Umicore A tale of opposing forces – model update

Umicore is a tale of opposing forces. Despite pressure from Chinese LFP CAM material, we expect Umicore's Battery Materials business to show a major top line growth acceleration as from 2024 with earnings growth to follow as from 2025. Solid order books, earnings protection clauses, legislative support and a desire of global OEMs to establish local supply chains in Europe & North America are all pleading in favour of Umicore's Battery Materials business. Catalysis is the a negative force as the only way from here looks down given the impact of ongoing electrification of transportation on LT ICE-demand. The faster than expected earnings normalization of Recycling after a 2021-22 boom has also been amongst the bad news recently, although the inherent quality & returns of this business remain outstanding and the expansion into battery recycling could provide a major new growth leg into the next decade. We lowered our FY24 adj. EBITDA forecast by 4% following weaker than expected guidance. We also revised our longer term earnings growth assumptions are now forecasting an adj EBITDA CAGR of 6% until 2030. We lower our target price from € 29 to € 26 but given the upside we maintain our Accumulate rating.