Half year results 2022
Umicore reports strong performance in the first half of 2022
Umicore delivers first-half performance in line with Q1 outlook, in a challenging market context, and makes good progress in the execution of the “Umicore 2030 – RISE” strategy
Umicore’s first half results were the second highest in its history, despite severe market disruptions, rising cost inflation and a volatile precious metal price environment.
Umicore’s revenues for the first 6 months amounted to € 2.1 billion, stable compared to the record levels of the first 6 months in the previous year. Adjusted EBIT of the Group amounted to € 461 million, and adjusted EBITDA to € 601 million, well up in contrast to the second half of last year, however below the record levels of the first half of 2021, reflecting the less favorable precious metal price environment and including higher spending linked to innovation and future growth as well as general cost inflation.
Strong operational cash flows including a less than anticipated increase in net working capital resulted in a stable net financial debt of € 955 million in contrast with end of 2021, corresponding to 0.88 times LTM adjusted EBITDA. In line with the dividend policy, an interim dividend of € 0.25 per share will be paid on August 23.
Umicore is actively implementing its RISE 2030 strategy with key milestones achieved in the first half of 2022, such as the signing of long-term customer contracts and preparation of its North-America value-chain presence in Rechargeable Battery Materials.
Revenues in Catalysis were stable, reflecting another outstanding performance in Automotive Catalysts, with volumes down less than the global car market driven by further market share gains in the light-duty gasoline market. Revenues in Precious Metals Chemistry were up, while revenues in Fuel Cell & Stationary Catalysts were impacted by a postponement of customer orders as a result of COVID-19 related lockdowns in China. Despite significant cost inflation, earnings were only slightly below the record level of the first half of 2021.
Revenues and earnings in Energy & Surface Technologies increased. Cobalt & Specialty Materials continued to benefit from exceptionally strong market demand combined with a favorable cobalt and nickel price environment. The performance in Rechargeable Battery Materials reflected a strong positive impact from the unexpected spike in the lithium price. Sales volumes of cathode materials were, as anticipated and announced in December, subdued.
Revenues and earnings in Recycling decreased, reflecting primarily the impact of a lower precious metal price environment in Precious Metals Refining and Precious Metals Management, which was only partially offset by a strong performance in Jewelry & Industrial Metals. Although below the record levels of the previous year, adjusted EBIT represents the second-highest level achieved in the history of the Recycling business group.
Outlook
Umicore expects another strong performance in 2022 across business groups in a severely disrupted market context.
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 expects its adjusted EBIT for the full year 2022 to be somewhat above consensus[1], including some € 220 million uplift from precious metal prices versus 2020 (taking into account the effect of strategic hedging). This outlook incorporates a cost inflation headwind estimated less than € 150 million for the full year, excluding offsetting measures such as pricing. This outlook also assumes no further significant disruptions to the economy or Umicore’s operations from geopolitical developments, the pandemic or additional supply-chain constraints.
It is anticipated that car production will remain impacted by the ongoing supply disruptions. Notwithstanding the related limited visibility, Umicore expects to continue to benefit from its strong market position in gasoline applications. Taking into account the strong performance in the first half of the year and the current assumptions on volumes for 2022, adjusted EBIT in Catalysis for the full year is expected to be close to the record level achieved in 2021, somewhat above consensus[1], despite the impact of cost inflation.
Based on the first-half performance and anticipating a normalization in Cobalt & Specialty Materials, Umicore expects adjusted EBIT in Energy & Surface Technologies for the full year 2022 to be above the level of the previous year and above current consensus[2] expectations.
Umicore expects adjusted EBIT for Recycling for the full year 2022 to be in line with current consensus[3]. This is based on the assumption that current precious metal prices will continue to prevail. This also takes into account a somewhat improved supply mix in Precious Metals Refining compared to the first half.
As announced previously, Corporate costs are expected to continue to increase above inflation in 2022 as Umicore is committed to its longer-term innovation and digitalization and is preparing its systems and organization for future expansion.
Key figures
Revenues of € 2.1 billion (-0%)
Adjusted EBITDA of € 601 million (-21%)
Adjusted EBIT of € 461 million (-26%)
EBIT adjustments of - € 20 million
ROCE of 20.8%
(compared to 28.4% in first half 2021)
Adjusted net profit (Group share) of € 321 million and adjusted EPS
of € 1.34
Cashflow from operations of € 521 million, including a € 152 million increase in working capital requirements; free cashflow from operations of € 320 million
Capital expenditure amounted to € 190 million
R&D expenditures of € 141 million (+19%)
Net debt at € 955 million, stable compared to end 2021. This corresponds to a net debt/ LTM adj. EBITDA ratio of 0.88x
Interim dividend of € 0.25 per share on 23 August
“In a market environment characterized by severe external challenges, we achieved the second-highest half-year earnings performance in the history of Umicore, which clearly demonstrates the resilience and strong position of our businesses in our key end-markets.
We also kept a clear focus on our strategic objectives and made important progress in the Rechargeable Battery Materials activity with the preparations of the roll-out of our value chain presence to North-America and the creation of new long-term, value creative strategic customer partnerships. Despite the current challenging market context, I am very positive about the opportunities ahead of us and our ability to deliver upon our ambitious “Umicore 2030 - RISE” strategy”.
Mathias Miedreich, CEO of Umicore
Umicore announces CFO succession
Umicore announces the departure and succession of Filip Platteeuw, who has decided to leave the Group after nearly 20 years, half of which he served as its Chief Financial Officer, to pursue other interests. As part of a planned succession program, Wannes Peferoen, currently Senior Vice President of Umicore’s Electro-Optic Materials business unit, will succeed Filip on October 1st.
Filip and Wannes are closely working together to ensure a smooth handover and after stepping down as CFO on 1 October, Filip will continue to support the transition during a period of six months.
Wannes started his career in Umicore almost 17 years ago as a Group controller, building a strong understanding of Umicore’s activities. He subsequently accumulated over 10 years’ experience as controller of several business units, building up a strong expertise in financial controlling including strategic planning, introducing new systems and managing financial risk. For the past five years, Wannes has held general management positions, combining finance with sound commercial and entrepreneurial experience building global customer partnerships.
“Filip has been instrumental in Umicore’s strategic developments and realizations. His integrity and balanced judgements, his deep knowledge of the company and its finances as well as his dedication and true partnership have helped equip our Group for the next ambitious growth phase. I am very grateful for his indispensable contributions, also to our recently launched “Umicore 2030 – RISE” strategy. We regret to see him go, but wish him lots of success with his new interests.
We warmly welcome Wannes who will be taking over at an exciting time for our Group, and thereby also for our customers and investors, who will be key in the successful execution of our strategy.”
Mathias Miedreich, CEO of Umicore
“I am grateful to have been part of Umicore for almost 20 years, and to have witnessed this company’s transformation, driven by so many talented colleagues across the globe.
I am honored and thankful to have served as CFO for close to ten years. Our recently articulated and ambitious Umicore 2030 - RISE strategy marks a new exciting chapter in Umicore’s journey. Now is the time to let new talent lead this change. I have full confidence in Wannes and the teams to achieve the ambitions we set out together.“
Filip Platteeuw
[1] Umicore has engaged Vara Research GmbH to survey brokerage analysts to provide analysts' consensus estimates to the market. The most recent consensus is available on https://vara-services.com/umicore/. Consensus adjusted EBIT for Umicore Group in 2022 amounted to € 828 million at the time of this publication.
[2] Catalysis adjusted EBIT for the FY 2021 amounted to €326 million. Consensus adjusted EBIT for Catalysis in 2022 amounted to € 281 million at the time of this publication.
[3] Energy & Surface Technologies adjusted EBIT for the FY 2021 amounted to €139 million. Consensus adjusted EBIT for Energy & Surface Technologies in 2022 amounted to € 148 million at the time of this publication.
[4] Consensus adjusted EBIT for Recycling in 2022 amounted to € 475 million at the time of this publication.
Note: 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)