Befesa (ETR:BFSA) reported preliminary full-year 2025 results showing higher profitability, record operating cash flow, and continued deleveraging, as management pointed to a “resilient” performance in its steel dust business and early signs of improvement in secondary aluminum.
Full-year 2025 results and profitability trends
Group adjusted EBITDA rose 14% year-over-year to EUR 243 million in 2025, according to CEO Asier Zarraonandia. The adjusted EBITDA margin improved to 21% from 17% in 2024, which management attributed to operational efficiency and cost discipline. Earnings also increased sharply, with EPS up 58% to EUR 2.01.
Steel dust: earnings lifted by pricing and hedging, volumes steady
Befesa’s Steel Dust segment delivered EUR 212 million of adjusted EBITDA in 2025, representing a 25% year-over-year increase. The segment’s margin improved to 27% from 21%, driven mainly by “better pricing environment on treatment charges and zinc hedging,” Pérez said.
Management characterized volumes as broadly stable. Pérez said the year-over-year impact from volume was “practically no impact,” with group-level plant utilization around 70%, similar to 2024. Zarraonandia noted that in Europe, steel production remained depressed (down 3% year-over-year), but Befesa’s deliveries from electric arc furnace (EAF) customers were in line with the 2024 average.
Operationally, European plants ran strongly, posting a 94% load factor in the fourth quarter, with no maintenance stoppages. In the U.S., steel production increased 3.1% year-over-year and Befesa’s plants operated at a 71% load factor in Q4, with gradual improvement over the year. The Palmerton expansion was completed, and the second kilns were hot commissioned in July 2025; new EAF supply contracts ramped through Q4 following initial startup delays. Zarraonandia also cited cost reduction measures at the U.S. clean refining plant as supporting profitability.
In Asia, volumes in Taiwan increased 11% year-over-year as the business recovered after a maintenance-impacted second quarter. Korea’s 2025 load factor reached 76%, up 6% year-over-year. China continued at low utilization with earnings around breakeven, reflecting market weakness.
Aluminum: salt slag stable operationally, secondary aluminum pressured but improving
Befesa’s Aluminum segment results were mixed. Pérez said aluminum salt slag produced EUR 32 million of EBITDA in 2025, down 27% from EUR 43 million in 2024, citing a lower aluminum metal margin and somewhat higher operating costs and energy prices. Overall volumes were “marginally negative,” with a EUR 3 million year-over-year EBITDA headwind, while pricing was a EUR 5 million drag due to margin pressure. The aluminum FMB price increased 3% to an average of EUR 2,369 per ton, which partially offset the margin decline.
Even with earnings pressure, management highlighted high utilization in salt slag. Zarraonandia said salt slag recycling continued to perform strongly, with utilization above 90% during 2025. Pérez reported utilization of about 89% in salt slag and 75% in secondary aluminum.
Secondary aluminum was described as operating in a “very challenging” environment tied to weak European automotive demand and tight metal margins, but management said fourth-quarter performance reinforced its view that the cycle bottom occurred in Q3 2025 and that recovery is beginning. In Q&A, Zarraonandia said Q4 margin levels were “a good reference” for the start of 2026, while cautioning it remained early to conclude how persistent the improvement will be.
Commodities, hedging, energy costs, and balance sheet
Pérez said zinc LME prices averaged $2,867 per ton in 2025, up 3% year-over-year, trading in a range of $2,521 to $3,351 per ton, with strength in the final months of the year. He noted euro-dollar FX movements reduced the zinc price in euros slightly, down 1% to EUR 2,542. Benchmark zinc treatment charges were set at $80 per ton for 2025, down from $165 in 2024 and described as an all-time low.
On hedging, Pérez said Befesa extended its zinc hedge book to the first half of 2028 at $3,100 per ton and set 2027 hedges at $3,000 per ton. Average hedge prices were $2,923 in 2025 and $2,990 for 2026.
Energy costs showed continued normalization in coke prices, which Pérez said represent around 60% of the total energy bill; average coke price in Q4 was about EUR 152 per ton. Electricity prices were similar to Q3 levels, while gas continued normalizing, with a slight increase to EUR 45 per MWh in Q4.
On leverage, Pérez said gross debt ended December at EUR 695 million, while net debt fell 11% to EUR 552 million, down from EUR 619 million a year earlier. Net leverage was 2.27x at year-end 2025, improving from 2.9x at December 2024. Pérez also said liquidity included EUR 143 million of cash plus an undrawn EUR 100 million revolving credit line.
Capital allocation, dividend, and 2026 themes
Management reiterated its capital allocation priorities as a combination of keeping net leverage below 2x, maintaining the dividend policy, and selectively investing in growth. Pérez said Befesa intends to keep regular maintenance CapEx around EUR 40 million to EUR 45 million over the coming years, while total 2026 CapEx is expected to be below EUR 70 million, with growth spending focused on the Bernburg expansion.
For dividends, Pérez said the company remains committed to paying 40% to 50% of net income. He noted the board plans to propose a EUR 40 million dividend for 2026 (EUR 1 per share), compared to a EUR 26 million dividend paid in July 2025 (EUR 0.63 per share).
On the 2026 outlook, Zarraonandia said Befesa will provide formal guidance in the first quarter after 2026 treatment charges are announced, but expects “another year of earnings growth,” strong cash generation, and continued deleveraging. Key operational themes discussed included stable steel dust volumes in Europe, higher volumes in the U.S. from new contracts, stable volumes in China and the rest of Asia, stable salt slag volumes supported by higher collection fees, and gradual improvement in secondary aluminum metal margins after the Q3 2025 trough.
In Q&A, management indicated expected incremental U.S. volumes of about 60,000 to 70,000 tons in 2026. Treatment charges were expected to rise from 2025’s $80 benchmark toward a $100 to $130 range in 2026, according to Zarraonandia’s comments in the prepared outlook.
Management also discussed longer-term growth options, including ramping U.S. utilization toward 90% by 2028 as new EAF capacity comes online, progressing the Bernburg project (construction started August 2025 with a 12-month build and a six-month ramp-up planned for the second half of 2026), and exploring additional European opportunities tied to EAF expansion. Share buybacks were described as a mid-term consideration depending on leverage, growth opportunities, and valuation.
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.
