Yahoo Finance Umicore: Slowdown in EV growth significantly impacts 2024 outlook for Umicore’s Battery Materials activities
Slowdown in EV growth significantly impacts 2024 outlook for Umicore’s Battery Materials activities
Against the backdrop of a sharp slowdown in the growth of demand for EVs impacting the entire supply chain, customers’ demand projections for Umicore’s battery materials have steeply declined in recent weeks. Consequently 2024 volumes for its battery materials could be equal or slightly lower than last year. In this context, Umicore lowers its full year 2024 guidance for the Battery Materials Business Group and now expects adjusted EBITDA for this business to be around break-even, including a positive one-off c. € 50 million1. This compares to the initially expected adjusted EBITDA2 for the Business Group in the order of €135 million3.
The overall 2024 performance of Umicore’s foundation businesses (Catalysis, Recycling and Specialty Materials) continues to be robust and overall in line with market expectations, confirming their capability to generate strong earnings and free cash flows and industry-leading returns.
Umicore now expects Group adjusted EBITDA for the full year 2024 to be in a range of € 760 million to € 800 million4.
The updated guidance reflects a reduction in cathode materials sales which is driven by:
Volumes from legacy contracts coming to an end faster than anticipated;
A delay in the anticipated volume ramp-up of new contracts in Europe as customers are scaling back their electrification ramp-up plans. The take-or-pay mechanisms of these contracts come in gradually during ramp-up;
The volumes for a Chinese battery OEM not materializing in 2024.
Adjusted EBITDA for Battery Materials (previously reported under the former Energy & Surface Technologies Business Group) amounted to €149 million in 2023, which included as reported earlier, substantial one offs related to a non-recurring lithium effect and valuation of battery production scraps.
Umicore has started a process of re-assessing growth projections post 2024 in response to the slowdown and ongoing reviews of the investments plans by EV manufacturers. Umicore is working closely with its customers to create clarity in the coming months. The outcome of this assessment will result in phasing Umicore’s capex plans to closely match the future growth pace of its customer base. In the meantime, capex5 for 2024 is expected to not exceed € 650 million. Given the slower ramp-up, Umicore is also assessing ways to adjust its cost structure.
Bart Sap, Umicore’s CEO, commented: “Our short-term outlook in Battery Materials is clearly disappointing. At the same time the electro-mobility trajectory is and will not be linear, like in any other significant industry transformation. This is why we are re-assessing our own growth path with agility and determination, while we maintain a strong belief in the long-term prospects of electrification. We are convinced that Umicore has the right to play across all drive-trains through our broad technology portfolio, lasting customer relationships and relevant footprint. We are adapting our pace to this new reality and are taking the necessary actions to navigate the immediate challenges. We continue to build on the firm fundamentals of our complementary foundation businesses which are global leaders in their respective markets. They are a bedrock of strong cash flow and returns, as well as a repository of our vast knowledge and experience. This underpins our ambition to replicate this success for our battery materials business.”
Conference call and live audio webcast
A conference call and audio webcast will take place today at 08:15 AM CEST hosted by Bart Sap, CEO and Wannes Peferoen, CFO.
Live audio webcast
The audio webcast and replay can be accessed here: https://channel.royalcast.com/landingpage/umicore/20240612_1/
Conference call
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Financial calendar
26 July 2024 - Half year results 2024 press release. On the same day, the Group will host a webcast and conference call for analysts and investors.
About Umicore
Umicore is a circular materials technology company that focuses on application areas where its expertise in materials science, chemistry and metallurgy makes a real difference. Its activities are organized into four Business Groups: Battery Materials, Catalysis, Recycling and Specialty Materials. Each Business Group is divided into market-focused business units offering materials and solutions at the cutting edge of new technological developments and essential to everyday life.
Umicore generates most of its revenues from and dedicates most of its R&D efforts to clean mobility materials and recycling. Umicore’s overriding goal of sustainable value creation is based on an ambition to develop, produce and recycle materials in a way that fulfills its mission: Materials for a better life.
Umicore’s industrial and commercial operations as well as its R&D activities are spread across the world to best serve its international customer base with more than 11,500 employees. The Group generated revenues (excluding metal) of € 3.9 billion (turnover of € 18.3 billion) in 2023.
For more information Umicore
Investor Relations
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Forward looking statements
This document contains forward-looking information that involves risks and uncertainties, including statements about Umicore’s plans, objectives, expectations and intentions. Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Umicore. Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected. As a result, neither Umicore nor any other person assumes any responsibility for the accuracy of these forward-looking statements.
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1 Predominantly related to the reversal of a provision for OEM recalls.
2 As communicated in the full year 2023 results press release, Umicore expected revenues for the Battery Materials Business Group to be in the range of € 575 million to € 675 million with an adjusted EBITDA margin around 22%.
3 Also including the positive € 50 million one-off predominantly related to a reversal of a provision on OEM recalls.
4 This compares to the initially expected adjusted EBITDA for the Group to be in the range of €900 million to € 950 million.
5 Capex does not include non-refundable government grants and excludes Umicore equity contribution to JVs.
