Aurubis now puts the scale of the precious metals shortfall stemming from the suspected fraud affecting its recycling business revealed at the end of last month at €185m. The figure is the result of the extraordinary inventory the copper company launched in the aftermath of the recent theft and fraud cases. Aurubis noted in its announcement that it may recover around €30m via insurance pay-outs and the seizing of assets from parties involved in the criminal activity, allowing it to offset some of the loss.
Accordingly, Aurubis expects the net adverse impact on its earnings to come in at around €150m. It has therefore modified its forecast for operating earnings before taxes in the current fiscal year to €310-350m. The company had already said that given the sizable losses resulting from the metals shortfall, it would not be able to achieve the €450-550m projection it had originally made for the year.
The copper group believes that shipments and samples of input materials for its recycling business with high levels of valuable metals were manipulated. "The shipments did not contain the metals in the amounts expected based on the manipulated samples, and inflated invoices were paid as a result. It was apparently possible to manipulate these input materials despite the high security standards, customary for the industry, in place at Aurubis," said the company. Group CEO Roland Harings said in a recent interview that it was "highly likely" that Aurubis employees were involved in the fraud.
"We are working closely with the investigative authorities and at full speed to get to the bottom of the criminal activities. We have pulled all of the necessary internal resources together and are using external forensic specialists," said Mr Harings. "At the same time, based on the findings of the investigation, we are immediately and comprehensively improving the level of protection against professional crime. Process improvements and additional security measures will be established. Our goal is to raise the level of security high enough to make theft and fraud impossible," he added.
The task force which Aurubis established immediately after the shortage was discovered is working on improving security planning. According to the group, the task force, which draws on both internal and external experts, has already implemented measures based on initial recommendations. These have included greater restrictions on access to sensitive areas, such as sampling operations, and increased checks of personnel and vehicles, along with enhanced surveillance.
No harm to the recycling industry
"The implementation of our growth strategy remains unaffected by the current developments, because Aurubis is in a robust financial position and has sufficient liquidity," emphasises group CEO Roland Harings. Recycling is the core of the corporate strategy and the expansion of the circular economy is crucial for resource conservation, he said. "So we will do everything in our power to ensure that the recycling industry as a whole is not undermined."
Aurubis said it could rule out that its own customers have been affected by the fraud case, but "the company cannot yet make any statements about which suppliers this will impact," said Aurubis. This was the subject of ongoing investigations by the State Criminal Investigation Office, it said.
Aurubis's results for the 2022/23 financial year which ends on 30 September and the group's full-year forecast for 2023/24 are scheduled for release with its consolidated financial statements on 6 December 2023.