Umicore: Strong performance in a persistently difficult market context

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Quelle: Umicore AG

Umicore posted a strong performance in 2019 against a backdrop of persisting headwinds in key markets, in particular the automotive sector. Revenues for the full year grew by 3% to € 3.4 billion and recurring EBITDA increased 5% to € 753 million, while recurring EBIT was € 509 million, close to the record levels of 2018. After a somewhat softer first half performance, revenues and recurring EBIT in the second half posted strong sequential growth and were up 6% and 12% respectively.

Umicore grew revenues and recurring EBIT in Catalysis in spite of the global recession in the automotive market, as a result of market share gains in light duty gasoline applications and the increasing penetration of gasoline particulate filters in Europe and China. As anticipated, the performance of Energy & Surface Technologies was well below the record levels of last year, due to a temporary market slowdown, particularly in the EV segment in China, as well as the impact from a depressed cobalt price and the inflow of cheaper cobalt units unethically sourced from artisanal mining. In addition, the performance was impacted by higher depreciation charges and upfront costs related to the greenfield investments. Sales of Umicore’s cathode materials used in EVs grew in line with the global EV market. The strong performance and year-on-year growth in Recycling were driven by higher metal prices, a favorable supply environment and Umicore’s ability to optimize its feed mix, which offset most of the impact of the extended shutdown and the fire incident in July.

2019 Key figures

  • Revenues of € 3.4 billion (+3%)
  • Recurring EBITDA of € 753 million (+5%)
  • Recurring EBIT of € 509 million (-1%)
  • ROCE of 12.6% (compared to 15.4% in 2018, reflecting impact of growth investments)
  • Recurring net profit (Group share) of € 312 million (-5%) and recurring EPS of € 1.30 (-5%)
  • Higher cashflow from operations of € 549 million (€ 92 million in 2018), including a € 78 million increase in working capital requirements from higher PGM prices; free cashflow from operations1 of – € 39 million (- € 406 million in 2018)
  • Capital expenditures of € 553 million (€ 478 million in 2018)

Net debt at € 1,443 million, up from € 861 million, mainly due to growth investments and including the € 188 million cash out relating to the acquisition of the cobalt refinery and cathode precursor activities in Kokkola, Finland. This corresponds to a net debt/recurring EBITDA ratio of 1.9x. Proposed stable gross annual dividend of € 0.75, of which € 0.375 was already paid out in August 2019. Committed to long-term growth strategy in clean mobility materials and recycling. Over the course of 2019 Umicore made important strides in the execution of its growth strategy.

While the EV market was in the spotlight, the strength of Umicore’s position as a supplier of materials technologies to all types of clean mobility solutions was confirmed. In Catalysis, this was demonstrated by several successes in catalyst technologies such as particulate filters for gasoline engines and the opening of the new plant for fuel cells catalysis in Korea. In Energy & Surface Technologies, Umicore continued to invest in the growth of its business, albeit at an adjusted pace in line with current market demand. Umicore commissioned its new Process Competence Center in Belgium, is ramping up production in the new plant in China and started construction of the greenfield plant in Poland. Umicore also continued to promote a global sustainable battery materials value chain, as evidenced by the acquisition of the cobalt refinery and cathode precursor operations in Finland and the long-term partnerships for sustainable cobalt supply. Finally, Umicore signed sizeable multi-year strategic supply agreements with LG Chem and Samsung SDI for NMC cathode materials which demonstrate the quality of its technology offering. In Recycling, Umicore completed the multi-year expansion program at the Hoboken plant and carried out various investments to further improve the environmental performance of the plant.

Outlook

As communicated in April 2019, Umicore expects to grow revenues and earnings in 2020 despite a deterioration in the global macro-economic environment since then, particularly in the automotive sector. This growth outlook assumes that the recent coronavirus outbreak will not result in a protracted or material effect on the economy in 2020.

While there are no signs of an imminent recovery in the automotive market, the business group Catalysis is expected to continue to benefit from its strong market position in gasoline catalyst applications and a further penetration of higher value gasoline particulate filters in Europe and China. Despite the expectation of subdued EV sales in China, Energy & Surface Technologies anticipates to benefit from higher sales of cathode materials for EVs in 2020, as well as the consolidation of the recently acquired activities in Kokkola, Finland. At the same time, the business group’s performance will reflect higher fixed costs related to the ongoing investments in capacity and innovation. Performance in Recycling is expected to benefit from a combination of higher metal prices, some of which were hedged in the course of 2019, a sustained favorable supply environment and increased availability of the Hoboken smelter.

Marc Grynberg, CEO of Umicore, commented: “I am proud of our performance in 2019 and pleased to confirm the growth outlook for 2020 despite the adverse market trends that developed in the course of 2019.  I am confident that our strategy to be a leader in clean mobility materials and recycling will result in further growth for Umicore and we will execute it with determination, while adjusting our investment programs to take account of evolving market needs.”

Source: Umicore

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