Befesa ETR: BFSA reported first-half 2026 adjusted EBITDA of €124 million, up 11% from a year earlier, as higher steel-dust recycling volumes and favorable zinc prices helped offset continued pressure in its secondary aluminum recycling business.
The company said its second-quarter EBITDA margin rose to 22% from 19% in the prior-year quarter. Net income and earnings per share each increased 13% year over year, while net leverage declined to approximately 2.18 times at the end of June from 2.7 times a year earlier.
Chief Executive Officer Asier Zarraonandia said the company remains on track for another year of earnings growth and reaffirmed its full-year adjusted EBITDA guidance of €250 million to €270 million. The range implies growth of 3% to 11% versus 2025.
Steel Dust Performance Supported by Zinc and U.S. Volumes
Befesa’s steel dust segment generated €104 million in adjusted EBITDA during the first half, an 8% increase from the previous year. Segment margin expanded by 260 basis points to 27%.
Chief Financial Officer Rafael Pérez said the improvement reflected higher London Metal Exchange zinc prices, increased throughput and lower coke prices, partly offset by foreign-exchange effects and inflation. The average LME zinc price was $3,353 per metric ton in the first half, up 22% from the same period in 2025.
The group’s global steel-dust load factor rose by nearly 4% year over year. In Europe, steel production remained near a five-year low, but Befesa’s load factor increased 6% to 91% on strong dust deliveries, particularly in the second quarter.
U.S. operations were a key contributor to volume growth. While U.S. steel production fell 6%, Befesa said lower steel output generated higher dust deliveries. U.S. utilization averaged 75% in the second quarter, up 11% from a year earlier, aided by new contracts with steel producers.
Zarraonandia said U.S. volumes increased 33% in the second quarter and that the growth was largely attributable to new contracts rather than a broad improvement in steel production. The company expects third- and fourth-quarter U.S. volumes to remain near second-quarter levels.
Turkey’s volumes were weak and South Korean operations were broadly stable, while utilization in China remained subdued. Befesa said it expects Turkey and South Korea to improve in the second half, while Chinese operations continued to operate around breakeven.
Aluminum Markets Remain Uneven
Befesa said its aluminum salt slag recycling business increased revenue 10% year over year to €61 million in the first half, with EBITDA also rising 10%. Volumes declined 4%, but higher prices offset the volume effect.
Management said salt-slag volumes normalized during the second quarter and are expected to remain at normalized production levels through the rest of the year. Higher collection fees are also expected to provide support.
Secondary aluminum recycling remained challenging because of limited availability of alloy scrap in Europe and weak automotive demand. Record-high exports of alloy scrap were continuing to pressure regional supply, the company said.
Revenue and EBITDA in secondary aluminum were broadly unchanged from the prior year, as lower volumes were offset by higher aluminum prices and improved metal margins. Zarraonandia told analysts that pricing changes can lag changes in scrap purchasing costs, but said margins are expected to improve further in the third and fourth quarters under quarterly customer contracts.
The company said it believes the secondary aluminum business could contribute around €10 million of EBITDA this year, potentially modestly more, depending on margins and production levels in the second half.
Cash Flow, Leverage and Hedging
Operating cash flow rose 10% to €71 million in the first half. Working-capital outflows totaled €44 million, including a buildup in inventories of waelz oxide concentrates, or WOCs. Management characterized the inventory increase as a timing issue related to shipments and said it expects a reversal in the third quarter.
Total capital expenditures were €46 million in the first half, including €31 million of maintenance spending and €15 million of growth capital expenditures associated with the Bernburg plant expansion in Germany. Befesa maintained its full-year CapEx expectation of around €70 million.
Cash on hand totaled €134 million at the end of June. Together with a fully undrawn €100 million revolving credit facility, the company had nearly €240 million of liquidity. Net debt was €555 million, down from €601 million a year earlier.
Befesa extended its zinc hedging program through January 2029. Its hedging book covers roughly 30 months, including all of 2027 and 2028, at about €3,100 per metric ton for those two years, which Pérez described as record-high levels for the company.
Outlook and Expansion Plans
Management said it expects to finish 2026 toward the midpoint to upper end of its €250 million to €270 million EBITDA guidance range if current market conditions persist. Higher U.S. steel-dust volumes, elevated zinc prices and recovering secondary-aluminum margins are expected to support the second half, although the company cited inflation, foreign exchange, energy costs and geopolitical uncertainty as risks.
The Bernburg expansion is on track to begin production at the end of August, adding 60,000 tons of recycling capacity to Befesa’s existing 200,000 tons. The majority of its contribution is expected in the fourth quarter, and management continues to target €6 million to €7 million in EBITDA from increased utilization of the added capacity.
Looking beyond 2026, Befesa expects lower capital requirements following its recent international expansion investments. It plans to maintain regular maintenance CapEx at about €45 million annually and limit growth investment primarily to a potential second kiln at its Recytec facility in France. The company reiterated its goal of keeping leverage below two times in coming years.
About Befesa (ETR:BFSA)
Befesa SA offers environmental recycling services to the steel and aluminum industries in European, Asian, and North American markets. It operates through two segments, Steel Dust Recycling Services and Aluminium Salt Slags Recycling Services. The Steel Dust Recycling Services segment collects and recycles crude steel dust and other steel residues generated in the production of crude, stainless, and galvanized steel; sells waelz oxide to zinc smelters; and treats crude steel dust. The Aluminium Salt Slags Recycling Services segment recycles salt slags; spent pot linings, a hazardous residue generated by primary aluminium producers; and recovers and sells salt, aluminium concentrate, and aluminium oxides.
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