LONDON (Reuters) - Europe’s largest copper producer Aurubis AG remains on the hunt for takeovers with a war chest of about $1 billion, Chief Executive Roland Harings said, pushing on with diversification after the early departure of its former head.
Shares in the Frankfurt-listed firm slid to an eight-year low in August after third-quarter earnings fell on weak demand from the cable and automobile sector and cost overruns at new projects.
Significantly higher than expected costs led the firm to announce the shutdown of its Future Complex Metallurgy (FCM) project - one of its largest ever, with a planned investment of 320 million euros ($357 million) - in June.
That forced out former chief executive Juergen Schachler earlier than expected, with Harings taking over from the start of July. He said diversification remained the firm’s strategy.
“It’s absolutely clear that stopping the FCM project does not mean a deviation from our multi-metal strategy,” Harings told Reuters on the sidelines of London Metal Exchange Week.
“The lesson we have learned from FCM is to do projects step by step and not make them too big in one go.”
The firm’s latest acquisition, a deal to buy recycler Metallo for 380 million euros agreed in May, will help it expand into new metals and increase recycling of complex scrap material.
“We have the firepower, we have a very strong balance sheet,” said Harings, who was previously CEO of MKM Mansfelder Kupfer und Messing, a German manufacturer of copper semi-finished products.
“We have banks who can support us beyond our direct capabilities. If there is an interesting target - and Metallo is the proof - we are willing to make some bigger steps.”
Harings added however that the U.S.-China trade conflict had slightly dampened appetite for merger and acquisition activity. “It creates more uncertainty and what you take into your business case as the assumptions going forward,” said Harings. “Companies need a bit of stability and predictability.”
Graphic: Aurubis shares suffers on series of setbacks,
Harings said Aurubis was in “active talks” with interested parties for the sale of its flat-rolled products business after an initial divesture was blocked by antitrust authorities in Europe.
The Metallo takeover is expected to close by December following approval from the European Commission.
He said the antitrust authorities needed to consider that metal flows and businesses operated in a global environment and competed with global heavyweights.
“We need some European leaders, we need some strong players who can stand up in the global competition,” he said.
Reporting by Zandi Shabalala; Editing by Jan Harvey
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