Umicore: Half Year Results 2019

Robust performance in challenging market conditions and compared to record levels in 2018 

Umicore delivered a robust performance in the first half of 2019 with revenues amounting to € 1.6 billion and a recurring EBIT of € 240 million against a backdrop of challenging conditions in key industries and reduced consumer confidence, especially impacting the automotive sector. Free cash flows improved substantially year on year.  

Umicore recorded higher revenues in Catalysis, substantially outperforming the declining automotive market and benefiting from market share gains in light-duty gasoline and an increasing penetration of gasoline particulate filters in Europe and China.  

In Energy & Surface Technologies, as announced in April, Umicore is facing a temporary slowdown in demand for its cathode materials and has adjusted its capital spending to the current slower pace of growth. The mid- and long-term fundamentals behind Umicore’s rechargeable battery materials activity are intact, with electrification strongly supported by legislation in key regions and a technology roadmap that offers ample room for innovation and differentiation.  

In Recycling, the throughput rates of the Hoboken plant improved significantly after the investments carried out during the scheduled extended maintenance shutdown in the beginning of the year. In the first half, however, volumes were lower due to the impact of the shutdown on the availability of the smelter. The metal price and supply environments were supportive over the period.  

Revenues of € 1.6 billion (-3% year on year)

Recurring EBITDA of € 357 million (-2% year on year)

Recurring EBIT of € 240 million (-8% year on year)

ROCE of 12.3% (16.6% in the first half of 2018)

Recurring net profit (Group share) of € 151 million (-8% year on year)

Recurring EPS of € 0.63 (-9% year on year)

Cashflow generated from operations of € 308 million (€ 102 million in the first half of 2018) and free cashflow from operations¹ of € 50 million (- € 104 million in the first half of 2018) including stable working capital versus end of 2018. 

Net debt at € 1,059 million corresponding to an average net debt / recurring EBITDA ratio of 1.34 

Umicore extended the maturity of its debt at historically low fixed terms through the successful completion of a € 390 million US Private Placement notes issue with maturities of 7 to 12 years.

An interim dividend of € 0.375 per share will be paid out on 27 August. In line with the dividend policy, the amount corresponds to half the annual dividend declared for the financial year 2018. 

Committed to its long-term strategy in clean mobility materials and recycling 

Umicore is committed to its long-term strategy in clean mobility materials and recycling and continues to invest in R&D and expand capacity to support the growth of its businesses. In Catalysis, the new production lines in Poland came online in the second quarter, while the new capacity in China is due to be commissioned by the end of 2019. In Rechargeable Battery Materials, construction of the new plant in Poland has started. The greenfield plant in China will start to come online after the summer with an adjusted timing for the addition of new lines.  

Umicore also announced in May two important steps to expand its integrated and sustainable battery materials value chain: the agreement to acquire Freeport Cobalt’s cobalt refining and cathode precursor activities in Kokkola, Finland and a long-term partnership with Glencore for the supply of cobalt.    

Outlook confirmed 

As announced in April, Umicore expects its recurring EBIT for the full year to be in a range of € 475 million to € 525 million, assuming no material further deterioration of the macroeconomic environment. In Catalysis, Umicore expects to continue outperforming the automotive market and grow the business group’s recurring EBIT for the full year from last year’s level. The Energy & Surface Technologies business group continues to face challenging market conditions in its key end-markets which, combined with the effect of low cobalt prices and unethical supply as well as costs related to new investments, means that the business group’s recurring EBIT for the full year is expected to be well below the level of last year. In Recycling, Umicore expects to benefit from the throughput improvement in Hoboken which, combined with a favorable supply mix and higher prices for certain metals, means that the business group’s recurring EBIT for the full year should grow from the level of 2018, despite the impact of the July fire incident in Hoboken. 

Marc Grynberg, CEO of Umicore, commented: “Both the performance of the first half and the outlook for the full year are fully in line with all elements of the guidance that we provided in April. We are proving our agility to deal with challenging market conditions while continuing to execute our strategy in clean mobility materials and recycling. Our operating performance and strong balance sheet enable us to forcefully pursue growth investments and R&D programs and to confirm our dividend policy.” 

¹ Free cashflow from operations = Cashflow generated from operations – capex – capitalized development expenses. 

Note: All comparisons are made with the first half of 2018, unless mentioned otherwise. 

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