At FinancialMediaGuide, we note that the decision by S&P Global Ratings to raise the outlook for Befesa from “stable” to “positive” reflects not only the improvement of the company’s individual financial indicators. This confirms that the metallurgical waste recycling industry is gradually becoming a point of sustainable growth for European and American players. At Prime Focus, we emphasize: it is the combination of structural demand for recycling and disciplined debt management that can turn second-tier companies into significant and sustainable market participants.
S&P maintained Befesa’s credit rating at ’BB’, noting that the company’s debt burden is decreasing faster than expected. The EBITDA outlook looks strong at €225 million in 2025, compared to €193 million in 2024 and €164 million in 2023. This puts the company back on a growth trajectory after the rating downgrade last spring.
FinancialMediaGuide commentary: The key drivers of the recovery were stable zinc prices with around 65% of volumes hedged at €2,640 per tonne, capacity expansion with new furnaces in Palmerton and cost savings at the Rutherford plant. This shows how targeted operational decisions can change the financial trajectory of a company in a cyclical industry.
However, weak links remain. In the aluminium alloys segment, competition for scrap metal from Southeast Asian players is intensifying, while demand from European automakers remains weak. In China, the adoption of electric arc furnaces is slower than expected, which is also putting pressure on the results.
S&P forecasts that the debt/EBITDA ratio will decrease to 2.9x by the end of 2025 and to 2.6x by 2026. Even taking into account dividend payments of €26 million and €38 million, the company will be able to maintain positive free cash flow of €49 million and €46 million, respectively.
FinancialMediaGuide view: For investors, this means a more predictable and balanced model. The main sources of growth will be concentrated in the US and Europe, where the transition of steelmakers to electric arc furnaces creates stable demand for Befesa’s services.
In our view, Befesa demonstrates how a company in the shadow of large players can reverse negative trends thanks to sound operating policies and debt control. The outlook remains limited by external risks, but the very fact that the forecast has been raised to “positive” shows that strategic discipline and participation in structural trends can change the market’s attitude even towards second-tier companies.
