Umicore Running fast to almost stand still
Umicore is in a tough spot, with Automotive Catalysis operating in a structurally declining market, Recycling being a cyclical and metal price-sensitive business and Battery Materials, previously considered as the future growth engine, subject of a strategic review amidst slowing EV adoption and Chinese competition with lower priced LFP. Staying active in Battery Materials is of major importance to the equity story and we expect the upcoming CMD to confirm this stance, albeit with significantly reduced ambitions and a smaller production footprint limited to Europe and South Korea. Given expected structural future earnings pressure for Catalysis and to a lesser extent Recycling, Umicore needs significant Battery Materials growth even to just stabilize group earnings. We lowered our forecasts following the recent FY24 results release and lower our target price from €13 to € 12. Given the upside remaining, we keep our Accumulate rating.Umicore is global player in the materials technology and recycling industries. Co. focuses on application areas such as chemistry, materials science, metallurgy and recycling. Co.'s business model comprises four segments: Catalysis, Performance Materials, Energy Materials and Recycling. Catalysis focuses on the abatement of global automotive emissions; Performance Materials focuses on materials that help develop more sophisticated and safer products; Energy Materials produces materials used in the production and storage of clean energy including rechargeable batteries and photovoltaics; and Recycling treats complex waste streams containing precious and other non-ferrous metals.
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