Title: Copper Giant Aurubis Faces Hefty Losses due to Fraudulent Activities
The Hamburg-based copper producer and recycling specialist, Aurubis, is grappling with financial losses following a series of fraudulent activities. Group CEO Roland Harings will shed light on the extent of the damage during a briefing on Wednesday at 10 a.m. Originally scheduled for December 6, the company's full income statement for the 2022/23 fiscal year had to be postponed by two weeks due to the increased time required to handle criminal acts during the preparation and audit process.
Preliminary figures suggest that the 2022/23 fiscal year concluded with an operating pre-tax profit of € 349 million. However, this represents a decline of approximately 34% compared to the previous year. The operating result was significantly influenced by the financial effects of the criminal acts against Aurubis, which were recognized in profit or loss during the past fiscal year.
Aurubis has been hit hard by a significant fraud case this year, resulting in losses estimated at almost 200 million euros. The fraud was uncovered during regular checks of the metal inventory, revealing considerable deviations from the target stock and special samples of certain recycling deliveries.
The company suspects that manipulated samples with high levels of valuable metals were submitted. However, the deliveries contained significantly less valuable metals, resulting in over-invoicing. The issue came to light back in June, when it was alleged that a gang of thieves had allegedly stolen intermediate products containing precious metals from the company. The accused are now being tried at Hamburg District Court.
Additional Insights
Aurubis' recent financial results have been quite promising, with higher metal prices, increased sulfuric acid revenues, and robust earnings from copper product sales driving a significant operating result in Q1 2024/25. Despite a year-over-year drop in treatment and refining charges, the company's net cash flow was well above the prior-year level. Aurubis anticipates an operating EBT between €300 and 400 million and a subsequent operating ROCE of between 7 and 11% for the current fiscal year 2024/25.
Moreover, Aurubis has made substantial progress in its strategic projects, with around €1 billion of the €1.7 billion total investment approved for strategic projects having been invested by the end of Q1 2024/25. These projects are expected to generate an additional EBITDA contribution of around €260 million per year.
The ongoing judicial proceedings at Hamburg District Court and the implications of the significant fraud case will likely have a substantial impact on Aurubis' financial performance and future growth prospects. The company's efforts to deal with the criminal acts against it and uncover the full extent of the financial damage will be critical to its ability to navigate through this challenging period.
