Befesa Posts Margin Gains Despite Dip in Sales Volumes for Q1

Befesa SA managed to improve its profitability in the first quarter of 2026, even as sales volumes took a hit compared to last year. The company clocked adjusted EBITDA at €58 million, marking a 4% increase from the previous year, although it fell slightly short of analyst expectations by about 4%.

The group's revenue was down 8% year-on-year, totaling €285 million. Foreign exchange pressures and lower volumes weighed on sales, but optimized margins kept earnings buoyant. Steel dust production nudged higher by 1% to 280 kilotons, despite some maintenance-related downtime.

The steel dust segment, the largest contributor, saw its revenue slip by 9% to €182 million. Yet, adjusted EBITDA climbed 3% to €51 million, pushing segment margins up from 24.6% to 27.7%. This suggests tighter cost controls and pricing power amid softer demand.

Salt slag business fared better revenue-wise, posting an 8% increase to €30 million, and its adjusted EBITDA rose 10% to €8 million. Conversely, the secondary aluminium segment encountered a 10% revenue decline to €85 million, but still showed a 13% gain in adjusted EBITDA, reaching €2 million.

Earnings per share advanced 11% to €0.52, compared with €0.47 a year earlier. Operating cash flow improved by 12%, reaching €38 million, although free cash flow declined to €12 million from €16 million previously.

Financial leverage showed slight improvement, with net debt to EBITDA ratio dropping to 2.25x from 2.78x in Q1 2025 and marginally lower than the 2.27x recorded at end-2025. This reflects ongoing efforts to strengthen the balance sheet.

Looking ahead, Befesa anticipates adjusted EBITDA in the range of €250 million to €270 million for 2026, sitting near but slightly below market consensus of €264 million. The firm expects earnings per share above €2.20, which is below the street's €2.56 estimate, reflecting cautious outlook in a challenging macro environment.

Capital expenditures are projected around €70 million for the year, with net leverage targeted near 2.0x. Treatment charges increased to $85 per ton from $80 last year, indicating some pricing resilience despite volume headwinds.

Whether Befesa's margin improvements can offset external pressures throughout the rest of 2026 remains to be seen, especially as steel and recycling markets navigate economic uncertainties.