Befesa S.A. Exhibits Resilience in 2024 Amid Challenges in Steel and Aluminum Markets
Befesa S.A., a leading Luxembourg-based company in steel furnace dust and aluminum salt slag recycling, reported a 5% increase in global revenue for 2024, reaching $1.2 billion. This growth, while impressive, came with a 12.4% decline in net income, signaling some underlying challenges. Despite macroeconomic pressures, Befesa continued to show its ability to thrive within the recycling sector, especially in steel mill servicing and aluminum byproducts operations.
The company’s business segments are divided mainly between steel furnace dust recycling and aluminum salt slag operations, with approximately two-thirds of its revenue coming from the former. Befesa operates across Europe, the United States, and China, with varying levels of operational efficiency and market conditions across these regions.
Solid Performance in Steel Furnace Dust and Aluminum Recycling
Befesa’s Steel Dust Segment demonstrated robust performance, particularly in Europe, where the company operated at 92% capacity utilization. In contrast, the United States saw a lower utilization rate of approximately 70%, due to regional market conditions affecting steel demand.
However, operations in China continued at a significantly reduced capacity of 50%, reflecting the ongoing market challenges in the country. Despite the lower capacity utilization in China, Befesa reported breakeven earnings in this region, which indicates a stabilization of performance despite the difficult market environment.
In 2024, Befesa’s global electric arc furnace steel dust throughput exceeded 1.2 million metric tons, marking a 1.3% increase from the previous year. The company’s EAF dust process produces recycled-content zinc, which benefited from favorable zinc prices in the global market.
Zinc and Aluminum Prices: Key Market Drivers
Zinc Prices showed positive trends for Befesa in 2024, with the London Metal Exchange zinc price averaging $2,690 per metric ton, an increase of nearly 5% compared to 2023. This price boost provided a favorable environment for Befesa’s zinc refining operations, boosting their overall profitability.
Similarly, the company’s aluminum recycling segment also saw improved market conditions, with the LME aluminum alloy price averaging 5.4% higher in 2024 compared to the previous year. Befesa processed 20% more aluminum salt slag in 2024 than in 2023, demonstrating its ability to scale its operations amidst higher demand for recycled aluminum.
However, despite these gains, the company faced compressed pricing margins in its secondary aluminum business, reflecting challenges in the broader automotive sector and global steel market.
Challenges in Macroeconomic Conditions
Despite its revenue growth, Befesa had to navigate through challenging macroeconomic conditions. The steel sector continued to struggle with depressed demand and competition, particularly from cheap imports, while the automotive industry also presented challenges that squeezed margins in the secondary aluminum business.
In particular, the global steel sector saw a downturn in demand, especially as some plants had to scale back production due to lower steel consumption and high energy costs. These external pressures posed challenges to Befesa’s growth, particularly in its aluminum byproducts segment, despite strong performance in the steel dust segment.
Optimistic Outlook for 2025
Despite the difficulties faced in 2024, Befesa remains optimistic about 2025. CEO Asier Zarraonandia expressed confidence in the company’s outlook for the next year, citing a strong pipeline of projects, including higher zinc hedges and increased steel dust volume growth in the U.S. as key growth drivers. The company also highlighted ongoing operational improvements in its zinc refining plants, which are expected to further boost its revenue and EBITDA growth in 2025.
The company is targeting double-digit EBITDA growth for 2025, based on these factors. Furthermore, Befesa’s strategic focus on operational excellence and disciplined execution of key projects are expected to continue driving its performance, even amidst the global challenges in the steel and aluminum markets.
Key Takeaways
•Befesa S.A. reported a 5% increase in global revenue for 2024, reaching over $1.2 billion, but net income fell by 12.4%.
•Steel furnace dust and aluminum salt slag recycling were the primary contributors to the company’s performance, with two-thirds of revenue coming from the steel mill servicing sector.
•Europe saw 92% capacity utilization in steel dust operations, while the U.S. ran at 70%, and China operated at 50%, reflecting regional challenges.
•Electric arc furnace steel dust throughput surpassed 1.2 million metric tons, marking a 1.3% increase from 2023.
•Zinc prices averaged $2,690 per metric ton, a 5% increase from 2023, benefiting the company’s zinc refining business.
•LME aluminum alloy prices were 5.4% higher in 2024, and Befesa processed 20% more aluminum salt slag than in 2023.
•Despite compressed pricing margins in the secondary aluminum business, Befesa’s operational excellence helped mitigate market challenges.
•CEO Asier Zarraonandia expects double-digit EBITDA growth for 2025, with improved zinc hedges, U.S. steel dust volume growth, and operational improvements in the zinc refining plant driving the outlook.
