Umicore Cutting forecasts on lower metal prices

Lower metal prices, in particular for rhodium, are prompting a negative forecast revision with our FY23 group adjusted EBIT revised down by c. 5% to € 694m, which represents a 20% decline vs the FY22 group adjusted EBIT. We acknowledge that Rechargeable Battery Materials is going through a transition year in 2023 given the ongoing shift towards high nickel chemistries, while we forecast CAM volume growth to mainly accelerate as from 2024 onwards. Despite the increased momentum of LFP chemistries and rising LFP-based EV exports from China, we maintain our viewpoint that Umicore is well placed to play a major role in the electrification of transportation as we believe that global OEMs are determined to establish local supply chains in ao Europe and North America. High manganese and solid-state technologies will in our opinion support the position of NMC-chemistries outside of China in the coming decade. Whilst CAM-related growth is the major growth driver for Umicore in the remainder of this decade, battery recycling has the potential to also become a major growth driver into the next decade, with a first industrial plant scheduled to ramp up as from 2026. Taking into account the solid mid to long term growth potential, but acknowledging the tougher short term metal price environment, we lower our TP from € 46 to € 38 while sticking to our BUY rating.