Umicore earnings boosted by record precious metals prices

Umicore, the Brussels-based global materials technology and recycling group, has announced its earnings for the second quarter and first half of 2021. The company says its strong performance reflects the recovery in demand from the automotive industry after the severe downturn caused by the COVID-19 pandemic, as well as record precious metal prices.

Umicore’s revenues for the first six months of 2021 totaled 2.1 billion euros, roughly $2.5 billion, for a 37 percent year-on-year increase. Its adjusted earnings before interest and taxes (EBIT) totaled 625 million euros, $771 million, for a 157 percent increase compared with the first half of 2020. The company says its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) doubled to 762 million euros, or $904 million, while adjusted net profit nearly tripled to 428 million euros, or $$508 million.

Marc Grynberg, Umicore CEO, says, “I am proud of the performance achieved by Umicore in the first half of 2021 and would like to thank all Umicore employees for their remarkable engagement. I am also proud of our ambitious sustainability roadmap, which will set us apart in our industry and goes hand in hand with our strategy to be a leader in clean mobility materials and recycling. We stand ready to capitalize on the acceleration of electrification in the automotive industry and the growing need for a circular economy.”

Umicore says revenue growth in its Catalysis business segment outperformed the recovering car market as a result of market share gains in the European and Chinese light-duty gasoline markets, a favorable platform mix and strong demand for heavy-duty diesel and fuel cell catalysts. Adjusted EBIT was 204 million euros, or $242 million, compared with 21 million euros, or $24.9 million, in the first half of last year and was also supported by cost savings and high platinum group metals (PGM) prices.

Revenue in the company’s Energy & Surface Technologies business increased, reflecting substantially higher sales volumes of cathode materials in rechargeable battery materials, a strong recovery in cobalt and specialty materials and strong demand in metal deposition solutions. Adjusted EBIT was well up with higher revenues more than compensating for the increase in fixed costs, as anticipated, Umicore says

Adjusted EBIT in its Recycling business nearly doubled compared with an already very strong first half of 2020, reflecting record precious metals prices, strong demand across end-markets and regions, an excellent supply mix and very favorable trading conditions.

Outlook

Based on the strong performance in the first half of the year and assuming precious metal prices remain around current levels for the remainder of the year, Umicore says it expects its adjusted EBIT for the full year to slightly exceed 1 billion euros, or $1.19 billion. This full-year outlook incorporates an additional contribution of roughly 250 million euros, or $297 million, compared with 2020 linked to higher current precious metal prices. Umicore’s outlook for the second half of 2021 includes the effect of the planned maintenance shutdown in Hoboken, Belgium, and the anticipated impact of the semiconductor shortage on vehicle production.

In Catalysis, Umicore says it expects to continue outperforming the automotive market and more than double adjusted EBIT for the full year 2021 compared with 2020. Revenue and earnings in the second half of the year will be affected by more subdued demand in the automotive industry arising from the ongoing shortage in the global supply of semiconductors. In addition, heavy-duty diesel catalyst sales volumes are expected to be affected by the phase-out of catalysts compliant with the China V legislation, according to the company.

In Energy & Surface Technologies, the company says adjusted EBIT is expected to grow for the full year and could slightly exceed current market consensus. However, the stronger than anticipated performance in Cobalt & Specialty Materials and Metal Deposition Solutions in the first half is expected to normalize and should not be extrapolated to the second half, Umicore cautions. The company says it expects substantial growth in sales volumes of cathode materials in 2021 to more than compensate for a 50 million euros, or $59.3 million increase in fixed costs.

In Recycling, Umicore says full-year 2021 adjusted EBIT is expected to reach exceptional levels, well above the prior year, driven by robust operations, strong growth across business units and regions and assuming that current precious metal prices prevail throughout the remainder of the year. The first-half performance should not be extrapolated to the second half as it included a spike in precious metal prices and the availability of the smelter in Hoboken will be lower because of the planned maintenance shutdown starting mid-September, the company adds.

CEO succession

Following his appointment by the supervisory board to succeed Grynberg as CEO, Mathias Miedreich will take up his new role at Umicore Oct. 1. Grynberg and Miedreich will work together for a short time to ensure optimal onboarding and a smooth leadership transition.

ESG ambitions

Umicore’s “Let’s go for Zero” sustainability strategy aims to maximize the impact of operations while continuing to maximize the positive impact on society and delivering value to all stakeholders. The strategy, underpinned by an enhanced disclosure and governance approach that includes linking environmental, social and corporate governance (ESG) to executive remuneration, consists of three key pillars: net-zero greenhouse gas (GHG) emissions by 2035, zero harm and zero inequality.