Recylex: S.A. – Financial information as of December 31, 2019

• Consolidated sales as of December 31, 2019 at € 305.7 million, down 16%

• Consolidated fourth quarter 2019 revenue of € 72.8 million, down 13%

• Activity impacted by the drop in lead and zinc prices as well as by unfavorable commercial conditions

1. Financial information as of December 31, 2019

As of December 31, 2019, the consolidated turnover by segment breaks down as follows:

In millions of euros At
December 31, 2019
At
December 31, 2018
Variation
(%)
Lead 196.4 236.6 -17%
Zinc 80.8 96.3 -16%
Special Metals 16.4 19.2 -14%
Plastic 12.1 12.9 -6%
Total 305.7 365.0 -16%

IFRS data, unaudited figures.

The evolution of metal prices at December 31, 2019 (in euros) is as follows:

In euros per tonne Average at
December 31, 2019
Average at
December 31, 2018
Variation
(%)
Lead price 1,787 1,895 -6%
Zinc price 2,274 2,468 -8%
€ / $ parity 1.1195 1.1810 -5%

Source: London Metal Exchange.

The average lead price for 2019 was 1,787 euros, down 6% compared to the 2018 average. Between January 2, 2019 and December 31, 2019, the evolution of lead prices was very volatile, registering a decrease of 1% over the year. After a slight improvement in the first quarter, the second quarter was marked by a very sharp decline, the price of lead reaching an annual low point, and the sharp increase in the third quarter of 2019 was moreover entirely offset by the sharp decline recorded in the fourth quarter.

The average zinc price for 2019 reached 2,274 euros, down 8% from the 2018 average. Between January 2, 2019 and December 31, 2019, the evolution of the zinc price was also very volatile. After a significant increase in the first quarter, the price of zinc fell sharply in the second quarter and the third quarter. The slight upturn at the start of the fourth quarter was completely wiped out at the end of the quarter, with zinc prices returning to their annual low in August in December.

In 2019, the average € / $ parity decreased by 5% compared to 2018 to reach 1.1195. Between January 2 and December 31, 2019, the € / $ exchange rate decreased by 2%.

2. Analysis of consolidated sales as of December 31, 2019 compared with December 31, 2018

Consolidated sales as of December 31, 2019 amounted to 305.7 million euros, down 16% compared to 2018. Consolidated sales restated2 at December 31, 2019 reached 326.4 million euros, also down 16% compared to December 31, 2018.

2.1 Lead segment: turnover -17%

The Lead segment represented 64% of consolidated sales as of December 31, 2019.

Its turnover reached 196.4 million euros at December 31, 2019, down 17% compared to 2018 due to:

  • A decline in volumes sold linked to the increase in volumes processed under the industrial subcontracting contract (“tolling”) and the evolution of the production process compared to 2018 (the by-products of the main oven being fully processed internally in 2019, instead of being sold as in the past);
  • The impact of the drop in lead prices and poorer commercial conditions for the foundry compared to 2018.

In this context, the Group recycled around 102,700 tonnes of used lead batteries in 2019 (-9% compared to 2018) and production at the foundry of Weser-Metall GmbH reached 105,260 tonnes of lead as of December 31, 2019 (+ 1% compared to 2018).

Fourth-quarter 2019 sales reached 49.4 million euros, down 11% compared to the fourth quarter of 2018, mainly due to the deterioration of business conditions compared to the same period of 2018, as well as the impact of the short scheduled maintenance shutdown of the foundry. This judgment also aimed to implement technical improvements aimed at stabilizing the charging and production of the two coupled ovens. The first results are encouraging at this stage.

2.2 Zinc segment: turnover -16%

The Zinc segment represented 27% of consolidated sales as of December 31, 2019.

The segment’s turnover amounted to 80.8 million euros at December 31, 2019, down 16% compared to 2018. The restated turnover2 amounted to € 101.4 million as of December 31, 2019, down 17% from 2018.

In 2019, the turnover of the dust recycling activity fell by more than 20% mainly due to the sharp drop in the price of zinc and the sharp deterioration in commercial conditions compared to 2018. Total production of Waelz oxides of the Group (HMG and Recytech) amounted to nearly 73,030 tonnes at December 31, 2019, down only 2% compared to 2018 despite an unfavorable comparison basis (Harz-Metall GmbH having operated a major maintenance shutdown scheduled in 2019, compared to no shutdown in 2018).

For the same reasons and in a difficult market context, the turnover of the zinc waste recycling activity also decreased. HZO’s zinc oxide production reached more than 22,000 tonnes as of December 31, 2019, down 10%, mainly due to larger maintenance operations than in 2018.

In the fourth quarter of 2019, sales amounted to 17.1 million euros, down 18% compared to the same period in 2018 and sales restated2 reached 22.1 million euros, down 19% compared to 2018. The segment’s two activities were impacted by the drop in the price of zinc, by significantly deteriorated commercial conditions compared to the fourth quarter of 2018, as well only by light unscheduled maintenance operations on the Recytech Waelz oven.

2.3 Special Metals Segment: turnover -14%

The Special Metals segment represented 5% of consolidated sales as of December 31, 2019.

PPM Pure Metals GmbH revenue was € 16.4 million at December 31, 2019, down 14% from 2018. Despite good performance in the first quarter of 2019, activity was marked by a sharp slowdown in demand for several metals in the following quarters, mainly for Arsenic and Germanium which are the main contributors to the segment.

In this context, PPM’s sales reached € 3.5 million in the fourth quarter of 2019, down 25% compared to the same period in 2018.

2.4 Plastic segment: turnover -6%

The Plastics segment represented 4% of consolidated revenue as of December 31, 2019.

In 2019, its turnover reached 12.1 million euros, down 6% compared to 2018. C2P France’s turnover now represents more than 92% of segment sales following the reorientation of C2P Germany3. During 2019, thanks to its commercial actions, C2P France’s turnover increased by 3% due to the increase in volumes sold in a stable “price” environment.

As of December 31, 2019, the Group’s total recycled polypropylene production reached nearly 12,500 tonnes, stable compared to 2018.

In the fourth quarter of 2019, sales reached 2.9 million euros, up 4% compared to the fourth quarter of 2018, driven by the good commercial momentum of C2P-France.

3. Co-option of a new director of Recylex S.A.

On February 6, 2020, the Board of Directors decided to co-opt Mrs. Karin Lattwein as director, to replace Mrs. Diana Kisro-Warnecke. His appointment will be subject to ratification by the next General Assembly of the company.

Commercial director of a car dealership and with her experience in both the automotive sector in Germany and risk management, Ms. Karin Lattwein will bring to Recylex her knowledge of business issues, compliance and business modernization, in a context of restructuring.

Mrs. Karin Lattwein meets the criteria of “independent” director as defined by Code MiddleNext, to which the company refers.

4. Ongoing procedures concerning Recylex S.A.

On January 29, 2020, the Court of Cassation dismissed the appeals brought by 88 former employees of Metaleurop Nord S.A.S. represented by the CGT against the June 29, 2018 judgments of the Douai Court of Appeal, rendering these judgments final. As a reminder, the Douai Court of Appeal overturned the decisions of the Lens Labor Council which ordered Recylex S.A. to compensate these 88 former employees.

The document summarizing the procedures concerning Metaleurop Nord S.A.S. and Recylex S.A., updated on January 29, 2020, is available on the space Finance of the site Internet of the Recylex Group.

5. Forecast financial agenda

Recylex will keep investors informed of developments in current discussions4 with the financial partners of the German subgroup.

Financial information as of March 31, 2020, Thursday April 30, 2020 (after market close).

1 See in particular the press releases of December 5, 2018, March 26, 2019, June 17, 2019, July 15, 2019 July 31, 2019, October 28, 2019, November 7, 2019, November 27, 2019 and December 20, 2019.

2 To assess the performance of the Zinc segment, the Group includes the share of Recytech S.A. (50% owned) in proportional consolidation, although this method is not accepted by IFRS standards. See note 19 to the 2017 consolidated financial statements.

3 See press release of April 24, 2019.

4 See press releases of November 28, 2019 and December 20, 2019.

Warning : This press release may contain forward-looking information constituting either trends or objectives, which should not be regarded as forecasts of results or any other performance indicator. This information is subject in nature to risks and uncertainties, as described in the Company’s Annual Report available on its website (www.recylex.eu). More complete information on Recylex can be obtained on its website (www.recylex.eu).

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NOTES

Quarterly trend in average metal prices

In euros per tonne First
quarter 2019
Second quarter 2019 Third quarter 2019 Fourth quarter 2019 First
quarter 2018
Second quarter 2018 Third quarter 2018 Fourth quarter 2018
Lead 1,793 1,677 1,824 1,847 2,053 2,006 1,810 1,721
Zinc 2,380 2,459 2,112 2,157 2,783 2,612 2,182 2,305

Source: London Metal Exchange.

Consolidated sales by quarter and by segment

In millions of euros First
quarter 2019
Second quarter 2019 Third quarter 2019 Fourth quarter 2019 First
quarter 2018
Second quarter 2018 Third quarter 2018 Fourth quarter 2018
Lead 45.8 48.3 52.8 49.4 59.6 64.0 57.8 55.2
Zinc 21.8 21.6 20.3 17.1 27.6 25.8 22.1 20.8
Special Metals 4.6 4.5 3.9 3.5 4.3 5.1 5.1 4.6
Plastic 3.6 3.3 2.4 2.9 3.8 3.6 2.7 2.9
Total 75.8 77.7 79.4 72.8 95.3 98.5 87.7 83.5

IFRS data, unaudited figures.

Recylex S.A. turnover

In millions of euros At
December 31, 2019
At
December 31, 2018
Variation
(%)
Lead segment 60.8 73.4 -20%
Services to Group companies 2.7 1.6 + 69%
Total turnover 63.5 75.0 -18%

IFRS data, unaudited figures

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Raw materials from urban mines

The Recylex group, located in France and Germany, is a European specialist in the recycling of lead, zinc, polypropylene and the production of high purity special metals. A major player in the circular economy thanks to its historical know-how, the Recylex group achieved consolidated sales of 306 million euros in 2019 and employs more than 730 people.

To find out more: visit our website: www.recylex.eu

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Press / Investor Contact: T +33 (0) 1 58 47 29 91 | E info@recylex.eu

Recylex S.A. | Headquarters: 6 place de la Madeleine | 75 008 Paris | France

Headquarters: 79 rue Jean-Jacques Rousseau | 92 158 Suresnes Cedex | France