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High increase in lead sales volume in Q1 2017 for Orzeł Biały Group

Orzeł Biały Group, Polish producer of refined lead and lead alloys with international reach, generated in the first quarter of 2017 revenues of PLN 162.7 million as compared to PLN 114.9 million in the corresponding period of the previous year.

 

• Group EBITDA (operating profit before depreciation/amortisation) in the first quarter of 2017 amounted to PLN 3.9 million, down 37% y-o-y. Net loss amounted to PLN 0.8 million as compared to PLN 2.6 million of net profit a year ago.
• Operating profit amounted to PLN 1.5 million, down 63% as against the same period of the previous year.
•  In the area of ​​core business, the volume of lead sold in the first quarter of 2017 amounted to 17.7 thousand metric tonnes while in the corresponding period of the previous year it amounted to 14.6 kt. 

 

Q1 2017 saw Group sales revenues reported at PLN 162.7 million and included an adjustment for the result on hedging of the lead price, which was negative and amounted to PLN -17.8 million. The 41.7% increase in revenues compared to the same period last year was caused by the increase in the volume of lead sold at 21.2% as well as by the 20.9% increase in the realised prices of lead alloys sold.
Operating profit achieved in the amount of PLN 1.5 million, down 63% as compared to the same period last year. The operating result was affected by the less cost-effective structure of production inputs. In the first quarter of this year, The Company was running production processes based on a mixture of raw materials with a higher share of higher value-added inputs. The share of outsourced raw lead for the refinery and outsourced lead scrap constituted 36% of the production of raffinates in the first quarter, while in the corresponding period of the previous year the share was 20%.
 
"We started the reporting period with a large stock of raw materials for production, in order to reduce the amount of stocks with a relatively high share of outsourced lead, and we consumed a bigger chunk of more expensive raw material for production in the first quarter, which directly translated into the results of the Group. We had continued key initiatives of strategic projects to implement efficiency improvements and cost reduction in the core business of battery recycling and lead making. However, this was not enough to compensate for the higher costs of raw materials used for production in the first quarter. I am not happy with our results achieved in the first quarter, but I remain optimistic for the whole year. "- says Michael Rohde Pedersen, President of the Management Board of Orzeł Biały.

The fall in EBITDA to the same period last year was mainly due to the less-favourable cost structure of raw materials used. EBITDA margin in the first quarter of 2017 amounted to 2.4% and was lower than in the corresponding period of the previous year when it was 5.4%.
 
Net loss on financial activities in the amount of PLN 0.8 million in the reporting period was mainly caused by negative exchange rate differences as well as interest on loans for financing purchases of raw materials.
 
"In the first quarter, the main shareholder being NEF Battery Holdings S.a.r.l. announced a Tender Offer call to subscribe for shares of the Company. As a result of the call, none of the shareholders submitted subscriptions for the sale of the shares of the Company. In addition, in the first quarter in the operations area we recorded high efficiency of production processes and further stable growth. In the area of ​​organisational measures, the first quarter saw the Group having another member company less, which is the result of a consistently implemented strategy of focusing on the core business of the Company. "- says Michael Rohde Pedersen, President of the Management Board of Orzeł Biały.