The shock waves were great when Aurubis announced at the beginning of September that it had tracked down a large-scale fraud. Damage in the three-digit millions, earnings forecast cashed in: investors fled, Europe's largest copper recycler lost almost a fifth of its value on the stock exchange in the short term. Barely three weeks later, you can see more clearly. The share price temporarily climbed by 5 percent after the Hamburg-based company reported details of the results of the special inventory. The damage, however, is not small: precious metals worth 185 million euros are missing from the inventory.
Business correspondent in Hamburg.
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This is not only about the recently discovered fraud through manipulated samples, which apparently provided some suppliers of recycling material containing precious metals with an excessive payout by Aurubis. This inventory difference also includes the damage caused by the theft of precious metal from the plant. This case had become public in June through a large-scale raid in which the police arrested several people and confiscated part of the loot and valuables worth a total of 20 million euros. The Hamburg State Office of Criminal Investigation is investigating both cases.
Aurubis did not quantify the damage from this theft in the summer and does not want to provide any concrete information at the moment. While both the fraud with recycled material and the theft of precious metals have apparently been practiced for years, the shortfall of 185 million euros that has now been identified relates to this year alone. Accordingly, Aurubis' profit will decrease in fiscal year 2022/2023, which ends on September 30. This does not include the full 185 million euros. Rather, Aurubis expects insurance benefits of around EUR 30 million, and the value of the confiscated items will also be charged.
Returns shrink drastically
Aurubis' new earnings forecast is therefore significantly lower than the previous one. While an operating profit of 450 to 550 million euros had previously been expected, the company now expects only 310 to 350 million euros. The operating return on capital employed is now only 8 to 12 percent instead of the previously forecast 14 to 18 percent. This shows that the fourth quarter of the fiscal year, which ends in a few days, must have been worse than expected. Aurubis has announced details of the fiscal year and a forecast for 2023/24 for December 6.
It is unclear to what extent the criminal cases have already led to considerable damage in previous years. Currently, it is not assumed that the balance sheets will have to be redrawn again, said an Aurubis spokesman on request. While Aurubis shareholders can already count among the victims, this does not apply to customers, it is emphasized in Hamburg: "Aurubis can rule out the possibility that customers are affected by the fraud."
In order to better secure its business processes against criminal activities, the Hamburg-based company has formed a working group in which forensic experts from an external consulting firm also participate. As an immediate measure, further checks on persons and vehicles were introduced and access authorisations for sensitive areas, in particular sampling, were restricted. The Supervisory Board of Aurubis AG also sees itself challenged. The committee has formed a special committee on safety, which monitors the progress of occupational and plant safety measures and is supported by the law firm Hengeler Mueller.