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Umicore FY 20 audio webcast for analyst & investors
Umicore FY 2020 performance
11 February 2021
Overview
Highlights 2020
2021 outlook
Maintaining strategic course while responding effectively to COVID-19 crisis
2020 business review
2020 financial review
Wrap-up
Q&A
3
Highlights 2020
Record earnings in unprecedented conditions
CATALYSIS
Significant impact of pandemic on automotive market in H1
Umicore disproportionately exposed to market recovery in H2 due to strong position in gasoline for LDV
Strict cost management and operational excellence initiatives
ENERGY & SURFACETECHNOLOGIES
Impact of pandemic on several end-markets
Excluding impact of excess inventories, Umicore's EV cathode materials volumes grew broadly in line with EV battery demand
Adj. EBIT reflecting underutilized capacity and pricing pressure in China, as well as costs related to recent and ongoing expansions
RECYCLING
Record performance with a nearly doubling of adj. EBIT YoY, reflecting strong growth across all business units
Exceptional metal price environment
High activity levels despite COVID-19 crisis and favorable trading conditions
4
2021 outlook
Umicore expects to achieve substantial growth in earnings in 2021, with growth in all business Groups
Given the current limited visibility, this outlook statement is made under the assumption that the ongoing COVID-19 outbreak would not result in additional material or protracted disruptions to the economy or Umicore's operations
CATALYSIS
Further benefit from leading edge technology offering in gasoline applications for LDV in China and Europe
Initial impact of China VI legislation for HDD applications
Savings from footprint adjustments and cost improvements carried out in 2020
ENERGY & SURFACE
TECHNOLOGIES
Substantial growth in sales volumes of cathode materials for EVs
Persisting Chinese overcapacity and pricing pressure
Some € 50m increase in fixed costs in Rechargeable Battery Materials
Volume growth to result in meaningful Adj. EBIT growth, in line with current market consensus1
RECYCLING
Favorable metal prices
Supportive supply mix and moderate volume growth in Precious Metals Refining
If current elevated metal price levels were to prevail throughout the year, Adj. EBIT would increase very significantly vs 2020
1 Umicore has engaged Vara Research GmbH to survey brokerage analysts to provide analysts' consensus estimates to the market. The most recent consensus is available onhttps://vara-services.com/umicore/
6
Maintaining the strategic course…
Strong regulatory drivers underpin Umicore's growth strategy
EU ambition : zero-emission mobility
China :
NEV subsidy plan extended (2022) Higher NEV penetration rate (20% by 2025, 50% by 2035)
Green recovery measures and stimuli for cleaner mobility
Stricter emission norms for ICE (China VI regulation for HDD in July 2021)
Increased need for a more circular economy
Umicore committed to strategic investments in clean mobility and recycling
Greenfield cathode materials plant in Poland :
Commissioning by end of H1 2021 1st industrial-scale plant in Europe
Fuel cell catalyst production ramp-up in Korea
Catalyst production capacity expansion in China for LDV and HDV
Multi-year investment program to improve safety and environmental performance of Hoboken recycling plant
8
… while responding effectively to the COVID-19 crisis
Strong capital | Production | |
Health & safety | ||
and liquidity | footprint | |
management | reassessment | |
Remain top priority | ||
Strict cost | Consolidation of | |
Strict hygiene and | management | North American |
other precautionary | Automotive Catalysts | |
Optimization of | ||
measures | production | |
working capital | ||
Dedicated task force | Streamlining of | |
Postponement of | ||
monitoring global | Cobalt & Specialty | |
certain investments | ||
operations | Materials activities | |
Further strengthening | ||
Impairment of certain | ||
of liquidity | ||
assets |
9
Key figures FY 2020
REVENUES € 3.2 bn
-4% YoY
Adjusted NET PROFIT
(Group share) € 322 m
Adjusted EPS € 1.34
Proposed gross annual dividend of € 0.75 per share
Adjusted EBIT € 536 m
+5% YoY
Adjusted EBITDA € 804 m
+7% YoYFree Operating Cash Flow € 167 m (- € 39 m in 2019)
Net debt at € 1,414 m
Net debt / LTM Adj. EBITDA 1.76x
CAPEX
€ 403 m
ROCE
12.1%
Record earnings in unprecedented conditions
Note: All references to revenues in this document refer to revenues excluding metals (all revenue elements - value of purchased metals)
COVID-19 outbreak: significant impact on auto-industry
FY 2020 YoY evolution of passenger car production across all powertrains (source: IHS & Umicore - 31/12/2020)
China
Europe
16%21% 20%
-2%
3%
1% 3%
-1%
-27%
-47%
-62% -64%
-88%
-5% YoY -18% YoY
-93%
-22% YoY
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
North America
6%
3%
3% 3%
5%
-2%
-6%
-9%
-20%
-31%
-84%
-99%
-20% YoY
Jan Feb Mar Apr May Jun Jul
Aug Sep Oct Nov Dec
Global market
5% 3%
1%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
H1: shut down of car OEM's assembly lines and dealerships in key regions as a result of government imposed lock-downs
H2: pick-up in global car demand, albeit with discrepancies between regions in terms of timing, speed and intensity of the recovery
Catalysis FY 2020 performance
Revenues -7% and Adj. EBIT -17%; reflecting severe impact from the pandemic in H1
REVENUES
Automotive Catalysts
Revenue decline much lower than global car market contraction
Disproportionate benefit from market recovery in H2 Outperformed LDV market in China and Europe Higher sales of catalysts for HDD applications
Cost savings (footprint adjustments + operational excellence initiatives)
Precious Metals Chemistry
Revenues down due to COVID-19 impact on automotive industry
Continued strong demand for fuel cell catalysts
2016
Adjusted EBIT
200
150 100 50 0
million €
2017
2018
2019
2020
185
2016
H1
H2
2017
2018
2019
2020
EV battery demand evolution
Evolution global EV LDV battery demand (GWh)
Source: EV Volumes, Umicore
Global EV battery market up 17% to 137 GWh, driven by Europe
Regional differences in demand patterns:
Little year-on-year growth in China, well below industry anticipations
More than doubling of demand in Europe driven by CO2 DirectiveContrasting evolution in China with demand dropping in H1 and some recovery starting at year-end
E&ST FY 2020 performance
Revenues -15%; Adj. EBIT -59%; severe COVID-19 impact and significant negative operating leverage
Rechargeable Battery Materials
Lower cathode materials revenues: higher NMC volumes for EVs; lower LCO and ESS volumes
Pricing pressure, underutilized capacity in China Higher fixed costs related to expansions
Cobalt & Specialty Materials
Lower revenues reflecting impact of COVID-19
Lower contribution from refining & recycling activities; reduced demand for cobalt and nickel chemicals
Electroplating recorded slightly higher revenues; revenues in Electro-Optic Materials decreased
REVENUES
1,500
1,250
1,000
Adjusted EBIT
250
million €
1,289
1,225
750
500
250
0
2016
2017
2018
2019
2020
300
257
200
150
100
50
0
2016
H1 H2
2017
2018
2019
2020
15
Recycling FY 2020 performance
An exceptional metal price environment, in particular for rhodium
Rhodium (EUR/kg)
500,000
450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000
0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2018
2019
2020
Source: Umicore
Palladium (EUR/kg)
100,000
90,000
+12%
80,000
Dec. 2019/2020*
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2018
2019
2020
*Comparison of average metal rates December 2019 vs December 2020
Gold (EUR/kg)
100,000
90,000
+33%
80,000
Dec. 2019/2020*
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2018
2019
2020
Historically high and volatile precious and PGM price levels in 2020, in particular for rhodium.
Rhodium price surged in H2 20 in a context of tight supply and high demand from the car industry as a result of increasingly stringent emission norms.
Current prices for precious and PGM metals already well above the average received prices in 2020.
16
Recycling FY 2020 performance
Revenues +23%; Adj. EBIT +92%; higher metal prices and to a lesser extent favorable trading conditions and supply mix
Precious Metals Recycling
Higher metal prices, particularly for PGMs Supportive supply environment Supportive trading conditions
Higher processed volumes (vs. extended maintenance in '19)
Increased Jewelry & Industrial Metals revenues
Substantial increase in earnings contribution from
Precious Metals Management
REVENUES
1,000
750 500 250
0
2016
Adjusted EBIT
million €
836
2017
2018
2019
2020
400 300 200 100
362
0
2016
H1 H2
2017
2018
2019
2020
17
Record Adj. EBIT(DA) and margins driven by Recycling
Adj. EBIT & Adj. EBIT margin
800 600 400 200
0
2016
2017
Adj. EBITDA & Adj. EBITDA margin
1200
1000
800
600
400
200
0
24.6%
2016
2017
Group, excluding discontinued activities, million €
2018
2019
Record adj. EBIT (€ 536 m) and record adj. EBIT margin
16.0%
14.0%
Stellar adj. EBIT growth in Recycling more than offset decreases in Catalysis and E&ST.
12.0%
10.0%
8.0%
Includes € 24 m higher D&A charges year on year from recent investments and acquisition.
6.0%
4.0%
2.0%
Strong rebound in Catalysis with 2H adj. EBIT, up 34 % year on year.
0.0%
2020
Record adj. EBIT margin driven by higher metal margin in Recycling.
25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
Record adj. EBITDA (€ 804 m) and record adj. EBITDA margin
Strong operating cash flow with highest adjusted EBITDA contribution in history.
Adj. EBITDA up 7 % year on year vs + 5 % for adj. EBIT.
2018
2019
2020
Adj EBITDA margins more resilient across business groups than adj. EBIT.
Pronounced operating leverage effects
Umicore FY 2020 performance
Full P&L
Million €
FY 2019
FY 2020
Adjusted EBIT
- Net finance cost
508.9
536.4
(83.2) (104.2)
- Adjusted Tax Adjusted net result
- Minorities
Adjusted net result Group share
Adjusted EPS
Adjustments to net result Group share
Net result Group share
(102.5) (102.7)
323.1 329.4
(11.4) (7.0)
311.7 322.4
1.30 1.34
(23.9)
287.8
(191.9)
130.5
Slight increase in Adj. net Group result and Adj. EPSHigher interest charges mainly due to higher financial debtStable adjusted tax charge and stable effective adjusted group tax rate (24.2%)Substantial adjustments in response to COVID-19
Substantial adjustments to EBIT
Million €
Restructuring-related Selected asset-impairments Environmental
Other
Total EBIT adjustments Adjusted tax result Adjusted minority result
Net adjustments (Group Share)
(97) (128)
(14) (45)
Million €
(55) (56)
1 (8)
(165) (237)
30 44 3 2
• Full year adjustments to EBIT per business group :
• Catalysis : - € 57 m
• Recycling : - € 51 m
• E&ST : - € 112 m
• Corporate : - € 17 m
(of which Element 6 : - € 14 m)
- € 237 m EBIT adjustments :
• 1H : concentrated in Catalysis
• 2H : concentrated in E&ST and Recycling
• >50% restructuring-related
• Hoboken green zone provision of € 50 m
• - € 147 m non-cash charges vs - € 90 m (future) cash out
• Net result impact : - € 192 m
Increase in free operating cash flows
million €, continued operations only
1000
-1000
-500
500
0
FY15
Cashflow generated from operations after net working capital cash flowNet working capital cash flows
Cashflow from operations before net working capital cash flow
million €, continued operations only
800
FY16
FY17
FY18
FY19
549 603
-200
-400
-600
600
400
200
0
-498
-800
-588
FY15
FY16
FY17
FY18
FY19
FY20
Cashflow generated from operations after net working capital cash flowCapex + capitalized development expenses
Free cashflow from operations
FY20
*Free cashflow from operations = cashflow generated from operations - capex & capitalized development expenses
Cash flow from operations before changes in working capital up 13 % at € 707 m
Increase in cash working capital of € 104 m mostly driven by higher PGM prices
Cash working capital increase mostly in Catalysis (Recycling to a lesser extent); decrease in E&ST
Cash flow from operations after working capital up 10 % at € 603 m
Free cash flow from operations up from - € 39 m in 2019 to € 168 m
Highest amount in recent years
Selective capex spending in view of market context (€ 403 m vs € 553 m in 2019)
Net cash flow bridge
million € 650 600 550
500
450
400
Free operating cashflow of € 168 million resulting in a € 29 million decrease in reported net debt
350
300
250
€ 44 million portion of convertible bond accounted for as equity
200
150
100
50
0
60
44
12
29
Dividend cash out of € 60 m limited to interim dividend payout in H2 20
-50
Cashflow from operationsCapex & capitalized development expenses
Free Operating Cashflow
Net interest paidDividends paid to
Umicore shareholders
Conversion right of convertible bond recognized in equity
Other (FX,Decrease inown shares, reported netlease liability…)financial debt
Further strengthening and diversification of funding base
Harmonize million to m
Stable net financial debt of € 1,414 m, slightly below the level of end 2019
Corresponds to robust credit ratios :
• Net debt / Adjusted EBITDA ratio of 1.76x
• Net gearing ratio of 35%Further diversification of LT funding base :
• € 125 m 8-year EIB loan
• € 500 m 5-year convertible bond
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
-0.6
1.9
1.4
0.9
Gearing ratio
0.4
Net debt / Adj. EBITDA
-0.1
Consolidated net financial debt, end of
2016
2017
2018
2019
2020
periodmillion €
Long-Term Fixed Rate Debt Maturity Profile
500
400
300
200
100
0
2023
2024
2025
2026
2027
2028
2029
2030
2031
Wrap-up
Maintaining strategic course and commitment to growth investments in clean mobility and recycling while responding effectively to the COVID-19 crisis
Strongest financial performance ever despite unprecedented conditions
Umicore's priority remains to keep its employees healthy and safeSuccess of Horizon 2020 strategy, building on complementarity of activitiesLong-term strategic drivers stronger than ever; further progress in execution of growth strategy in 2021
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Financial calendar
26 March 2021 | Publication of 2020 annual report |
29 April 2021 | Annual General Meeting of Shareholders |
3 May 2021 | Ex-dividend date |
4 May 2021 | Record date for the dividend |
5 May 2021 | Dividend payment date |
30 July 2020 | Half Year Results 2021 |
Link to all documents related to Umicore's 2020 FY results
For a glossary of used financial and technical terms please refer tohttps://www.umicore.com/en/investors/glossary/
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Disclaimer
Umicore NV published this content on 11 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 February 2021 09:04:00 UTC.