UMICORE: HALF YEAR RESULTS 2024
Umicore Group key figures
- Revenues1 of € 1.8 billion
- Adjusted EBITDA of € 393 million and adjusted EBITDA
margin of 21.8%
- Adjusted EBIT of € 241 million
- Adjusted net profit (Group share) of € 118 million and adjusted
EPS of € 0.49
- Adjustments to EBITDA of -€1.66 billion (mainly because of a
-€1.60 billion non-cash impairment and write down in Battery
Materials)
- ROCE of 11.3%
- Cash flow from operations of € 453 million: free operating cash
flow of € 168 million
- Capital expenditures of € 269 million
- R&D expenditures of € 131 million
- Net debt at € 1,434 million corresponding to a net
debt/ LTM adj. EBITDA ratio of 1.70x
- Total recordable injury rate of 5.1
- Interim dividend of € 0.25 per share on 21 August 2024
Statement from Bart Sap, CEO
“In recent months, short- and medium-term growth
projections for the electric vehicles market have been scaled back
substantially, significantly affecting Umicore’s Battery Materials
business. Today, we share the elements of how we are adjusting to
this new reality. The large impairment of our Battery Materials
assets is painful and reflects the changed situation as we see it
today. In the coming months, we will continue to thoroughly
reassess our Battery Materials activities, with energy and an open
mind, always in close alignment with our customers and partners. We
are shaping a new way forward and will share the outcomes during a
Capital Markets Day in Q1 2025.” says Bart Sap, Umicore’s CEO.
“In these challenging times, we must focus on what we need to
adjust while not forgetting the strong fundamentals on which we
stand. I deeply value the hard work and resilience of the Umicore
teams, whose long-standing experience and deep knowledge will
continue to be the driving forces in everything that we do. Our
foundation businesses continue to provide strong cash flows and
returns, evidenced by their robust performance over the first half
of this year. This solid base enables us to bridge the current
headwinds while we reposition to seize new opportunities. "
Update on strategic review of Battery
Materials activities and impairments
Adjusting to new market
reality
Umicore updated its 2024 outlook for the Battery
Materials business on June 12th, following the recent significant
slowdown in short- and medium-term EV growth projections affecting
its activities. The Group has taken immediate action to deal with
this situation. The following measures have been initiated and are
ongoing:
- Launch of a strategic review
to reassess the growth projections in the Battery Materials
business beyond 2024;
- Strict capital allocation
discipline: Group capital expenditures in 2024 will be below €
650 million;
- Additional Group-wide efficiency
and cost measures: such measures come on top of Umicore’s
Efficiency for Growth program, which was launched in 2023 and is
already well on track to deliver at least €70 million EBITDA
anticipated for 2024 (included in the 2024 outlook), with more than
half achieved over the first half of 2024.
Building on existing footprint and projected
orderbook
With the information available today, and
building on the existing assets and orderbook, Umicore developed a
scenario to realign its operations to the new market reality. This
is based on the following assumptions:
- At least 18 months delay in the ramp-up of its customer
contracted volumes;
- Substantially reduced volume projections reflecting current
offtake commitments at take-or-pay thresholds in line with
currently confirmed investment waves;
- More prudent assumptions on operational cost evolution;
- Minimized further expansion of the existing footprint in Europe
and Korea to serve its customers, which implies lower capex
spending.
This scenario results in a well utilized
capacity in the last years of this decade, except for the Chinese
CAM assets which Umicore assumes to remain underutilized.
Impairments
Based on this scenario an impairment exercise
has been performed, leading to a € 1.60 billion reduction in the
Battery Materials’ capital employed. The impairment relates to
Property, Plant and Equipment (PPE) and non-current inventories
across Battery Materials’ activities, mainly in Asia. Therefore,
the remaining capital employed for this business amounts to € 1.51
billion on 30 June 2024.
Within this scenario, Umicore anticipates that
Battery Materials’ EBIT will remain below break-even levels in 2025
and 2026, and returns above the cost of capital are expected to be
achieved in the last years of this decade.
Ongoing review of medium- to long-term
Battery Materials strategy
With the current scenario as baseline, a
strategic review has been launched with the intent to unlock and
maximize future business value in Battery Materials. This
comprehensive review will explore opportunities on top of the
current scenario. It will be developed in close engagement with
Umicore’s stakeholders, in particular its downstream industry
partners.
The Group’s guiding principles for the review
remain:
- Maximizing capacity utilization of existing assets, before
considering any further expansion. Umicore is assessing the
configuration of its existing footprint in Asia and Europe as well
as its expansion project in North America. Pending the outcome of
this review and keeping options open, Umicore is delaying spending
on the construction of its battery materials plant in Loyalist,
Canada;
- Optimizing the battery materials setup, closely aligned to
customers’ new growth paths. Tight controls will ensure
investments are only committed to, once customer demand is
confirmed. Umicore will continue to leverage the strong customer
agreements in place, as well as the differentiating market position
of its CAM plant in Europe;
- Further customer diversification as well as openness to
partnerships across Umicore’s Battery Materials value
chain;
- Focus on technology, as well as overall
operational and cost efficiency.
With the Battery Materials review process
ongoing, the Group remains committed to executing the strategy and
business plans in Umicore’s other activities, all while
implementing above mentioned capital and cost discipline.
Capital Markets Day in the first quarter of
2025
The Group intends to schedule a Capital Markets
Day in the first quarter of 2025 which will include an in-depth
review of the Battery Materials’ business following the strategic
review, as well as an update of the Business Groups Catalysis,
Recycling and Specialty Materials. Umicore will present the future
growth prospects and targets of each Business Group. In the
meantime, updates will be provided when further information becomes
available.
Business performance in the first half of
2024
Umicore’s Group revenues for the first half of
2024 amounted to € 1.8 billion versus € 2.1 billion in the first
half of 2023. The adj. EBIT for the Group stood at € 241 million
and the adj. EBITDA at € 393 million, down 36% and 24% respectively
compared to the first half of 2023.
- Battery Materials2 reported lower revenues
than the first half of 2023, primarily reflecting the absence of a
non-recurring lithium effect in the year-on-year comparison.
Cathode materials sales remained broadly flat compared to last
year. Adj. EBITDA in the first half of 2024 was close to
break-even. The year-on-year decrease in adj. EBITDA was due to
lower revenues, costs related to the greenfield investments in
Poland and Canada, and an unfavorable comparison with the first
half of 2023 that benefited from a substantial positive effect
related to lower costs of mass production test runs and the
valuation of battery production scrap. Despite the recent slowdown
in the global EV sales, the long-term clean mobility trend remains
confirmed, as was recently illustrated by the reconfirmation of the
Green Deal in Europe.
- Catalysis3 had lower revenues than in the
first 6 months of 2023. ROCE was 40%. Automotive Catalysts’ sales
volumes decreased, due to a less favorable customer mix in the
light-duty car segment and a more difficult market context in
Europe and Asia for the heavy-duty diesel segment. Precious Metals
Chemistry’s revenues declined significantly while Fuel Cells &
Stationary Catalysts’ revenues were slightly below the level of the
previous year. Earnings were supported by strict cost discipline
and efficiency measures and only slightly below the level of the
previous year. Going forward the Automotive Catalyst business will
further maximize business value based on its strong technology
positioning, high process efficiency and operational agility,
unlocking attractive EBITDA margins and substantial cash flow
towards 2030.
- Revenues in Recycling3 were down compared to
the first half of the previous year, mainly driven by a less
supportive precious metal price environment in Precious Metals
Management and Precious Metals Refining. ROCE was 69%. Adj. EBITDA
reflected a substantially lower contribution from Precious Metals
Management’s trading activity, partly mitigated by higher earnings
in Precious Metals Refining and Jewelry & Industrial Metals as
a result of efficiency measures in the framework of the Efficiency
for Growth program. The Precious Metals Refining activity hereby
demonstrated once more its unique ability to generate strong
returns and substantial cash flows at all points in the metal price
cycle. With its leadership in sustainable and complex recycling,
Precious Metals Refining is ideally positioned to respond to
society’s growing need for metal recycling, unlocking significant
future value and cash flows for the Group.
- Revenues in Specialty Materials3 were
slightly lower compared to the first half of the previous year.
ROCE was 8%. Earnings felt the impact of lower refining and
distribution margins in Cobalt & Specialty Materials as a
result of competitive pressure and a lower cobalt price. Although
the refining and recycling activities in the Business Group can
bring a certain metal price sensitivity to its performance, its
business units are active in appealing niche segments with
attractive return profiles.
In 2023 Umicore launched the ‘Efficiency for
Growth’ program, a Group-wide program that accelerates ongoing
efficiency improvements across the different Business Groups to
support both cost optimization, top-line growth and working capital
improvement. This program is well on track to deliver at least € 70
million EBITDA in 2024 (included in the 2024 outlook), with more
than half achieved over the first half of 2024. As from 2025,
Umicore anticipates to achieve a run-rate exceeding € 100 million.
This will be combined with additional efforts across the Group to
help counteract the turbulent market context in the Battery
Materials business3.
Capital expenditures amounted to € 269 million,
down 20% compared to the first half of 2023. Operational free cash
flow remained strong at € 168 million, driven by a
decrease in net working capital and lower investments. Net
financial debt amounted to € 1.4 billion on 30 June 2024,
corresponding to a net debt/ LTM adj. EBITDA ratio of 1.70x. The
Group remains committed to a strong balance sheet going forward.
The Group ROCE of 11.3% reflects the lower earnings and capital
employed as a result of the impairments.
2024 Outlook
Based on the performance in the first half of
the year and assuming precious metal prices remain at current
levels for the remainder of the year, Umicore reconfirms it
anticipates 2024 Group adj. EBITDA to be within a range of
€ 760 million to € 800 million.
As announced on June 12th, customers’
most recent demand projections for Umicore’s battery materials have
steeply declined in a context of a sharp slowdown in global EV
sales. As a result, volumes for Umicore’s Battery Materials
for the full year 2024 are anticipated to be equal to, or slightly
below, the level of last year. Umicore expects adj. EBITDA in 2024
for this Business Group to be around break-even, including a
positive one-off of c. € 50 million4.
It is anticipated that the business unit
Automotive Catalysts will continue to benefit from its strong
market position in gasoline applications and further progress on
efficiency improvements. Taking into account the current
outstanding strategic metal hedges and the impact of efficiency
measures, it is expected that the adj. EBITDA of the Business Group
Catalysis in 2024 will be in line with the level of the
previous year, despite the lower PGM price environment.
Following the completion of the planned
maintenance shutdown in the first half of the year, it is
anticipated that Precious Metals Refining will post a solid
underlying performance in the second half. Assuming that current
metal prices continue to prevail throughout the year and taking
into account the current strategic metal hedges, it is expected
that the 2024 adj. EBITDA of the Recycling Business Group
will be below the level of the previous year, in line with current
market expectations5.
Anticipating that the revenues and earnings of
the Cobalt & Specialty Materials business unit will continue to
be impacted by the challenging market environment. Umicore expects
adj. EBITDA in the Business Group Specialty Materials for
the full year 2024 to be below the level of the previous year and
below current market expectations6.
It is anticipated that Corporate costs
will be roughly in line with previous year.
Capital expenditures for the full year 2024 will
be below € 650 million.
For more information
Investor Relations
Caroline Kerremans |
+32 2 227 72 21 |
caroline.kerremans@umicore.com |
Eva Behaeghe |
+32 2 227 70 68 |
eva.behaeghe@umicore.com |
Benoit Mathieu |
+32 2 227 73 72 |
benoit.mathieu@umicore.com |
Adrien Raicher |
+32 2 227 74 34 |
adrien.raicher@umicore.com |
Media Relations
Marjolein Scheers |
+32 2 227 71 47 |
marjolein.scheers@umicore.com |
Caroline Jacobs |
+32 2 227 71 29 |
caroline.jacobs@eu.umicore.com |
Financial calendar
19 August
2024
Ex-dividend trading date, interim dividend 2024
20 August 2024
Record
date for the interim dividend 2024
21 August 2024
Payment date for the interim dividend 2024
14 February 2025
Full Year Results
2024
Umicore profile
Umicore is a circular materials
technology Group. It focuses on application areas where
its expertise in materials science, chemistry and metallurgy
make a real difference. Its activities are organized in four
business groups: Battery Materials, Catalysis, Recycling and
Specialty Materials. Each business group is divided into
market-focused business units offering materials and solutions that
are at the cutting edge of new technological developments and
essential to everyday life.
Umicore generates the majority of its
revenues from and dedicates most of its R&D efforts to clean
mobility materials and recycling. Umicore’s overriding goal of
sustainable value creation is based on an ambition to develop,
produce and recycle materials in a way that fulfills its mission:
Materials for a better life.
Umicore’s industrial and commercial operations
as well as R&D activities are located across the world to
best serve its global customer base with around 12,000 employees.
The Group generated revenues (excluding metal) of € 1.8 billion
(turnover of € 7.4 billion) in the first half year of
2024.
___________________________________________________________________________________________
A conference call and audio webcast for
analysts and investors will take place today at
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Media Relations team.
Access to our webcast on our Financial Results
page.
1 All references to revenues in this
document refer to revenues excluding metals (i.e. all revenue
elements less the value of the following purchased metals: Au, Ag,
Pt, Pd, Rh, Co, Ni, Pb, Cu, Ge, Li and Mn).
2 For more information, consult the
“Update on strategic review of Battery Materials activities”
section of this press release.
3 For more details on the performance
of the Business Groups, consult the “Detailed overview of 2024
performance” section of this press release.
4 Predominantly related to the
reversal of a provision for OEM recalls.
5 VARA consensus as at July
25th 2024. Consensus adj. EBITDA for Recycling in 2024
amounted to € 324 million at the time of this publication.
6 VARA consensus as at July
25th 2024. Consensus adj. EBITDA for Specialty Materials
in 2024 amounted to € 109 million at the time of this
publication.