Wim De VOS, CEO Campine NV
Regulated information March 20, 2020 – 6:50 p.m.
Needless to say, 2019 was characterized by many uncertainties, which created more volatility in the commodity markets.
The debate on climate change and the constantly changing demands and taxes on cars with combustion engines have forced the automotive sector into a phase of accelerated transition / electrification. Campines products have a certain dependence on the automotive markets. Car batteries are not only the primary user of lead alloys in the Metal Recycling division, but cars also require a lot of flame retardant plastics, which are supplied by the Campines Specialty Chemicals division. The slowdown and uncertainties in the automotive market ultimately lead to a domino effect of lower demand across our entire value chain.
We were able to counter the short-term decline in demand for lead products. Campine even experienced slight growth thanks to the volumes of new industrial customers and higher sales to commodity traders. Unlike other base metals, the price of LME lead was supported in 2019 by the 6-month outage of a large lead producer in Australia, which reduced the projected global lead surplus.
In our Specialty Chemicals division, it has been much more difficult to respond to the temporary drop in demand, as many products are tailor-made for specific applications or customers. The drop in demand for antimony products in China also leads to an increase in Chinese exports and therefore greater competition on world markets. Besides the negative impact on volume, the abundant supply of antimony in China (also caused by the high availability of Russian antimony ore) created a downward spiral of prices for antimony products, which lasted for most of 2019.
Campines’ net income was largely impacted by the EU Tribunal’s decision to reimburse 3.9 million euros from the European Commission’s initial 8.2 million euros fine. The verdict in this case was released on November 7, 2019. It confirms Campine’s slightest involvement in the alleged buying cartel. The 3.9 million reimbursement received on our bank accounts in December has no tax impact. Since legal fees were mainly recorded in previous years, the reimbursement contributes almost entirely to the net result.
In 2019, Campine generated sales of 192.5 million euros, compared to 212.4 million euros in 2018 (-9%). This drop in revenues is linked to the drop in metal prices (mainly antimony), which forms the basis for Campine sales prices and lower sales volumes in the Specialty Chemicals Division.
EBIT reached 9.6 million (including reimbursement of 3.9 million of the EC fine), 19% more compared to 8.1 million in 2018. The net result for 2019 is 8, 0 million (including the 3.9 million reimbursement of the EC fine) compared to 5.8 million in 2018 (+ 37%).
Our financial ratios were further strengthened in 2019. With a solvency ratio of 61% (equity / total balance), we have the financial resources to continue our vast investment program as defined in our business plan.
The board of directors proposes to pay a dividend in the amount of 2,625 million on the basis of the 2019 results. The payment of 1.75 gross per share is scheduled for June 12, 2020.
Results by division
Metals Recycling sales 128.6 million (-4%) EBIT (excluding fine CE) 6.0 million (+ 22%)
This division is made up of the Business Units Lead and Metals Recovery.
Sales volumes increased by 2.5% compared to 2018 and reached approx. 64,300 tonnes.
Both sales and EBIT are highly dependent on the price of metals, primarily the price of LME lead. Our margins are under pressure when the LME has a downward trend and the margins recover during upward movements of the LME. Despite the small difference between the main LME in January (1.746 / tonne) and December (1.707 / tonne), there was some volatility throughout the year, with an average LME even at 1.787 / tonne.
As a result, revenue decreased 4% to 128.6 million while EBIT increased to 6.0 million (+ 22%).
Sales of specialty chemicals 77.1 million (-14%) EBIT (excluding the EC fine) -0.2 million (-107%)
This division is made up of the Antimony and Plastics Business Units.
The sales volumes of the Specialty Chemicals division decreased for the first time in years and reached approx. 13,600 tonnes. This represents a decrease of 12% compared to 2018.
Revenues are linked to changes in the prices of antimony metals. The average price of Antimony Metal-Bulletin in 2019 of 6,722 USD / ton is significantly lower than the average of 8,316 USD / ton in 2018. Consequently, our turnover only reached 77.1 million (-14 % vs 2018).
The downward price trend that continued throughout the year led to a significant drop in the value of our stocks throughout the year, the price of antimony on January 1st was 8,000 USD / ton and 6,000 USD / ton at the end of the year.
In line with the drop in sales volumes and the drastic fall in the prices of antimony products in 2019, EBIT fell sharply to 0.2 million.
Outlook for 2020
Giving a perspective on 2020 is extremely difficult under the current dramatic circumstances of the crown epidemic.
Demand for our specialty chemicals has recovered so far in 2020. Prices were trending up due to shortages of antimony metal from China. This rise in prices seems to be stabilizing now that Chinese exports are preparing again.
In our metal recycling division, it will be important to follow macroeconomic developments. So far, demand is in line with 2019. However, with the closure of automotive assembly lines, demand for lead will decrease in the short term. In recent days, customers have been lowering their demand forecasts. LME lead prices, like most commodities, fell sharply, with lows falling below 1,500 / tonne. The benefits of Campines in recycling are directly linked to the LME lead values.
Major investments will be made during 2020 in the Metal Recycling division: a 3rd a line for the recovery of metals from industrial waste streams other than batteries will be built and should be operational at the end of 2020. In the lead refinery, a new line of ingots, which should increase our operational efficiency and our overall capacity, will be put into operation in production at the start of 2021. As for the project to recover polypropylene plastic from battery boxes, construction work will start on 2North Dakota semester 2020.
Our auditor, Deloitte Bedrijfsrevisoren, represented by Luc Van Coppenolle, has confirmed that the audit procedures for the consolidated financial statements are essentially completed and that these procedures did not reveal any significant modification to be made to the accounting information, derived of the consolidated financial statements and included in this press release.
The annual financial report will be made public on April 24, 2020 on the Campine website.
For more information, you can contact Karin Leysen:
Phone. +32 14 60 15 49 / email: [email protected]
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