Good afternoon, ladies and gentlemen, and welcome to the analyst call. Let me now turn the floor over to Elke Brinkmann, Head of Investor Relations.
Good afternoon, and welcome to our Q2 2025-2026 conference call. We will walk you through the results for the six months of our fiscal year. With me on the call are our CEO, Toralf Haag, and CFO, Steffen Hoffmann. After the presentation, we will be happy to take your questions. If you would like to ask a question during the Q&A session, please use the nine-star key sequence. Before we start, let me draw your attention to our disclaimer. We will make forward-looking statements today. These are based on current plans and expectations and are subject to risks and uncertainties. Actual results may differ materially. That being said, let me now turn the floor over to Toralf Haag.
Thank you, Elke, and good afternoon from beautiful Hamburg. Before we dive into the details later in the presentation, let me provide you with a high-level overview of the performance in the first six months. Compared to the previous quarter, Aurubis achieved a significant increase in earnings in quarter two of fiscal year 2025/2026. Operating EBT came in at EUR 121 million, a 15% increase versus Q1. In the first half of 2025/2026, we delivered robust results, broadly on par with last year and in line with market expectations. Operating EBT came in at EUR 226 million, and Operating EBITDA increased by 3% to EUR 351 million. Net cash flow was EUR 161 million, and below last year's EUR 190 million.
This is mainly due to higher net working capital in connection with increased metal prices. Free cash flow before dividend improved to EUR -63 million compared to EUR -151 million last year, supported by over EUR 100 million less CapEx spend. Operating return on capital employed was 8.1%, down from 10.2%, reflecting higher capital employed for strategic projects and lower earnings in previous quarters. In the recent quarters, key drivers of our business have developed in our favor, such as persistently high metal prices, improved recycling markets, as well as healthy copper product and sulfuric acid markets. Against this background, we have raised our guidance of the Operating EBT in the current fiscal year to EUR 425 million to EUR 525 million. Let me now take you through the market environment.
Sulfuric acid has certainly been an area of attention in the last quarter as Middle East shipping restrictions tightened the global sulfur market. As a result, sulfuric acid spot prices moved up sharply and even stayed above the already high levels. Supported by overall good physical demand, European spot copper premiums increased compared to the end of 2025. Still, premium levels remain volatile. European spot refining charges for scrap number 2 increased further, driven by high metal prices and hence better scrap availability. In contrast, spot TCRCs for copper concentrates stayed in negative territory, reflecting the still tight concentrate market. With regard to the price environment for key metals, gold and silver prices outperformed copper in Q2. In doing so, both precious metals once again reached new all-time highs before easing somewhat due to the conflict in the Middle East.
The copper price was over as stable as historical high levels. The strong performance of these key metals supported our metal result, as we will see later on. The EURO/U.S. dollar exchange rate was broadly stable versus Q1 and therefore had limited effects on our Q2 results. On a general note, please bear in mind that there is no direct one-to-one relation between the price development shown here and our P&L. As we hedge parts of our earnings, some of the effects will only become visible with a time lag. I would now like to provide some color on the Middle East situation and the effects on Aurubis, since this is a frequently discussed topic in many calls and meetings. As we do not receive concentrate from the region and purchase only limited scrap volumes there, our exposure from a sourcing point of view is very limited.
On the sales side, we also have no major exposure to the Middle East for metal products or sulfuric acid. Direct risks are therefore low in the short term. Indirectly, higher oil and gas prices do impact energy and freight costs, but this is manageable. At the same time, sulfur supply disruptions and potential export restrictions support sulfuric acid markets as production of sulfuric acid from burning of elemental sulfur remains the largest source of sulfuric acid. A disruption of cathode exports from Iran and potential disruptions of SXEW production in consequence of the lack of sulfur supply could support global premium levels. Overall, from today's perspective, we anticipate more medium-term opportunities than risks for Aurubis. In light of the current geopolitical situation, I would now like to provide a deep dive on sulfuric acid.
Until 2030, global sulfuric acid demand is expected to grow further by about 3% annually, mainly driven by fertilizers and metals. At Aurubis, we produce more than 2 million tonnes annually and sell it to a diversified customer base. This base spans fertilizers, metals, and chemicals with a focus on Europe, Turkey, and North Africa. Around 85% of our sulfuric acid is sold under large annual contracts with quarterly or semi-annual pricing. About 15% is sold on the spot market, mainly to overseas customers, giving us exposure to spot prices. In 2024, 2025, sulfuric acid contributed roughly EUR 125 million to the gross margin with a high conversion to EBT. Before I hand over to Steffen, let me give you a brief update on the U.S. tariffs, where an updated ruling was published on April 2.
The updated U.S. tariff regime continues to bolster domestic copper recycling and therefore Aurubis Richmond. A key change is that duties on copper semis and selective derivatives now apply to the full customer value, not just the copper content. More importantly, however, U.S. origin copper that is smelted and cast in the U.S. but refined elsewhere and reimported to the U.S. can now qualify for a reduced 10% rate. While strict traceability requirements need to be fulfilled, this ruling creates access for U.S. origin copper to Aurubis European smelter network. In this respect, our smelter network adds flexibility and enhanced supply security for U.S. customers as well. Now let me hand over to Steffen Hoffmann, who will take you through the details of our financials.
Thank you, Toralf, and welcome from my side, too. Let's move to the financial details of the first six months. I would like to start with the key KPIs of the second quarter. Quarter-on-quarter, our profitability clearly improved. Operating EBT significantly rose by 15% from EUR 105 million in Q1 to EUR 121 million in Q2. The main drivers were considerably higher earnings from processing recycling materials and from copper product sales. Net cash flow turned from EUR -8 million in Q1 to EUR +169 million in Q2, benefiting from, among others, an improved Operating EBITDA. Let's switch over to the aggregated six-month overview. Group revenues increased by 23% to approximately EUR 11.3 billion, mainly due to higher metal prices, especially for precious metals. Operating EBT was stable at the prior year level.
A higher metal result, as well as slightly higher earnings from processing of recycling raw mats, as well as copper products and sulfuric acid sales offset lower concentrate TCRCs. Net cash flow was EUR 161 million, below last year's EUR 190 million, reflecting higher inventories in connection with high metal prices. Operating ROCE decreased to 8.1%, which is attributable to lower earnings in previous quarters, as well as our growth projects that are still in the implementation phase. These projects are reflected in the EBIT in form of ramp-up costs as well as in the capital employed and will unfold their full earnings impact in the medium term once ramp-up is complete. Moving on to the split of our gross margin, which is a good reflection of our multi-metal strategy and the diversification of our earnings drivers.
The total gross margin for H1 was about EUR 1.1 billion, up from approximately EUR 1.08 billion last year. Overall, the contribution of the metal result to our gross margin increased year-over-year, which can be attributed in particular to the strong development of metal prices. Compared to last year, products and premiums remained broadly stable, reflecting the ongoing healthy demand for copper products. Year-on-year, the contribution from sulfuric acid was slightly higher, which is however masked on the slide due to rounding effects. In contrast, the total of TCRCs and RCs was down versus previous year, mainly due to the tightness in the concentrate market and the subsequent pressure on TCRCs. The contribution of RCs for recycling raw materials was actually slightly up versus the prior year. Here again, rounding effects distort the picture.
Long-term supply relationships and our focus on complex raw materials contribute to mitigating headwinds, in particular from challenging concentrate markets. This shift in the contribution of different earnings drivers resembles the resilience of our business model, which we continue to enhance with strategic projects such as Richmond and CRH, as well as the tank house expansion in Pirdop. Now, let's move on to the segments, starting with multi-metal recycling. The gross margin increased by 11% to EUR 387 million. Main driver for the development was a stronger metal result, which has been supported by higher prices for gold, silver, and copper. Refining charges for complex recycling materials also improved and largely offset slightly lower throughput. Altogether, this translates into a disproportionately large Operating EBITDA increase. Absolute EBITDA rose from EUR 84 million last year to EUR 103 million.
Despite an around 13 million higher level of depreciation, the Operating EBT improved to EUR 56 million from EUR 51 million. Considering the EBIT of the last four quarters, Operating ROCE declined to 1.2%. This was attributable to weaker financial performance due to one-off effects and project-related ramp-up costs incurred in the previous fiscal year. At the same time, capital employed increased by 30%, primarily as a result of significant growth investments, especially in Richmond. In Custom Smelting and Products, the gross margin of about EUR 710 million is composed of 51% products and premiums, 36% metal result, and 13% TCRCs for concentrates and RCs for recycling input. The slight gross margin reduction to prior year's level was caused by sharply lower concentrate TCRCs, trend we have seen over past quarters and anticipated in our guidance.
On the positive side, higher metal prices and product sales had a positive impact on the segment's performance. Likewise, concentrate throughput increased to 1.25 million tonnes, reflecting good operating performance in Hamburg and Pirdop. This enabled higher sulfuric acid sales amid strong market conditions. In line with a slightly lower gross margin, Operating EBITDA was at EUR 279 million. Operating EBT was at EUR 211 million, reflecting year-over-year EUR 10 million higher D&A in the segment. Operating ROCE remained strong at 16.5% and only slightly below last year's 16.8%. Capital expenditure in the first half was below EUR 150 million and used mainly for the construction of the precious metals refinery, Complex Recycling Hamburg, and the Pirdop tank house expansion. Let's now take a look at the cost development in the group.
Total cost rose by EUR 13 million, a 3% increase to EUR 949 million. The main driver, however, was higher scheduled depreciation and amortization of about EUR 23 million, reflecting our investment activities and the ramp-up of strategic projects. Personnel cost rose to general wage inflation and higher average headcount in line with our footprint expansion. Other operating expenses decreased slightly to 20% of total cost, with logistics and administrative costs being the largest components. Energy costs declined to 8% of total cost, thanks to effective energy management and hedging. Let me now deep dive into our cash flow bridge. Operating EBITDA was EUR 351 million, offset in the order of EUR 152 million due to increased net working capital in connection with higher metal prices.
Within the net working capital position, increased inventories accounted for close to half a billion and higher receivables for nearly EUR 240 million of cash outflow. Elevated metal price effects were, however, not limited to the asset side. Liabilities increased as well by more than half a billion EUR. Including the outflow in taxes, net cash flow came in at EUR 161 million, down from EUR 190 million in the prior year, but clearly improved from the minus EUR 8 million at the end of Q1 of this fiscal year. Cash outflow for investing activities was EUR 250 million, driven mainly by spending on Richmond, the new precious metals refinery in Hamburg, CRH in Hamburg, and the Pirdop tank house expansion. Interest paid was limited to just EUR 10 million. Free cash flow before dividend was therefore minus EUR 63 million.
This is an improvement of nearly EUR 100 million compared to the prior year and predominantly achieved by lower CapEx spending. Looking ahead, for Q3 of this fiscal year, we expect a significantly negative free cash flow, which is due to normal seasonality and is in line with our internal planning. For Q4, we expect a significantly positive free cash flow. For our full year, we remain on track to achieve our free cash flow targets above break even before dividend for the full year. Before we move to our outlook and guidance, I would now like to take you through some of our balance sheet KPIs. The equity ratio on an operating basis was 48.6%.
The decrease compared to previous year was caused by the expansion of the balance sheet, driven in particular by higher working capital that negatively offset the addition of EUR 175 million in earnings to the equity. Let us put the equity ratio into perspective, though. The close to 50% level is still very solid and clearly above our larger than 40% target. In the next quarters, we expect to return to the 50% levels again. Debt coverage, defined as net financial liabilities over rolling EBITDA, increased to 0.6, also a result of higher working capital, yet is still well below our ceiling of 3.0. CapEx for the first six months was EUR 232 million, down from EUR 340 million, reflecting progress in completion of strategic projects as well as disciplined execution.
Capital employed increased from EUR 4.07 billion to EUR 4.35 billion, reflecting growth investments and higher working capital. Let's now turn to the outlook for the key drivers of our business. Since our last update in February 26th, our view in some macro drivers has improved. Overall, raw mat supply remains tight but manageable due to our long-term contracts and diversified sourcing. Still, let it be mentioned that given headwinds and volatilities in our sourcing markets, it is also a stretch for our commercial teams to secure the right quantity and quality at the right time and place. Concentrate TCRCs remain under pressure, reflected in the reddish signal on the chart. For recycling, material availability in the recent quarter has improved somewhat, among others, due to higher metal prices, and therefore, we've been seeing better market conditions.
Such improvements in market terms tend to trail the actual development and therefore take effect in our P&L with a time lag. We are taking a slightly more positive view than we did in February and have added a touch of green to the yellow traffic light. The EURO/U.S . Dollar exchange rate environment remains largely unchanged versus our previous assessment. Given the tight supply situation in the consequence of the Middle East crisis, sulfuric acid markets are very supportive. We've colored the acid outlook completely in green. Metal prices, especially for precious metals and copper, remain persistently on a high level, demand for our products remains strong, in particular for wire rod. This improved backdrop underpins our higher confidence regarding the outlook for the second half of the fiscal year.
Based on the performance of the first half-year, as well as the improved outlook for key drivers of our business, we have lifted the full year forecast for fiscal year 2025/2026 last Friday. We now expect Operating EBITDA between EUR 700 million and EUR 800 million. Operating EBT is now expected between EUR 425 million and EUR 525 million for the group. Within this overall range, we expect EBT of EUR 370 million-EUR 430 million for CSP and EUR 115 million-EUR 175 million for MMR. For MMR, this takes into account that although ramp-up Richmond is making progress, a break-even on EBITDA level will still be a stretch this year. We have factored this caution into the segment's EBT range.
We are now targeting an Operating ROCE between 10% and 12% at group level, with CSP at 15%-17% and MMR at 8%-10%. For Net cash flow, we expect to be above last year's level despite higher working capital, which is in part due to higher metal prices. We continue to aim for free cash flow before dividend, at least at the break-even level, and are on track to achieve this target. This being said, please bear in mind that usual working capital fluctuations in high metal environments may affect our free cash flow at the balance sheet date. All these guidance figures are based on our current market assumptions and exclude any major unforeseen disruptions. With this, I would like to hand over back to you, Toralf.
Thank you, Steffen. Before we wrap up today's presentation, I would like to update you on our strategic projects. With its first melt on March 23rd, Complex Recycling Hamburg, in short, CRH, was successfully hot commissioned. Since then, the plant has been ramping up gradually, with the first blister copper having already been supplied to the Hamburg primary smelter. CRH is a brownfield expansion that optimizes material flows and improves metal recovery at the Hamburg site. It allows us to process internal intermediates and around 32,000 tonnes of external complex raw materials per year. CRH will contribute to the group's gross margin via TCRCs and RCs, as well as via the additional metal result, and thereby supports our multi-metal strategy. Turning to the other two projects that are in or near commissioning. At Aurubis Richmond, phase I is making progress.
The central equipment has been commissioned, including key furnaces and supporting systems. We are gradually increasing the share of complex feed materials in phase I as the ramp-up advances. Construction work for phase II is largely finalized, and commissioning is the next step. In parallel to the technical activities, we are also scaling up our sourcing efforts and developing our North American supplier base in order to secure feedstock to operate the two Richmond phases. Building up the technical and commercial ramp-up curve takes time. In Pirdop, the tank house expansion is in its final stage. Technical installations and construction work are essentially complete. Current activities are focusing on testing and ensuring equipment operability. The gradual start of production is scheduled for summer 2026, which will increase refined copper capacity to about 340,000 tonnes from around 220,000 tonnes today.
Coming to the final slide of our presentation, I would like to summarize the first half year. Quarter-to-quarter, we improved our EBT by 15% and achieved EUR 121 million in Operating EBT. In half year one, EBITDA of EUR 351 million exceeded last year, while EBT of EUR 226 million was in line with both the prior year and market expectations. The main positive drivers were a higher metal result and slightly higher earnings from recycling materials, copper products, and sulfuric acid. Free cash flow improved on a like-for-like basis as this year's dividend was paid in Q2 instead of Q3, while Net cash flow was lower due to higher working capital. Operating, our ROCE is temporarily subdued because of our high investment activity and ramp-up costs, but these projects will support returns in the medium term.
We achieved important milestones in our strategic CapEx program. First melt and first blister at CRH, continued progress in Pirdop and Richmond phases I and II. For the full year, we see metal prices at a high level and expect earnings from processing of recycling materials to be better than anticipated. We also expect our copper product business to perform well and now also expect earnings from sulfuric acid to improve in the second half-year. Therefore, we raised our fiscal year 2025/2026 guidance to Operating EBT of now EUR 425 million-EUR 525 million and remain on track to achieve at least the free cash flow breakeven before dividend payments. With this, I would like to hand back over to Elke Brinkmann.
Thank you, Toralf and Steffen. Before we open the line for your questions, I would like to provide you with an outlook on the next events. On August 6, we will publish our results for the first nine months of 2025/2026. Our annual report for fiscal year 2025/2026 is due on December 2nd. That being said, I now hand over to the operator for the first question.
Thank you very much. Dear ladies and gentlemen, if you are dialed in the conference call, please press nine and the star key now to enter the queue. I repeat, the combination within the teleconference is nine star. The first questions are already incoming. The first one is from Ioannis Masvoulas, Morgan Stanley. Please, over to you.
Hi. Thank you very much for taking my questions this afternoon. Maybe just starting with Richmond and to clarify on the EBITDA contribution. Last quarter, you guided us to be break-even. I think just now you mentioned that break-even will be a stretch for this year. Is that correct? If so, what has driven this change?
Yeah, Iannis, thank you for the question. like we said, we had the first melt in September 25 and since this we successfully gone into commissioning and subsequent ramp-up. Since then, we are gradually ramping up the plant. we have our first blister shipped to Europe, and we have stepwise increased the intake of complex recycling material, which is important because with this, we allow the recovery of more valuable metals from scrap. like we said, phase II is approaching the finalization of construction and will be coming to the commissioning. The ramp-up curve of the project implies that the buildup steadily moves forward. The slope of the curve may be steeper in certain periods and flatter in times of larger technical efforts.
Due to some technical challenges in Q2 that are meanwhile solved, we were facing some delays in the recent ramp-up. From today's perspective, we expect Richmond to end this fiscal year a bit below EBITDA break even. This assumption is part of the new and increased group guidance.
That's really clear. Thank you.
You're welcome.
Maybe just following up on the U.S., do you have any updates on your thinking regarding the next steps for the U.S. footprint, just especially given the changes to the tariff regime last month that you outlined in the presentation?
Well, as we said before, we are in close contact with the U.S. administration on evaluating potential further steps. However, there is nothing imminent at this point. Our priority lies on the ramp-up of the Richmond plant.
Okay, perfect. Thank you. I'll join the queue.
Thank you very much for your questions. The next question is from Daniel Major, UBS. Over to you, please.
Hi there. Thanks so much for the questions and congratulations on good set of results. The first one on sulfur, you also provided quite a lot of detail, so it's very useful. Can you just try and give us a little bit more flavor on the earning sensitivity and how it relates to those kind of pricing contracts? You did about EUR 65 million of gross margin from sulfur, sulfuric acid, sorry, in the first half of this fiscal year. If prices were to stay at this sort of level, what kind of uplift will we see in the second half? Is it as simple as if the price doubles, we should just add an annualized EUR 120 million to EBITDA? Is that the way we sort of should be thinking about the sensitivity?
Hi, Daniel. This is Steffen. As we've shown on the charts, you know that also in the sulfuric acid business, we are not very much exposed to the spot market. 85% of the portfolio is based primarily on annual contracts, with quarterly or semi-annual pricing mechanisms and only 15% exposure on the spot market. What I can say is in the guidance increase, where we increase both ends of the range by EUR 50 million and we were kind of labeling the EUR 50 million due to a better metal prices environment, better RC and better sulfuric acid, roughly a third of that. Call it EUR 15 million-EUR 20 million would be attributed to an additional H2 effect on sulfuric acid.
Okay, thanks. Yeah, if we're to think about that EUR 15 million-EUR 20 million on the second half, yeah, it would be fair to assume if prices stay here, that would continue and actually be higher into fiscal year 2026/2027. Is that fair?
That's correct.
Okay. Okay. Thank you. Yeah, my second question, you mentioned around improved scrap contribution, improved scrap availability in Europe in response to the higher pricing environment. How do you see the broader scrap market? Is that sustainable? Are there any updates on legislation with respect to potential restrictions on scrap exports from Europe?
Well, Daniel, we overall, like we said, the RCs are improving slightly. We see increased availability in general in Europe and U.S. with the higher metal prices. Nevertheless, we have to face also the Asian competition on the European market and also the U.S. market. This is counterbalancing that. We expect some regulation in Europe to come. I mean, there's already some regulation in the U.S., but we expect some regulation in Europe to come, hopefully in due course. So far there is no timing that we can relate to. These are the two counterbalancing effects.
Okay, thanks. One final one, and then I'll go back into queue. The, the broader dynamics in the smelting industry, you've seen this like continued negative move in the treatment charge with smelting companies, including yourselves, you know, still generating resilient earnings because of free metals, sulfuric acid, precious pricing, et cetera. I guess my question is, are you seeing any pressure or discussions around negotiating the other variables of profitability in a very tight concentrate market, i.e. reduced payability, reduced free metals, as, you know, China continues to stretch for, you know, getting enough concentrate?
No, no, we don't see that pressure, high pressure on these other aspects of our contract negotiations. I think here it really pays out our, like you mentioned, the word resilience, that we have a diversity of our supply base. You know, we work with many mines together, and we have long-term relationships, and we also have a tight link to them. We have a security of supply, but also apart from the TCRCs, quite stable other conditions.
Okay, thanks. I'll go back in the queue.
Thank you very much for your questions. The next question is from Maxime Kogge, ODDO BHF. Over to you, the floor is yours.
Yeah. Good afternoon, gents. First question is a follow-up on sulfuric acid. I think you provided some insight on your earning sensitivity. I mean, if we take a high level view, it's difficult to actually make out what capacity has been actually destroyed, what is just temporarily disrupted because of the closure of the Strait of Hormuz. What's your view on that? What's your take on the actual disruption level and how long it could take for them to come back to the market? That would be my first question.
Yeah, Maxime, we don't have detailed numbers on this question, how much capacity has been de-destroyed. We see restriction, export restrictions from certain countries, which is helping the spot market. I think more importantly is what we've provided in the slide that we have a mid and long-term strong demand of sulfuric acid, which is growing steadily on, supported by different industries like the chemical and fertilizer industry. I think this is the important development of this market. How much has been destroyed, we don't have the answer.
Okay, fair enough. Second question is on new capacity coming online in Europe. There will be on the one hand the tank house at Rönnskär by Boliden, which will restart again by the end of this year. You also have a big recycling facility in Spain at Atlantic Copper coming up in the coming weeks actually. What do you think the impacts will be on the refining charges for the Atlantic Copper project and on cathode premium for the Rönnskär tank house? Do you expect to suffer as a result from this increased capacity?
No, we don't expect any direct impact on our RCs because, like we said before, the demand for our copper products, for cathodes, but also other copper products remains intact and is growing over the next years. We don't expect any direct impact of these new capacities.
Just the last one, it's on TCRC. So far the Chinese smelters have been able to avert a negative scenario where the benchmark would be below 0. That was the case in 2026. But since then the TCRC has plunged further into negative territory. You are itself quite immune because I mean, you have your own contracts, but you still have some earning sensitivity, some sensitivity to the benchmark level. Do you think a scenario where the benchmark comes below 0 can be again avoided next year, given the recent evolution of the market?
Well, we cannot speak for the benchmark, as we always said, our long-term contracts are not so much linked to the benchmarks. We expect midterm the TCRCs to recover because of the overall market situation. In our opinion also it takes some time. We don't expect a short-term strong recovery of the TCRCs.
All right. Thank you. That's all on my side.
Thank you very much for your questions. Dear ladies and gentlemen, The next question comes from Bastian Synagowitz, Deutsche Bank. Please, over to you, Mr. Synagowitz.
Yes, good afternoon, thanks for taking my questions. My first one is, just follow up on the operational.
Challenges there, which you mentioned with regards to Richmond, is a low double-digit headwind the right ballpark when we think about what the second quarter earnings impact has been? Also, have there been any other effects which you had in the second quarter, or maybe which are a little bit more in the one-off in nature, any disruptions, for example, also from hedge rolls and so on? That's my first question. Maybe related to that, and the other projects you've got going on, you could give us a quick update on how the other projects are doing at the moment and what the latest overall expectations are with regards to EBITDA contribution this and next year. I'll stop there.
First on Richmond, on the assumption of the headwind we had, your assumption is right. It was low double-digit million in the Q2. Maybe Steffen on the hedging question.
Yeah, Bastian. I think you're referring to remark that that was in our documents that on CSP, kind of about offsetting effects from realization of hedging transactions. It's a bit a technical comment here. I think the most important message is both segments, MMR and CSP, benefited from the contribution of a higher metal result, which is linked to overall higher price levels. Further spot-driven upside was capped in CSP due to hedging, which is our normal course of business to avoid risks. The effect was recognized in the CSP segment as the derivatives in question were allocated to CSP-related legal entities. It's really a very technical effect. I would not overemphasize it. Key message is we earn good money on the metal price side.
We do not enjoy all record high spot levels due to our hedging strategy, but this is obviously the right approach for us.
Mm-hmm.
Thanks for that. Can I maybe briefly follow up? Just on the duration of the hedge book, is it fair to assume that the main impact from the, I guess, the very strong metal prices is mostly coming in the second half of the calendar year? Assuming maybe like a 12-month duration in the hedge book?
It's basically coming in in all the quarters of this year and also for next year. As we speak, for this fiscal year on the precious metals, we are hedged at around 75%. I think at another occasion we did say that for next fiscal year in silver, we are already hedged at 60%, in gold already at 50%. Then it comes in every quarter. Obviously, it's fair to say that hedging decisions have been taken nine or 12 months in advance. Let's say what you see in this Q2 might be kind of the consequence of hedging decisions that have been taken nine or 12 months earlier. So it comes quarter by quarter.
Got you. Thank you.
Maybe Bastian, on the other questions of the other strategic projects, as we've reported before, [ASAP], and BOB in Olen Beerse, they have come on stream. They are now at the planned capacities. CRH is also coming on stream and also looks like it's going according to plan. The other two big projects which still need to be fully implemented are the tank house in Pirdop and the precious metals refinery in Hamburg. Both these projects are on track from, also from a budget standpoint.
Mm-hmm. Thank you. What does that mean for the overall contribution? I guess, the contribution now in 2026 as well as what you now expect in 2027?
Well, Bastian, you know that for the impact of the strategic projects, we were guiding that in the midterm, so meaning in the fiscal year 2028, 2029, we expect a contribution of EUR 260 million overall. We would not give the more detailed picture now on each fiscal year. Speaking overall, and with regard to the projects that Toralf Haag just alluded to, we are in a comfortable position to achieve this midterm target.
Okay. Got you. Fair enough. Just one last question and just coming back on sulfuric acid. I guess even when taking into account your contract structure, is there any reason why spot pricing shouldn't be coming through pretty much in full in the last fiscal year quarter?
I agree with you that obviously the impact that we see out of the dynamics Toralf described earlier related to the Middle East, the impact should be rather in Q4 than in Q3. What I've said earlier to, let's say, EUR 15 million-20 million increase in the fiscal year, most of it should be coming in Q4. Once again, visibility is also low and we do not know to what degree this favorable pricing level will continue. You're right, major impact should be in Q4.
Of course, looking at the EUR 15 million-EUR 20 million and your exposure to sulfuric acid volume-wise, I guess makes the EUR 15 million-EUR 20 million look very low. I don't think you've been factoring in anything near the current spot price. Is that correct?
I mean, you know that when we give a new guidance, our focus point is the midpoint of the guidance. In other words, when I quote the EUR 15 million-EUR 20 million, this is in focus to the midpoint. If you would wanna argue more towards the upper part of the guidance range, the impact of sulfuric acid would be more meaningful than the EUR 15 million-EUR 20 million.
At current spot, is there any guidance you could give us on how maybe the fourth quarter exit run rate will look like? Obviously, when the metal results will probably strengthen further, and particularly sulfuric, and maybe the scrap side will obviously start to support as well. Would it be wrong to say that you should be above the EUR 200 million pre-tax run rate, possibly?
I mean, I know where you want to get with me and I would love to stay where we were. We said EUR 125 million last year, targeting a midpoint of the guidance with a larger impact of Q4. I would add, let's say the EUR 15 million-EUR 20 million. Now talking about exit run rates out of Q4 into the next year, I would love to have that discussion with you later in the year. We still have a few months to prepare for that discussion.
Okay, fair enough. Thanks so much.
Thank you very much for your questions. At the moment, there are no more questions in the queue. Dear ladies and gentlemen, last call, please press 9 and the star key now on your telephone keypad. We'll wait a couple minutes. Or better to say moments. Everything seems quite clear. With that, thank you very much. We're closing the Q&A session, and I'm handing the floor back over to the host.
Thank you. The IR team will of course be happy to answer any further questions you might have. We would now like to close today's conference call, and thank you for your attention. Enjoy the rest of your day. Thank you, and bye-bye.