Umicore grows revenues in 2022

Umicore, headquartered in Brussels, has released its earnings report for 2022, showing strong performance amid what it describes as “severe market disruptions, cost inflation and a volatile precious metal price environment.”

The company’s revenues for the full year totaled 4.2 billion euros, or $4.5 billion, which is 10 percent greater than in the previous year. The company says the growth was driven by strong operational performance and higher volumes and prices.

Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled 1,151 million euros, or $1,230 million, a decrease of 8 percent compared with 2021’s record levels, reflecting increased spending for innovation and growth preparation, cost inflation and less favorable precious metal price levels, according to the company. Operational free cash flow was 344 million euros, or $367.7 million, despite higher working capital requirements mainly driven by a record lithium price, and higher capital expenditures, Umicore says.

CEO Mathias Miedreich, says, “The year 2022 marks a successful start for our ‘2030 RISE’ strategy, which is designed to accelerate value-creative growth. We have delivered a strong business performance in a context of significant macroeconomic headwinds and have already demonstrated very tangible progress against key strategic and financial objectives.”

He adds that he is “very confident” Umicore is positioned to capture the growth opportunities the accelerating mobility transformation provides.

Revenues and earnings in Catalysis reached record levels, Umicore says. Automotive Catalysts outperformed the global car market, driven by a favorable platform and customer mix in light-duty applications and market share gains. The company says its “operational excellence” and its ability to pass-through cost inflation resulted in record adjusted EBITDA of 419 million euros, or $447.9 million.

Revenues and earnings in Umicor’s Energy & Surface Technologies segment increased substantially, achieving adjusted EBITDA of 290 million, or $310 million. Umicore says Cobalt & Specialty Materials benefited from “exceptionally strong” demand and a supportive cobalt and nickel price environment in the year’s first half before an expected normalization in the second half. The increased performance of Rechargeable Battery Materials included favorable exposure to the increase of the lithium price. As anticipated and previously announced, sales volumes of cathode active materials remained subdued, Umicore says.

Recycling achieved revenues in line with those achieved in 2021, the company says, adding that the Precious Metals Refining business unit benefited from solid volumes and an overall supportive supply environment. A slightly lower contribution of the trading activity in Precious Metals Management was offset by higher revenues in the Jewelry & Industrial Metals business unit. Adjusted EBITDA totaled 532 million euros, or $568.7 million, which was less than in 2021 owing to cost inflation and less favorable precious metal price levels compared with 2021, the company adds.

2022 also is when Umicore’s “2030 RISE” strategy, designed to deliver significant, value-creative growth, was launched. The company says its Rechargeable Battery Materials business unit made significant progress by closing multiple long-term customer contracts and supplier partnerships and by achieving milestones in executing its value chain presence in Europe and North America. The Catalysis and Recycling business groups demonstrated their resilience, operational prowess and ability to generate strong free cash flows in a very challenging market context, the company adds. Also, the  Science Based Target initiative (SBTi) has validated Umicore’s intermediate greenhouse gas reduction targets for 2030, which the company says is an important milestone in its Let’s go for Zero ambitions to achieve net-zero greenhouse gases by 2035.

2023 outlook

Automotive Catalysts is expected to benefit from its strong market position in gasoline catalyst applications, a supply chain recovery and an anticipated rebound of the Chinese heavy-duty diesel market. Given that, adjusted EBITDA of the Catalysis business group is expected to show a growth in 2023 versus 2022, Umicore says.

In Energy & Surface Technologies, the company says it expects the earnings of the Rechargeable Battery Materials business unit will be in line with the 2022 level. Considering that the Cobalt & Specialty Materials business unit in 2023 will not benefit from the exceptional profitability that occurred in the first half of 2022, adjusted EBITDA for the group is anticipated to be somewhat below the level of 2022.

As lithium and manganese are growing in value as well as in volatility, Umicore says it decided to no longer treat them as consumables but as hedged metals to make the accounting approach consistent with the revenue performance indicator used in Umicore’s other business units. This will allow neutralizing distortions in revenues resulting from the volatility in the value of the purchased metals and enhance comparability of the underlying performance of the Rechargeable Battery Material business unit, according to the company. Going forward, the pass-through value of the purchased lithium and manganese will be excluded from the revenue calculation, as is currently the case for cobalt and nickel. The Energy & Surface Technologies 2021 and 2022 revenues have been restated accordingly.

In Recycling, the Precious Metals Refining business unit is expected to continue to benefit from an overall supportive supply environment, Umicore says. Assuming current precious metal prices are to prevail throughout the year, adjusted EBITDA in the Recycling business group in 2023 is expected to be below the level of 2022 in light of the full-year effect of cost inflation.

Overall, adjusted EBIT and EBITDA for the group are expected to be below the levels of 2022, in line with current market expectations, Umicore says.

Grouping Rechargeable Battery Materials activities

The business unit Rechargeable Battery Materials is at the core of Umicore’s 2030 RISE strategy. As a next step in the execution of its strategy, Umicore says it plans to group the Rechargeable Battery Materials activities within one legal entity, providing the best foundation for the business unit to scale within Umicore and maximize its financing options while delivering on its ambitious 2030 RISE objectives.