Umicore reports solid performance in 2020 despite challenging market

Companies & MarketsNews
November 4, 2020

November 4, 2020

Global materials technology and recycling group Umicore, headquartered in Brussels, Belgium, has reported its financial results for the third quarter of 2020. The company reportedly expects its full-year adjusted EBIT to be in the range of €465–490 million, with adjusted EBIT in Catalysis and Energy & Surface Technologies business groups well below the level of 2019 and adjusted EBIT in Recycling well above the level of 2019.

The company’s Catalysis business group is said to have benefitted from a sharp recovery for the automotive industry in Q3 2020. After a contraction of 35% in the first half of 2020, global car production picked up in the third quarter to reach almost the same levels seen in the same period in 2019.

Umicore’s volumes and revenues in its Automotive Catalysts business unit in the third quarter reportedly outperformed the global car market, benefitting from a strong market position in China, in particular with international OEMs. Earnings in the third quarter were said to have reflected the positive operating leverage driven by the volume recovery and cost savings following recent footprint adjustments.

Based on current market trends, Umicore expects global car production to be down by approximately 20% for the full year, compared to its previous prediction of a 25% decrease. In this scenario, Umicore expects adjusted EBIT for Catalysis for the full year of 2020 to be in the range of €130–140 million.

In 2021, the business group is expected to continue to benefit from its strong market position in gasoline LDV applications, particularly in Europe and China, supplemented by the initial impact from China VI legislation for heavy-duty diesel applications and cost savings resulting from the cost reduction measures carried out in 2020.

For the first nine months of 2020, global EV sales for the company’s Energy & Surface Technologies business group were up 9%, reflecting a sales rebound in the third quarter after a severe contraction in the first half of the year. Umicore expects adjusted EBIT for Energy & Surface Technologies for the full year 2020 to be in the range of €70–75 million.

Expressed in GWh, battery demand for EVs in the first nine months of 2020 increased by approximately 5%, as EV sales growth was driven by plug-in hybrid vehicles, requiring on average 5–6 times less kWh of cathode materials than full EVs. For the year to date, full EV sales were roughly flat year on year.

In Europe, EV sales continued to see positive momentum and more than doubled in the third quarter compared to the previous year, driven by strong demand for PHEVs, which more than tripled and currently represent close to half of the European EV market, compared to about one third in 2019.

In China, EV sales declined by 19% over the year to date and, on average, remained well below the peak levels reached in the second half of 2018. Despite growth in third-quarter sales of EVs, the battery materials market in China is still facing significant excess capacity.

Sales volumes of Umicore cathode materials in the third quarter were said to reflect the negative impact of excess inventories in the rechargeable battery supply chain. This inventory effect should subside by year-end and Umicore expects sales volumes of cathode materials for EVs in the second half to grow year-on-year and sequentially. Sales volumes in portable electronics and energy storage systems are expected to be lower year-on-year.

The performance of Umicore’s other business units in the second half was expected to continue to reflect the impact of weak trading conditions.

Companies & MarketsNews
November 4, 2020

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