Education
About Us
Working with TipRanks
Follow Us
Befesa S.A. (DE:BFSA)
XETRA:BFSA
Top Page
Befesa S.A.
(XETRA:BFSA)
Select Model
Select Model
Rating:63Neutral
Price Target:
€34.00
▲(3.98% Upside)
Action:DowngradedDate:01/13/26
The score is held back primarily by weakening recent financial performance (notably the sharp TTM revenue decline and weaker cash flow conversion), despite a manageable balance sheet. Technicals show an uptrend but are overextended, which tempers near-term outlook. Offsetting these risks, valuation looks reasonable and the latest earnings call indicated improving profitability, declining leverage, and reaffirmed guidance, albeit with noted cyclical/region-specific challenges.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong demand for Befesa's recycling services, supporting long-term business stability and expansion.
U.S. Market Expansion
Successful expansion in the U.S. enhances Befesa's market presence, providing a strategic advantage in a growing market for recycling services.
Cash Generation
Strong EBITDA margins reflect Befesa's ability to generate cash efficiently, ensuring financial flexibility and supporting future investments.
Negative Factors
Negative EBIT Margin
A negative EBIT margin suggests operational inefficiencies that could hinder profitability and require strategic adjustments to improve margins.
Challenges in Europe
Weak European steel production impacts Befesa's recycling operations, potentially reducing revenue from this key region and necessitating market adaptation.
Challenges in China
Continued low utilization in China reflects market weakness, limiting growth opportunities and affecting overall profitability in the region.
Befesa S.A. (BFSA) vs. iShares MSCI Germany ETF (EWG)
Market Cap
€1.29B
Dividend Yield2.24%
Average Volume (3M)62.78K
Price to Earnings (P/E)14.9
Beta (1Y)1.14
Revenue Growth2.08%
EPS Growth56.30%
CountryDE
Employees1,835
SectorIndustrials
Sector Strength72
IndustryWaste Management
Share Statistics
EPS (TTM)0.49
Shares Outstanding39,999,996
10 Day Avg. Volume72,927
30 Day Avg. Volume62,780
Financial Highlights & Ratios
PEG Ratio-1.32
Price to Book (P/B)1.00
Price to Sales (P/S)0.67
P/FCF Ratio7.33
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
€36.33Price Target Upside11.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)2.54
Revenue Forecast (FY)€1.37B
Befesa S.A. Business Overview & Revenue Model
Company DescriptionBefesa S.A. provides 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 steel dust and other steel residues generated in the production of crude, stainless, and galvanized steel. The Aluminium Salt Slags Recycling Services segment recycles salt slags; spent pot linings, a hazardous residue generated by primary aluminum producers; and recovers and sells salt, aluminum concentrate, and aluminum oxides. This segment also collects and recycles aluminum scrap and other aluminum residues, such as aluminum dross, shavings, and cuttings; and produces secondary aluminum alloys for automotive and construction industries. The company also offers logistics and waelz oxide treatment services; develops projects and technology; and operates as a marketing company. Befesa S.A. was founded in 1987 and is based in Luxembourg City, Luxembourg.
How the Company Makes MoneyBefesa generates revenue through its recycling services by charging fees for the processing and treatment of steel and aluminum waste. The company has established key revenue streams from its operations in the Steel Dust Recycling and Aluminum Salt Slag Recycling segments, where it earns income by recovering and selling metals such as zinc and aluminum. Additionally, Befesa benefits from long-term contracts with steel and aluminum producers, ensuring a steady stream of waste materials to process. The company also capitalizes on the increasing demand for recycled metals driven by environmental regulations and sustainability initiatives, which bolsters its earnings potential.
Befesa S.A. Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial picture: EBITDA growth (+14%), margin expansion, record operating cash flow (+10%), successful deleveraging (net debt down 11%, leverage 2.27x) and strong commodity hedging/visibility. Key growth projects (Palmerton completed, Bernburg underway) and a disciplined CapEx and dividend approach support the constructive outlook. Headwinds remain in the aluminium segments, China utilization and inflationary/energy costs, but management expects recovery in secondary aluminium and higher treatment charges in 2026. On balance, the positive achievements and financial improvements outweigh the localized challenges.Q4-2025 Updates
Positive Updates
Strong overall profitability and margin expansion
Adjusted EBITDA for FY2025 was €243 million, up 14% year‑on‑year, with EBITDA margin improving to 21% from 17% in FY2024, reflecting operational efficiency and disciplined cost management.
Steel dust business performance
Steel dust EBITDA reached €212 million in 2025, up 25% year‑on‑year, with the segment margin improving from 21% to 27%. Key drivers included higher zinc hedge prices (avg. zinc LME +3% YoY to $2,867/t), significantly lower zinc treatment charges (set at $80/t in 2025 vs $165/t in 2024), and cost reductions in the U.S. zinc smelter.
Record operating cash flow and improved cash conversion
Operating cash flow was a record €212 million in 2025 (up 10% YoY). Working capital consumption was limited (€10 million) and final cash flow was €40 million. Cash on hand was €143 million plus a €100 million undrawn RCF, providing >€240 million liquidity.
Deleveraging and balance sheet strength
Net debt fell 11% to €552 million (from €619 million), net leverage improved to 2.27x at year‑end 2025 (from 2.9x at Dec‑2024) and management targets ~2.0x by year‑end 2026, supporting financial flexibility.
Hedging program and commodity visibility
Hedge book extended through H1 2028 with hedges up to $3,100/t (2027 hedge at $3,000/t). Average hedge prices were $2,923 in 2025 and c. $2,990 for 2026, providing price visibility and downside protection.
Strategic project milestones: Palmerton and Bernburg
Palmerton expansion completed with second kiln commissioned in July 2025; US plants capacity positioned to capture expected EAF growth. Bernburg expansion permits obtained and construction started Aug‑2025 (12 months construction + 6 month ramp-up), on track commercially.
Capital discipline and shareholder returns
Total CapEx in 2025 was €76 million (below initial guidance of €80–90m). Management committed to maintenance CapEx ~€45m–€50m p.a. and proposes a higher dividend for 2026 (€40 million, +37% vs 2025 dividend), maintaining a 40–50% payout policy.
Negative Updates
Aluminum salt slag and secondary aluminium weakness
Aluminum salt slag EBITDA declined to €32 million in 2025, down 27% YoY (from €43m), driven by lower aluminum metal margins and higher operating/energy costs. Secondary aluminium remains under pressure with tight metal margins and low production linked to the weak automotive market.
China operations at low utilization
China operations ran at low utilization with earnings around breakeven; one plant operating at 10–20% and another at 50–60% at times. Management says China is not cash negative overall but recovery timing remains uncertain.
Energy and inflationary cost pressures
Inflationary pressures and higher operating and energy‑related expenses persisted in 2025 and are expected to continue in 2026 as European natural gas and electricity prices are projected to rise, adding negative cost pressure.
Treatment charge environment historically low (market risk)
Benchmark zinc treatment charge was $80/t in 2025 — a 15‑year low (vs $165/t in 2024). Although this supported Befesa’s 2025 EBITDA, the low TC signals tight concentrate market dynamics and potential volatility; management expects TCs to rise to $100–$130 in 2026.
U.S. smelter profitability still volume‑dependent
U.S. zinc refinery is close to breakeven after cost actions, but profitability remains dependent on ramping volumes and commercial ramp-up of new contracts, with further improvement contingent on volume growth.
Segmental variability and near‑term uncertainty
While steel dust performed strongly, the business mix shows divergence (steel dust strong vs aluminium weak). General macro/industry uncertainties (automotive weakness, maintenance seasonality, FX headwinds reducing zinc euro price by ~1%) create near‑term variability in results.
Company Guidance
Befesa expects 2026 to be another year of earnings growth, strong cash generation and continued deleveraging with net leverage targeted around ~2.0x by year‑end 2026 (below 2x thereafter). Total CapEx will be below EUR 70m in 2026, with regular maintenance CapEx roughly EUR 40–50m (management cited ~EUR45m) and the remainder as growth CapEx focused on Bernburg (permits secured, construction started Aug‑25, 12‑month build + 6‑month ramp‑up in H2‑26). Zinc hedges provide multi‑year visibility (average 2026 hedge ≈ EUR 2,990/t, 2027 hedged at $3,000/t and hedges extended into H1‑2028 at $3,100/t); treatment charges are expected to recover from $80/t in 2025 toward ~$100–130/t in 2026. Management flags moderate energy cost movements (coke normalizing, Q4 gas ~EUR45/MWh; Q4 coke ≈ EUR152/t), stable salt‑slag volumes with ~89% utilization, secondary‑Al utilization ~75% with gradual margin improvement, incremental U.S. steel‑dust volumes of ~60–70k t in 2026 and a target to ramp U.S. utilization from <70% today to ~90% by 2028, plus a proposed dividend of EUR 40m (EUR 1.00/sh, 50% payout, +37% vs 2025).Befesa S.A. Financial Statement Overview
Summary
Financials are serviceable but under pressure: Income Statement reflects a sharp TTM revenue decline (-28%) and margin volatility despite remaining profitable (~5% net margin). Balance sheet leverage is manageable (debt ~0.86x equity) with moderate ROE (~7%), but debt remains meaningful. Cash flow is positive with free cash flow (~46M), yet conversion is weak (~29% of net income) and less consistent versus 2024.Income Statement
Revenue has softened materially in TTM (Trailing-Twelve-Months) (down 28%), reversing the steady growth seen from 2021–2024. Profitability is mixed: the latest net margin remains modest (~5%) and roughly in line with recent years, but earnings quality looks less stable given the sharp swing in gross margin versus 2024 and weaker operating performance versus prior years. Overall, the company is still profitable, but the recent top-line contraction and margin volatility temper the outlook.56
Neutral
Balance Sheet
Leverage appears manageable with debt at ~0.86x equity in TTM (Trailing-Twelve-Months), improved from higher leverage earlier in the period (notably 2020–2021). Equity has grown over time, supporting the capital structure, and returns on equity are positive but moderate (~7% in TTM (Trailing-Twelve-Months)) versus stronger levels in 2021–2022. Key risk remains that debt is still substantial in absolute terms, which could pressure flexibility if profitability weakens.63
Positive
Cash Flow
Cash generation is positive, with operating cash flow of ~159M in TTM (Trailing-Twelve-Months) and positive free cash flow (~46M). However, free cash flow conversion is relatively weak versus reported earnings (free cash flow is ~29% of net income in TTM (Trailing-Twelve-Months)), and free cash flow is well below the strong 2024 level, indicating volatility in cash efficiency. The positive free cash flow growth rate is a near-term plus, but overall cash flow consistency remains a watch item.52
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.22B | 1.24B | 1.18B | 1.14B | 821.61M | 604.33M |
| Gross Profit | 231.88M | 514.17M | 456.20M | 569.11M | 465.10M | 350.58M |
| EBITDA | 240.60M | 195.66M | 184.52M | 223.15M | 180.47M | 117.22M |
| Net Income | 60.74M | 50.82M | 57.97M | 106.22M | 99.75M | 47.61M |
Balance Sheet | ||||||
| Total Assets | 1.87B | 1.98B | 1.95B | 1.98B | 1.80B | 1.10B |
| Cash, Cash Equivalents and Short-Term Investments | 89.63M | 102.52M | 106.69M | 161.75M | 224.09M | 154.56M |
| Total Debt | 699.64M | 721.48M | 710.77M | 710.77M | 694.73M | 548.22M |
| Total Liabilities | 1.04B | 1.13B | 1.07B | 1.16B | 1.16B | 772.82M |
| Stockholders Equity | 813.57M | 830.22M | 823.53M | 805.10M | 622.84M | 317.29M |
Cash Flow | ||||||
| Free Cash Flow | 46.02M | 113.25M | 12.51M | 30.68M | 40.22M | 37.72M |
| Operating Cash Flow | 158.85M | 191.82M | 117.32M | 137.33M | 117.90M | 92.54M |
| Investing Cash Flow | -53.39M | -78.57M | -90.85M | -151.40M | -449.47M | -53.88M |
| Financing Cash Flow | -63.64M | -117.27M | -80.24M | -46.89M | 401.77M | -9.16M |
Befesa S.A. Technical Analysis
Positive
32.70
Price Trends
31.17
Positive
29.83
Positive
28.57
Positive
Market Momentum
0.39
Positive
46.29
Neutral
51.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:BFSA, the sentiment is Positive. The current price of 32.7 is above the 20-day moving average (MA) of 32.17, above the 50-day MA of 31.17, and above the 200-day MA of 28.57, indicating a neutral trend. The MACD of 0.39 indicates Positive momentum. The RSI at 46.29 is Neutral, neither overbought nor oversold. The STOCH value of 51.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:BFSA.
Befesa S.A. Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | €1.94B | 15.92 | 11.18% | 2.84% | 4.20% | -20.71% | |
76 Outperform | €1.60B | 22.09 | 7.17% | 1.97% | -5.27% | -13.70% | |
76 Outperform | €1.94B | 16.96 | 11.18% | 2.76% | 4.20% | -20.71% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | €1.29B | 14.91 | 10.98% | 2.24% | 2.08% | 56.30% | |
62 Neutral | €1.83B | 44.35 | 4.34% | 2.03% | 9.79% | -31.93% | |
57 Neutral | €3.24B | -14.89 | -4.47% | 0.51% | -9.52% | -4.21% |
* Industrials Sector Average
DE:BFSA
Befesa S.A.
31.62
8.55
37.07%
DE:DEZ
Deutz AG
12.14
6.96
134.45%
DE:JEN
Jenoptik
28.26
5.98
26.84%
DE:KSB
KSB AG
1,140.00
451.88
65.67%
DE:KSB3
KSB AG
1,100.00
452.87
69.98%
DE:SZG
Salzgitter
54.40
34.66
175.64%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.