umicore 2019 h1 presentations · umicore h1 2019 performance 7 catalysis h1 2019 market context...

Umicore H1 2019 performance

31 July 2019

Highlights H1 2019

2019 outlook

H1 2019 business review

Financial review

Wrap up

Q&A

Overview

Umicore H1 2019 performance 2

Highlights H1 2019

33

RECURRING NET

PROFIT (Group share)


Committed to long-term strategy in clean

mobility materials and recycling

Important steps taken to expand integrated and

sustainable battery materials value chain in Europe

Agreement to acquire Freeport Cobalt’s refining

and cathode precursor activities in Finland

Long-term partnership with Glencore for

sustainable cobalt supply

Capacity expansions supporting growth in Automotive

Catalysts; greenfield sites under construction in China

and Poland for battery materials

Continued investments in R&D

Robust performance in challenging

market conditions and compared to

record levels in 2018

Catalysis: substantially outperforming automotive

market

E&ST: disciplined approach to capital spending,

adapting to short-term fluctuations in demand

Recycling: significant improvement in throughput rates

following last wave of investment

Free Cash Flow of € 50 m (- € 104 m in H1 18);

cashflow from operations of € 308 m (€ 102 m in H1

18) including stable working capital

Successful placement of € 390 m private debt at low

fixed interest rates

Interim dividend of € 0.375

Continued increase of

throughput rate and favorable

supply environment

Annualized processed volumes

well above 2018 record level

Favorable supply environment

Tailwinds from metal prices

July fire in Hoboken (REBIT

impact of about € 10 m)

Volume growth expected in

cathode materials

Full impact of subsidy cuts on EV

demand in China

Potential pick-up in demand for

ESS

Lower demand from portable

electronics and e-buses

New capacity in China, at an

adapted pace

Higher D&A and upfront greenfield

costs

Persisting low cobalt price

Strong performance expected

despite persisting headwinds in

automotive industry

Market share gains in gasoline

Benefitting from cGPFs in Europe

and China

Capacity expansions in Poland,

China and India

Revenue growth in Precious

Metals Chemistry

4

CATALYSIS ENERGY & SURFACE

TECHNOLOGIES

RECYCLING


H2 2019 perspectives

5Umicore H1 2019 performance

Umicore confirms its outlook of recurring EBIT for the full year 2019 in a range of

€ 475 million to € 525 million, assuming no material further deterioration of the macroeconomic environment

2019 outlook confirmed

CATALYSIS ENERGY & SURFACE

TECHNOLOGIES

RECYCLING

Recurring

EBIT to grow

year on year

Recurring EBIT

well below the

level of last year

Recurring

EBIT to grow

year on year

H1 2019

business review


Catalysis H1 2019 market contextStrong headwinds in the automotive industry

Global light-duty vehicle production contracted by 6.7% year on yearChina down 12.1%

Europe down 6.4%

North America down 3.6%

China, the world’s largest car market, significantly declining since H2 2018

after years of strong growth

Falling diesel production in Europe (-13%), share of 36% of car production in

the region

No concrete signs of immediate recovery

61 63

78

75 8

1 85 86

82 8

7

0

10

20

30

40

50

60

70

80

90

100

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19

Automotive Catalysts (~90% Catalysis revenues)

Market share gains in light duty gasoline

Growing penetration of cGPFs

Good customer and platform mix esp. in China

Higher revenues in heavy-duty diesel

Precious Metals Chemistry

Strong demand from pharmaceutical and chemical

industries

Higher revenues from fuel cell catalysts

Catalysis H1 2019 performance

8

Revenues +1% and stable REBIT; in strong contrast with declining auto market


549

545

598

565 633

620 709

652 717

0

100

200

300

400

500

600

700

800

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19

REVENUES

million €

H1

H2REBIT


Tightening emission norms for

LDV and HDD, in particular in

China, Europe and India

Significant value uplift especially

in gasoline catalysts

Increasing share of gasoline

platforms in the global mix

Increasing uptake of fuel cell

drivetrains

Umicore best positioned to

capture growth in growing

gasoline segment

Largest share of cGPF platforms

won in China and Europe

Umicore well positioned to

capture growth in HDD segments

Umicore expanding capacity in

fuel cells

Strong growth drivers in Catalysis

E&ST H1 19 market context


Transportation: slowdown in EV demand in China, the world’s largest EV market

ESS in Korea: production of new systems halted after safety incidents

Subdued demand for high-end portable electronics

Depressed cobalt price and inflow of unethically sourced artisanal cobalt

Excess customer inventories of high-cobalt containing products

Slowing growth pace of demand for cathode materials and lower metal prices

11

Revenues -7%; REBIT -16% reflecting slowdown in demand and lower metal prices


Rechargeable Battery Materials

Lower NMC for ESS and LCO sales

Flat demand for automotive applications

Recycling and refining activities hit by lower metal prices

Cobalt & Specialty Materials

Customer destocking of excess inventories

Activities impacted by low metal prices

Inflow of cheaper unethically sourced artisanal cobalt

Revenues for Electroplating slightly down; stable for

Electro-Optic Materials

Battery materials value chain is ~70% E&ST revenues

298

289

288

321 398 4

95

650

639

607

0

100

200

300

400

500

600

700

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19

H1

H2

REVENUES

million €

REBIT

4030 37

4561

79

121136

102

0

20

40

60

80

100

120

140

160

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19

E&ST H1 19 performance


Electrification and technology differentiation

Electrification confirmed as the main

avenue to drastically reduce vehicle

emissions in mid & long term

Strongly supported by legislation:

Continued regulatory push in China

despite earlier than anticipated

subsidy cuts

CO2 legislation in Europe

and evidenced by the massive roll-

out of car OEM’s e-mobility strategies

Technology roadmap offers ample

room for innovation and

differentiation:

Product: range, charging times,

durability

Process: ability to scale up fast, cost

efficient and flexible processes,

quality consistency

Closed loop offering

Umicore ideally positioned to address the long-term requirements of

this industry, while managing short-term fluctuations with agility

Strong growth drivers for E&ST

13

Expanding integrated and sustainable battery

materials supply chain


Umicore battery supply chain in Europe

Agreement to acquire Freeport

Cobalt’s refining and cathode

precursor activities in Finland

Fully integrated and sustainable battery materials

supply chain in Europe

To support Umicore’s and its customers’ European

growth plans

Supply precursors for cathode materials production in

Poland, due to start in H2 2020

Complementary IP and know-how for refining and

precursor production

Team of experienced battery industry professionals

Acquisition earnings accretive from 2020 and value

accretive from 2021

Closing subject to customary conditions and approvals

Partnership with Glencore for

sustainable cobalt supply

Long-term supply guarantee for substantial part of our

cobalt needs

Cobalt sourced from state-of-the-art industrial mining

operations, then shipped to our refineries globally


Strong supply mix

Increased availability of complex materials, in particular end-

of-life materials

Stricter enforcement of import ban of e-scrap in China

High volumes of more complex spent catalysts

Higher prices for certain PGMs

Recycling H1 2019 market contextSupportive market environment

H1

H2

343

320

323

318

339

311

327

300

313

0

150

300

450

600

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19

Recycling H1 2019 performance

15

Revenues and REBIT -2%(*) due to extended maintenance shutdown

(*) excluding the impact of the divestment of the European activities of Technical

Materials at the end of January 2018 Umicore H1 2019 performance

Precious Metals Recycling (~70% Recycling

revenues)

Better throughput rates following latest wave of

investments in Hoboken

Lower processed volumes due to extended scheduled

shutdown

Better supply mix and higher metal prices

Revenues for Jewelry & Industrial Metals

slightly up; higher earnings contribution from Precious

Metals Management

REVENUES

million €

REBIT

7765 62 63

73

55

79

56

76

0

50

100

H1

20

15

H2

20

15

H1

20

16

H2

20

16

H1

20

17

H2

20

17

H1

20

18

H2

20

18

H1

20

19


Increasing resource scarcity

and need for closing the loop

Growing complexity of

materials to recycle

Eco-efficient recycling

processes are becoming the

norm

Umicore uniquely positioned to

capture growth in this segment

as the world’s largest and most

complex precious metal

recycler with world class

environmental and quality

standards

Strong drivers for Recycling

Financial review

18

REBIT & REBIT margin

REBITDA & REBITDA margin

Group, excluding discontinued activities, million €Umicore H1 2019 performance

Robust performance in a challenging environment

Down compared to a record H1 18 and resilient

sequential performance

vs H1 18 vs H2 18

Revenues - 3 % + 3 %

Recurring EBIT - 8 % - 5 %

Recurring EBITDA - 2 % =

Robust margin performance despite higher costs (D&A

and greenfield expansions) :

Recurring EBIT margin of 14.3%

Recurring EBITDA margin of 21.4%

Adoption of IFRS 16 lease standard increasing D&A and

recurring EBITDA by € 7.3 million

ROCE of 12.3% reflecting impact of recent investments

148

120 155

165 195

203 2

61

252

240

11.8%

10.0%

12.4%

12.8%

13.5%

13.0%

15.2%

15.9%

14.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

100

200

300

400H

1 2

015

H2 2

015

H1 2

016

H2 2

016

H1 2

017

H2 2

017

H1 2

018

H2 2

018

H1 2

019

220

206 238

258

288

299 3

64

356

35717.9%

17.4%

19.3%

20.5% 20.2%19.8%

21.3%22.4%

21.4%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

0

100

200

300

400

500

H1

201

5

H2

201

5

H1

201

6

H2

201

6

H1

201

7

H2

201

7

H1

201

8

H2

201

8

H1

201

9

19Umicore H1 2019 performance* Free operating cashflow = cashflow generated from operations – capex & capitalized development expenses

Cashflow generated from operations tripled

compared to H1 18 and highest in recent years

Stable net working capital in 1H19 versus last

year’s strong increase

Higher capex (€ 241 m) of which two thirds in

E&ST

Complemented by increased capitalized

development expenses (€ 17 m) also mostly in

E&ST

Substantial improvement in free operating

cashflow year on year (€ 50 m in H1 19)

Full year projected capex of appr. € 600 m and

targeting stable working capital

*

Stronger free operating cash flows


* Cashflow generated from operations includes net working capital cash flows

Free operating cashflow

of € 50 m

(- € 104 m in H1 18)

** Free operating cashflow = cashflow generated from operations – capex & capitalized development expenses

Tax and net interest cash

out of € 86 m

(€ 88 m in H1 18)

Higher dividend pay-out to

Umicore shareholders

(€ 96m vs € 91m in H1 18)

Non-cash increase in net

financial debt of € 37 m

from IFRS 16 adoption

**

*

Net cash flow profile

15% 15% 14%14%

23%

31%

14%

24%29%


Net financial debt € 1,059 m

Modest impact from the adoption of

IFRS 16 due to limited use of

operating leases (€ 37 m)

Ample funding headroom to

execute growth strategy, no

need for additional capital

injection

Corresponds to :

1.35 x average net debt to

recurring EBITDA ratio

29% net gearing ratio

Consolidated net

financial debt, end of

period

Gearing

ratio

Average net debt

/ recurring EBITDA

million €

314 321 298 296

556

840

429

8611,059

0.59 0.65 0.600.55

0.72

1.15

0.87 0.91

1.35

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

0

200

400

600

800

1000

1200

1400

1600

1800

2000

H1 2

015

H2 2

015

H1 2

016

H2 2

016

H1 2

017

H2 2

017

H1 2

018

H2 2

018

H1 2

019

Maintaining a strong capital structure


Issuance of € 390 m US private placement notes,

complementing existing committed credit facilities :

Historically low, fixed interest rates

Maturities of 7, 10 and 12 years

Expected drawdown in September

Total of committed medium and long term debt facilities

amounting to € 1,875 million.

No major maturities before 2029

330

360

390

795

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Committed medium & long term

facilitiesTotal of € 1,875 m

2017 Schuldschein

2017 US Private Placement

2019 US Private Placement

Syndicated bank facilities

(largely undrawn)

0

100

200

300

400

500

2023 2024 2025 2026 2027 2028 2029 2030 2031

Debt maturity profile

million € million €

Further extended funding base


Adoption of IFRS 16 lease agreements standard

Adoption of IFRIC 23 Interpretation on uncertain tax positions

Change in valuation principles of permanently tied-up metal inventories :

Existing separate inventory category of metal stock with indefinite use required to run

operations without business interruptions

Change from LOCOM to IAS 16 & IAS 36 rules to reduce future non-cash and non-recurring

earnings volatility without underlying commercial and operational performance relevance

Market value of Group’s total permanently tied-up metal inventories double current book

value

Limited negative non-recurring EBIT items (€ 3 m)

Accounting changes and non-recurring items

Wrap-up


Performance in H1 and outlook

for the full year in line with

guidance provided in April

Robust H1 performance in

challenging market conditions

Catalysis: substantially

outperforming the automotive

market

E&ST: adjusting capital spending

to current slower pace of growth

Recycling: significant

improvement in throughput rates

Drivers behind growth strategy in

clean mobility materials and

recycling intact

Dealing with agility in challenging

market conditions while consistently

executing long-term strategy

Robust performance and strong

balance sheet providing ample

room to fund growth, R&D

investments and dividends

Wrap-up

27 August 2019

7 February 2020

30 April 2020

Payment date for the interim dividend

Full Year Results 2019

Ordinary General Meeting of Shareholders

`


Financial calendar

This presentation 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.


Forward-looking statements

umicore 2019 h1 presentations · umicore h1 2019 performance 7 catalysis h1 2019 market context...

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