is that whenever we produce physical metal, we will also sell it. So we are not waiting strategically. We are waiting with our LME position. That's a different thing. So that needs to be separated quite well. So physical -- bringing physical inventory down does only little to do with what we are doing on our strategic hedges. And yes, despite all the opportunistic purchases that we have done. If we look to, for instance, the scrap market and also concentrates, we will be driving down our inventories to a good extent towards the 30th of September. And this guidance with EUR 270 million cash flow is not an overstatement. We will be able to achieve that.

Yes. So in the end, you don't need some kind of an inventory buffer in the last quarter?

I would -- if I -- Rainer, if I might jump in. What we are doing and what we have done successfully so far, we put our, let's say, inventory of the raw materials to the higher end of the range. So we are well supplied on concentrates. We are well supplied and also bought some extra quantities of scrap and recycling materials. And this, we will continue going forward. So therefore, to your question, this cash flow is not based on any kind of unreasonable order or extreme measures, but this cash flow is the result of a stable, continued operation.

Okay. And then I have a last question -- a concern. Is there any news concerning your small little nickel joint venture in Asia?

Well, Mr. Obst, that's -- yes, we -- so we are in close discussion with LS Nickel, who is the partner in Asia. The project, which was the development of a technology to produce in a more efficient way highest-quality battery-grade nickel has progressed, and we have achieved some major milestones on the technology side. And we are now reviewing the market situation, jointly with our partner, what is the right next step. There was the idea of an investment -- joint investment in Asia with the recent developments in Europe, where battery production is ramping up significantly. Both parties have decided we are reviewing if this announced step 2 years or 2.5 years ago is still the best way to benefit from this joint technology.

So is there a possibility that you might decide for some kind of a new plant for that kind of combined venture with the Asian company?

I wouldn't rule this out. Yes. That's an option.

And the next question comes from Ioannis Masvoulas.

A few left from my side. First on the Metallo, you already touched on the profitability. But if we can go talk about it in a bit more detail. So looking at the fiscal Q3, was the business able to generate a EUR 50 million run rate EBITDA that you have indicated in the past? And I'll stop here for the first question. We can go through the rest of it after you respond.

The simple answer is yes. But be careful because we closed end of May. So in our Q3 results, only 1 month is included. And there are some closing effects in the result. So this didn't go completely through to our bottom line. So this quarter will be the first quarter without these special effects and where we'll see this run rate of performance at Metallo.

Okay. And this -- I think you mentioned depreciation is EUR 23 million, right, on a full year basis?

That's correct. Yes.

Okay. So how should we think about the rest of the P&L in terms of interest and the tax rate? Just to get an idea of an EBITDA to EBT bridge, that would be very, very useful.

I think this is probably is not the detailed level as we are integrating Metallo into Aurubis now. I think an interest rate or a tax rate is probably misleading at this point. I would really refer to this -- the closing of this quarter where, let's say, it's a kind of integrated, or I'd say, mainly integrated business. And then you will see this in our normal reporting, integrated reporting. So June is not fully representative month for the performance of Metallo.

Okay. Understood. And then the second question on the synergies I appreciate that you would not like to give any specific numbers at this stage. But if I were to look at the presentation you put out on Metallo last year, you put around 50% of synergies into the flow sheet integration bucket. And then the balance is technical synergies and efficiencies. In terms of the upside, where do you see that coming through mostly?

Yes. If you look -- and Rainer shared the numbers of metals, which Metallo contributed in June to our multi-metal approach. And here, the experts are -- have detected some interesting upside potential, specifically in the combination with our Lunen, where we also recycle very complex or very, let's say, different types of scrap, although highly electronic waste. And here, there are clear ideas developed first with the existing flow sheet, how can we improve material flows of mainly intermediates between the different plants, including Hamburg. That's the first. I'd say, I think we can -- we are going to implement earlier. But even more attractive is, and I think we stated we bought Metallo not just for the current business but also for the project pipeline going forward, where they have -- the plasma furnace was mentioned today, but there are some other very interesting developments that Metallo was working on. And this will be the second wave that we will do some additional, I would say, complementary investments, smaller-sized investments in the flow sheet to benefit from these concepts. This will be the second wave. And as we are still in the development and the engineering of these different flow sheets, please accept that we are not stating any hard number at this point in time. Just I would like to repeat, we see a significant update and a strong confirmation of the acquisition and the business rationale of this integration of Metallo in our flow sheet.

Okay. And just again on Metallo and apologies for all the questions. What is the maintenance CapEx level, taking out all those growth projects, just looking at the current footprint of the 2 plants?

So I would say that what we see now is that the depreciation is also equaling pretty much the investment going forward. So that is a quite fair level of investment that you can assume for Metallo. Yes.

Okay. That's clear. And maybe just last one on FRP. So for the first 9 months, performance was -- EBT was breakeven. And then you still downgraded your full year guidance, which assumes a very weak fiscal Q4. Would you see that this new guidance as very conservative? Or is there a significant seasonal impact plus the market headwinds? Some visibility here would be very useful.

There is -- it's not really conservative. It's reality, unfortunately. So the FRP business demand, and you see this with the other market participants who are in short working schemes and are reporting -- if they are reporting, they are reporting very bad results. This industry is really down. And we see a certain dynamic -- a later dynamic in recovery. Expectation is that the demand will come back or will recover in the last quarter of this fiscal year, but this quarter will be the low in FRP. And this downstream business doesn't have an alternative in -- if you see our MRP business, we were able to compensate again the strong pillars of our business model and how does -- to compensate certain shortfalls in some areas with some additional sales and activities in other areas. I think that's really the difference to the FRP business, which is very much focused on one type of product and is, therefore, seeing these negative numbers in the quarter.

The next question comes from Rochus Brauneiser.

Yes. Let me start with FRP. Just [indiscernible] I also was a bit [indiscernible] guidance revision again here and the very negative outlook you're providing for the fourth quarter. Maybe can you put more color, a volume thing that expecting shipments or production to be lower quarter-on-quarter? Or is this more kind of a pricing thing because of the disruption and market imbalance in the FRP system?

Just some additional comments to FRP. So clearly, it's not a pricing problem on the market. It's really -- the demand is just not there. So that's leading to the negative results. And we decided that we are not doing some structural fundamental changes of the setup because we believe that this is already significantly optimized. Nevertheless, some continuation is going to happen. But we want, and we are sure that business is coming back to some extent, and we want to be ready for that. So we take a bit of a dive. But again, put this into perspective of Aurubis. It's very small numbers compared to the total company. And given also the compensation that we can do in other areas, it's the right business decision to keep now the business in this condition, whether that's for the next couple of weeks and then be ready for some type of recovery that we are going to expect in this business.

Okay. Maybe one add on to this. I think the wording on that business is quite harsh in the [indiscernible]. I think [indiscernible] not a good quarter, maybe even worsened [indiscernible] decline rate [indiscernible] a bit of a steeper [indiscernible].

Mr. Brauneiser, I have really to -- it was difficult to get. It was interrupted. I'm not sure if you have a bad landline or mobile line. Could you please repeat your question?

Yes. On the FRP is a bit harsh. But look at the volume performance for FRP compared to the rod business, you could say that rod was not necessarily better. It had even the stronger decrease rate. So what is the point -- what differentiates FRP from rod? Is it the [indiscernible] first quarter? Or is there anything else I should think about?

Now, I think the main explanation is if you see value-added on rod from cathodes to the rod product is comparably small. Hence, the cost position is also relatively small. We have a high multiplier, but it's -- in comparison, FRP has much higher value-added, hence, fixed cost on the business and the reduction in volume has a much larger impact than you would see this on the rod side. So therefore, I think if you look at the math, if you make the equation, it's quite -- it explains the situation there.

Okay. And from a volume perspective, Mr. Brauneiser, also the FRP percentage-wise is much more suffering currently than the rods business.

Okay. [indiscernible] FRP mean for [indiscernible] for [indiscernible]

Mr. Brauneiser. Sorry, Mr. Brauneiser, we can't hear your question. Your line is really very bad.

Okay. Okay. Sorry, because I can hear you very well.

Maybe it's a good idea if you call me later, and then I answer your question because it's really hard to understand you.

At the moment, we have no further questions.

Okay. If there are no further questions, I would like to close the call here today. Looking forward to the next time in this setup, that will be on December 9, as Mr. Harings already said. But we, of course, for sure, will talk in between. If you have any questions, please call Elke or myself, give us a call, then we are more than happy to answer your questions. What I can say is have a nice last summer and stay healthy.

Okay. Thanks, and good afternoon from my side. All the best. Bye-bye.

Bye-bye.