Half Year 2024 Umicore SA Earnings Call

July 26, 2024

For the duration your lines will be on listen only mode. However, you will have an opportunity to ask questions at the end of the call.

Bychops: This can be done by pressing star one on your telephone keypad. If you require assistance at any point. Please press star zero and you'll be connected to an operator I will now hand over to your host by chops. The CEO to begin today's conference. Please go ahead, Sir Thank you.

Chops: Yes. Thank you so good morning, everyone and welcome to hear me core H one results update.

Chops: Today, I think we have a pretty packed and interesting agenda for you.

Speaker Change: First start off with the strategic review on the battery materials, where we stand.

Speaker Change: Let's then look at the key figures and the highlights of the first half of 2024.

Speaker Change: And then we'll go over the business. If you will for a different business groups. One is we'll talk to you about the financials.

Speaker Change: I'll be coming back with the outlook for 2024, and then we will do a wrap up and then it's open for Q&A.

Speaker Change: So let me start off by the strategic review for battery materials.

Now there is a new market reality out there and we have to adjust to it.

Speaker Change: The market context is challenging and we have seen.

Speaker Change: Slowdown in the growth of EV sales in the short and midterm.

Speaker Change: The Oems are revising the speeds, but also the regional setup of the rectification plan and this results in a more limited visibility in the short and midterm.

Speaker Change: Now of course, we cannot stand still and we're taking therefore immediate actions and we have been taking those actions already now we launched already the strategic review to assess our growth projections beyond 2024 for the battery materials business.

Speaker Change: We've talked about strict capital discipline and this year, we will be spending less than 650 million euro.

Speaker Change: Additionally, we have launched.

Speaker Change: Further efficiency and cost measures.

Speaker Change: Graham on top of efficiency for growth program, which we announced earlier.

Speaker Change: Now if we look at the broader picture and despite the current slowdown in the growth we do see that policymakers continue to support this clean mobility trends and this is also reconfirmed by the green deal.

Speaker Change: <unk> recently.

Speaker Change: Now this is where we are.

Speaker Change: For 2024.

Speaker Change: Now in our second step and we are using here a layered approach.

Speaker Change: We're taking stock of what we have today.

Speaker Change: And to have today, we have an interesting footprints and as well we have a projected order book.

Speaker Change: Brought dose elements together.

Speaker Change: And our basic scenario.

Speaker Change: And some of the main assumptions and main considerations in this scenario.

Speaker Change: We have at least an 18 month delay and ramp up of customer contracted volumes.

Speaker Change: We see substantially reduced volume projections, reflecting the current offtake commitments or take or take or pay thresholds in line with the currently confirmed investment waves.

Speaker Change: We are more prudent on our assumptions on operational cost evolution.

Speaker Change: And we are minimizing further expansion of the existing footprints in Europe and Korea in order to serve our customers with the contracts that we have today. This will result in lower capex spending going forward.

Speaker Change: This will also result.

Speaker Change: At the end of this decade in the last years of this decade, we will have a low utilized global capacity at the exception of our Chinese assets.

Speaker Change: Basically in China.

Speaker Change: So what is the consequence of this.

Speaker Change: We're taking an impairment across the battery materials business.

Speaker Change: This is a $1 6 billion noncash adjustments, mostly related to property plant and equipment and non current inventory mainly in Asia.

Speaker Change: This means that the remaining book value that will have at June 2024 stands at $1 5 billion. So the remaining book value $1 5 billion.

Speaker Change: The battery materials EBIT.

Speaker Change: We'll remain negative or below breakeven in 2025 and 2026.

Speaker Change: And in the last years of this decade, we will see returns above the cost of capital.

Speaker Change: Now what are now discussed is the base scenario and where we take stock of what we have today.

Speaker Change: This is not an endpoint this is the basis from which we start and build further for our strategic review.

Speaker Change: So that is also what we're continuing to do in the next months.

Speaker Change: So we are now having a comprehensive and structured review to see how we can further unlock more business value from this business.

Speaker Change: We're exploring opportunities on top of the current base that we have.

Speaker Change: And we do this in close cooperation with all our stakeholders, but in particularly also with our downstream industry partners.

Speaker Change: The guiding principles for this with you.

Speaker Change: We will focus on maximizing our capacity utilization of the existing assets first.

Speaker Change: Before we consider any further expansion.

Speaker Change: We're looking at our global footprint.

Speaker Change: And this includes of course Asia, Europe, but as well as Canada.

Speaker Change: And for Canada, we can say that's pending the outcome of our strategic review, which is still ongoing we are delay at this moment in time on spending for that site.

Speaker Change: So again no conclusions taken for that site, what we spending until we're.

Spending our investments until we have that final review time.

Speaker Change: Further we will optimize the battery materials setup in close alignment with our customers and net new growth path.

Speaker Change: We'll continue to leverage leverage on the strong agreements that we have.

Speaker Change: And on our differentiating position that we have in Europe, which I do feel that our customers value.

Speaker Change: We will focus on further customer diversification and we are open to partnerships along before value chain.

Our focus on technology as well as operational and cost efficiency will remain an integral part of this review and we will come with our conclusions at the capital markets day in Q1 2025.

Speaker Change: Next to the review of the battery materials update of course, we also keep focusing on our other business groups, Our foundation businesses and their strategy execution at the same time at the group at group level, we are implementing capital and cost discipline across the group.

Speaker Change: Now what I also felt in earlier discussions and based on feedback is that there might be merit in trying to explain our take or pay mechanisms even more even more clearly.

Speaker Change: So how do these take or pay mechanisms actually work.

Speaker Change: So on the one hand, we have a contractual annual offtake folio.

Speaker Change: Accrete upon for the confirmed investment place that means that for every confirmed investment wave is a dedicated annual contractual volume which is fixed.

Which we start and build further for our strategic review.

Speaker Change: Next to that we have also a take or pay flawed defined as a percentage of that contractual annual volume.

So that is also what we're continuing to do in the next months.

And that percentage is also defined for that specific yet. So it is a specific percentage and a specific contractual annual volume for any product given year.

So we are now having a comprehensive and structured review to see how we can further unlock more business value from this business.

We're exploring opportunities on top of the current base that we have.

Speaker Change: Now at the stock and especially in the first year of the ramp up of S&P. After the first year of Sop that.

And we do this in close cooperation with all our stakeholders within particularly also with our downstream industry partners.

Speaker Change: That percentage is somewhat lower.

Speaker Change: Once the contract is up and running these percentages on average go to 85%.

The guiding principles for this if you are.

Speaker Change: Now then annually what do we do we look how much did the customer on how much will the customer uptake in that specific year.

We will focus on maximizing our capacity utilization of the existing assets first.

Before we consider any further expansion.

Speaker Change: And then we compare it with the annual contractual volume multiplied by the take or pay percentage and that difference.

We're looking at our global footprint.

And this includes of course Asia, Europe, but as well as Canada.

Speaker Change: If the customer volume would be below that take or pay floor.

And for Canada, we can say that's pending the outcome of our strategic review, which is still ongoing we are delay at this moment in time of spending for that site.

Speaker Change: We will receive a compensation.

Speaker Change: Yeah.

Speaker Change: Now, let me transit to the key figures and highlights for the first half of this year.

So again no conclusions taken for that site, what we spending until.

Speaker Change: Now we have been operating against a softer macroeconomic environments and also a less favorable metal price.

We are spending our investments until we have that final review time.

Further we will optimize the battery materials setup in close alignment with our customers and net new growth path.

Speaker Change: Taxed for PJM.

Speaker Change: While revenues will stand or stands at $1 8 billion for the first half of the year, we have 168 million free.

We will continue to leverage leverage on the strong agreements that we have.

Speaker Change: Free operating cash flow, 20%, adjusted EBITDA margin and $393 million adjusted EBITDA, Our ROE stands at 11, 3% and we keep our level of leverage will be at one seven.

And on our differentiating can position that we have in Europe, which I do feel that our customers value a lot.

We will focus on further customer diversification and we are open to partnerships along the full value chain.

Speaker Change: That's where it is.

Speaker Change: Now if I look high level at the performance of the different business groups.

Our focus on technology as well as operational and cost efficiency will remain an integral part of this review.

Speaker Change: Should say that's actually our foundation business is.

Speaker Change: Broadly in line with market consensus catalysis had another set of impressive margins, 25% return on capital of 40%.

We'll come with our conclusions at the capital markets day in Q1 2025.

Next to the review of the battery materials update of course, we also keep focusing on our other business groups, Our foundation businesses and their strategy execution at the same time at a group level, we are implementing capital and cost discipline across the group.

Speaker Change: Our recycling business continues to do well with EBITDA margins of 36, 5% a return of capital close to 70% and despite and this despite lower PGM prices.

Speaker Change: And our maintenance shutdown.

Speaker Change: Our specialty materials business.

Now what I also felt.

Speaker Change: Also had a good performance, but was suffering from what from a more difficult market context for cobalt <unk> specialty materials and that the return on capital came in around 8%.

The earlier discussions and based on feedback is that there might be merit in trying to explain our take or pay mechanisms even more even more clearly.

Speaker Change: Our efficiency for growth program is well on track and this should yield 70 million as you know for 2024 and I can tell you that where that puts on track and already more than halfway through.

So how do these take or pay mechanisms actually work.

So on the one hand, we have a contractual annual offtake folio.

Is it creates a pump for the confirmed investment place that means that for every confirmed investment wave is a dedicated annual contractual volume which is fixed.

Speaker Change: Through the half of this year.

Speaker Change: We remain committed to a strong balance sheet and we have resilient debt maturity profile and one that we will talk more about that later in the presentation.

Next to that we have also a take or pay flawed defined as a percentage of that contractual annual volume.

We also reconfirm, our adjusted EBITDA outlook for 2024.

Speaker Change: And this will be in the range of 760 to 800 million Euro.

And that percentage is also defined for that specific yet. So it is a specific percentage and a specific contractual annual volume for any for a given year.

Speaker Change: Let me now translates to an overview of the different business groups and let me start off again with battery materials.

Now at the stock and especially in the first year of the ramp up of the first year of Sop.

Speaker Change: Now I've talked about this before we see that the market is changing.

That percentage is somewhat lower.

Speaker Change: We see a slowdown in the ramp up and this is what we have to take into account for the short term, but also for our longer term evolution.

Once the contract is up and running these percentages on average go to 85%.

So if you then look at 2024.

Now then annually what do we do.

Speaker Change: For the first half of this year, we do see a decline in our adjusted.

How much did the customer on how much will the customer uptake in that specific year.

Speaker Change: And our revenues and adjusted EBITDA, which is quite significant versus last year.

And then we compare it with the annual contractual volume multiplied by the take or pay percentage and that difference.

Speaker Change: Revenues are down 33%.

Speaker Change: At the same time, our volumes are broadly in line with 2023.

If the customer volume would be below that take or pay flow.

We'll receive a compensation.

Speaker Change: Our adjusted EBITDA is close to breakeven and this EBITDA includes costs related to the startup of our Greenfields and Canada as well as Emboldens.

Now, let me transition to the key figures and highlights for the first half of this year.

Now we have been operating against a softer macroeconomic environment and also a less favorable metal price.

Speaker Change: 102 million Euro in Capex.

Speaker Change: And of course, the $1 6 billion impairment, which I highlighted earlier.

Context for PGS.

Speaker Change: When I go to catalysis, there, we see that the markets actually in terms of Ice's productions is globally.

While revenues will stance or stand at $1 8 billion for the first half of the year, we have 168 million.

Speaker Change: Flat.

Free operating cash flow, 20%, adjusted EBITDA margin and $393 million adjusted EBITDA, Our ROE stands at 11, 3% and we keep our level of leverage will be at $1 seven.

Speaker Change: Now it does this guy some regional changes on the one hand, we see strong growth in.

Speaker Change: In China was 6%.

Speaker Change: Americas more muted.

Speaker Change: 3% decline in Europe, but especially Japan and Korea.

Speaker Change: Rather weak and we also see in the <unk> segment, a decline in Europe with 13%.

Speaker Change: Yes, that's where it is.

Speaker Change: Now if I look high level at the performance of the different business groups.

Speaker Change: And China, the HDD volumes remain at a low level and despite that they had a small growth, but overall low level.

Speaker Change: I should say that's actually our foundation business is.

Speaker Change: Broadly in line with market consensus catalysis had another set of impressive margins 25%.

Speaker Change: Now if you then go to the underlying.

Speaker Change: Performance of the business.

Speaker Change: Despite this more difficult market context.

Speaker Change: Return on capital of 40%.

Our recycling business continues to do well with EBITDA margins of 36, 5% a return of capital of close to 70% and despite and this despite lower PGM prices.

Speaker Change: Our EBITDA is still reflecting a very strong performance as it's in line.

Speaker Change: With last year and this is thanks to strict cost discipline and efficiency measures.

Speaker Change: And our maintenance shutdowns.

Speaker Change: And the automotive catalysts business.

Speaker Change: Our specialty materials business.

Speaker Change: We are significantly improving our quality of earnings despite some lower light duty in HDD sales applications, we do see strong underlying performance.

Speaker Change: Also had a good performance, but was suffering somewhat from a more difficult market context for cobalt <unk> specialty materials and that the return on capital came in around 8%.

Speaker Change: Our efficiency for growth program is well on track and this should yield 70 million as you know for 2024 and I can tell you that were that are put on track and already more than halfway in.

Speaker Change: So in the future it's not only about top line development. It's also about the improvement in the evolution of the quality of earnings and Thats what were working on and that's what the teams are doing fairly successfully.

Speaker Change: Through the half of this year.

Speaker Change: We started also the streamlining of our R&D organization as we announced earlier in the context of the maturing markets of ice.

Speaker Change: We remain committed to a strong balance sheet and we have resilient debt maturity profile and one that we will talk more about that later in the presentation.

Speaker Change: Internal combustion vehicles, but also in the context after a weaker euro seven legislation and.

Speaker Change: We also reconfirmed our adjusted EBITDA outlook for 2024.

Speaker Change: And this will be in the range of $762 800 million.

Speaker Change: And the PMC, we saw slower sales in the homogeneous catalysts business, but overall, despite the lower PGM prices we.

Speaker Change: Let me now translates to an overview of the different business groups and let me start off again with battery materials.

Speaker Change: We did see that results are resilient and metal hedges made up for those filters.

Now I've talked about this before we see that the market is changing.

Speaker Change: The fuel cell market remains difficult in China.

Speaker Change: We see a slowdown in the ramp up and this is what we have to take into account for the short term, but also for our longer term evolution.

Speaker Change: And the earnings of that business is affected by cost.

Speaker Change: Costs that were incurring related to the startup.

Speaker Change: So if you then look at 2024.

Speaker Change: Actually the construction of our plant in Changzhou as anticipated. This project is on track and going well.

For the first half of this year, we do see a decline in our adjusted.

Now if we look at recycling that.

Speaker Change: And our revenues and adjusted EBITDA, which is quite significant versus last year.

Speaker Change: We also have.

Speaker Change: Some important news to share with you today.

Revenues are down 33%.

Speaker Change: So we have taken some decisions around battery recycling solutions business.

Speaker Change: At the same time, our volumes are broadly in line with <unk> 2023.

Speaker Change: So what we basically we came to the conclusion that we're going to postpone our investments in a large scale European battery recycling plan with a startup of production anticipated not earlier than in 2032.

Speaker Change: Our adjusted EBITDA is close to breakeven and this EBITDA includes costs related to the startup of our Greenfields and Canada as well as in Poland.

Speaker Change: 102 million Euro in Capex.

Speaker Change: And of course, the $1 6 billion impairment, which I highlighted earlier.

Speaker Change: 2032 at the earliest.

Speaker Change: And this given the slowdown in EV sales.

Speaker Change: When I go to catalysis, there, we see that the markets actually in terms of Ice's productions is globally.

Speaker Change: What does that mean concretely short term there will be a lower availability of battery scraps.

Speaker Change: Flat.

Speaker Change: There will also be a delayed influx of end of life batteries as a consequence of this slower trends.

Speaker Change: Now it does this guy some regional changes on the one hand, we see strong growth in.

Speaker Change: In China was 6%.

Speaker Change: But we also see that there is a longer useful life for batteries as such good news for the market, but that means that these batteries will come back only later to be recycled.

Speaker Change: Americas more muted.

Speaker Change: 3% decline in Europe, but especially in Japan and Korea.

Speaker Change: Rather weak and we also see in the <unk> segment, a decline in Europe with 13%.

Speaker Change: Now in the Meanwhile, we are continuing to focus on the first on the further industrial developments and deployments of our pilot plant in Hoboken with further optimizing our technology and I'm talking of course here about the Hoboken plant in Belgium.

Speaker Change: And China, the HDD volumes remain at a low level and despite that they had a small growth, but overall low level.

Speaker Change: Now if you then go to the underlying.

Speaker Change: Performance of the business.

Speaker Change: Now coming to the broader context of battery box.

Speaker Change: Despite this more difficult market context.

Speaker Change: Our EBITDA is still reflecting a very strong performance as it's in line.

Speaker Change: Contracts.

Speaker Change: Recycling.

Speaker Change: And then of course, the PGM prices to play an important role with.

Speaker Change: Last year and this is thanks to strict cost discipline and efficiency measures.

Speaker Change: We see that rhodium is down roughly 50% year on year Palladium, 35% and you can imagine that for our business.

Speaker Change: And automotive catalysts business.

Speaker Change: We are significantly improving our quality of earnings despite some lower light duty in HDD sales applications, we do see strong underlying performance.

Speaker Change: Significantly our high exposure to these metals that this has an impact on our results.

Speaker Change: And that's also what we see basically when we look to the <unk> performance.

Speaker Change: So in the future, it's not only about topline developments. It's also about the improvement in the evolution of the quality of earnings and Thats what were working on and that's what the teams are doing fairly successfully.

Speaker Change: Now our revenues are down 30% on EBITDA, 60% full.

Speaker Change: That business and this reflects a less supportive precious metals environment as I highlighted earlier.

Speaker Change: We started also the streamlining of our R&D organization as we announced earlier in the context of the maturing markets of ice.

Speaker Change: Now for the professionals metals refining business, we can say that our suppliers mix is broadly in line with last year.

Speaker Change: Internal combustion vehicles, but also in the context of the weaker euro seven legislation.

Speaker Change: Our revenues of course are impacted by the unfavorable PGM price environment.

Speaker Change: And the PMC, we saw slower sales in the homogeneous catalysts business.

At the same time in Q1, we also had the first.

Speaker Change: But overall, despite the lower PGM prices.

Speaker Change: You also have the plant maintenance shutdown right.

Speaker Change: We did see that results, our resilience and metal hedges made four dose tilt us.

Speaker Change: So thats all according to plan.

Speaker Change: Now if you look at the earnings.

Speaker Change: The fuel cell markets remains difficult in China.

Speaker Change: These earnings are still robust and strong on the back of further efficiency improvements that we have taken as.

Speaker Change: The earnings of that business is affected by.

Speaker Change: As well as a reduction in the energy cost.

Speaker Change: Costs that were incurring related to the startup.

Julie: Julie and industrial metals business unit, we see stable.

Speaker Change: The construction of our plant in Chongqing as anticipated. This project is on track and going well.

Julie: Revenues, but also here higher earnings based on cost discipline and efficiency measures.

Speaker Change: Now if we look at recycling.

Speaker Change: And then we also have.

Julie: For precious metals management, there, especially the rhodium avaya vegetables unfavorable and therefore, the earnings were significantly impacted and will be lower than last year.

Speaker Change: Some important news to share with you today.

Speaker Change: So we have taken some decisions around battery recycling solutions business.

Speaker Change: So what we basically we came to the conclusion that we are going to postpone our investments in a large scale European battery recycling plan with a startup of production anticipated not earlier than in 2032.

Julie: Let's now come to the specialty materials business group and we report for the first time on this business group and Thats, a business group, which highlights which actually turn centers around three business units, so cobalt <unk> specialty materials.

Speaker Change: <unk> thousand 32 at the earliest.

Julie: Is really working on cobalt and nickel chemicals.

Speaker Change: And this given the slowdown in EV sales.

Julie: And in all a variety of applications with a very strong distribution footprint.

Speaker Change: What does that mean concretely short term there will be a lower availability of battery scraps.

Julie: The metals deposition solution, it's all about layering semiconductors micro electronics, that's what this business is focusing on so coatings that is the focus of that business and then electro optic materials and you can think about solar solar panels and space, but also.

Speaker Change: There will also be a delayed influx of end of life batteries as a consequence of this slower trends.

Speaker Change: But we also see that.

There is a longer useful life for batteries as such good news for the market, but that means that these batteries will come back only later to be recycled.

Julie: Night vision.

Speaker Change: In the Meanwhile, we are continuing to focus on the first on the further industrial developments and deployments of our pilot plant in Hoboken with further optimizing our technology and I'm talking of course here about the Hoboken plant in Belgium.

You can think about.

Julie: From fiber for your Internet, so germanium isn't quite a lot of applications here as well now.

Speaker Change: Now the cobalt <unk> specialty materials business unit is operating in a difficult market context, especially for cobalt and this is of course also related to the weaker.

Speaker Change: Now coming to the broader context of battery box product contracts.

Speaker Change: Cycling.

Speaker Change: Environment that we see for the battery materials business as these metals are of course.

Speaker Change: And then of course, the PGM prices to play an important role.

Speaker Change: Playing in both markets at the same time and these are communicating vessels for metals. The earnings I'd also resetting that while our revenues are relatively stable now.

Speaker Change: We see that rhodium is down roughly 50% year on year Palladium, 35% and you can imagine that for our business.

Speaker Change: Now the metal deposition solutions.

Speaker Change: Siggi.

Siggi: Inefficiently or high exposure to these metals that this has an impact on our results.

Speaker Change: The AUC.

Speaker Change: Solid performance solid earnings solid settlements electro optic materials, we see an increase in revenues, while germanium solution business is doing well.

Siggi: And that's also what we see basically when we look through the H one performance.

Siggi: Now our revenues are down 30% on EBITDA, 60% full.

Speaker Change: We see a slower demand in the optic fiber and we have some production backlog in the in progress solutions. We also would like to highlight that we signed a long term partnership with a company called STL on the refining of germanium in the Democratic Republic of Congo.

Speaker Change: That business and this reflects a less supportive precious metals environment as I highlighted earlier.

Speaker Change: Now for the professionals metals refining business, we can say that our suppliers mix is broadly in line with last year.

Speaker Change: Our revenues of course are impacted by the unfavorable PGM price environment.

Speaker Change: Now.

Speaker Change: This is wrapping up the business group overview and section so maybe want us if you could guide us through the financial numbers space, Yes sure Marc.

Speaker Change: At the same time in Q1, we also had the first.

Speaker Change: You also have the plant maintenance shutdown right. So.

Speaker Change: Good morning to you all.

Speaker Change: As mentioned earlier by box the performance across the different business segments was impacted by the softer market economic environment and by a less favorable metal price environment.

Speaker Change: So thats all according to plan.

Speaker Change: Now if we look at the earnings.

Speaker Change: These earnings are still robust and strong on the back of further efficiency improvements that we have taken as well as a reduction in the energy cost.

Speaker Change: This resulted in revenues being 30% lower versus the same period last year now amounting to $1 8 billion.

Speaker Change: For that shortly and industrial metals business unit, we see stable.

Speaker Change: In catalysis volumes were down due to a less favorable customer and regional mix and the light duty vehicle market and a more challenging heavy duty diesel market in Europe and China.

Speaker Change: Revenues, but also here higher earnings based on cost discipline and efficiency measures.

For precious metals management, there, especially the rhodium favorable unfavorable and therefore, the earnings were significantly impacted and will be lower than last year.

Speaker Change: In battery materials, while <unk> sales were broadly in line with the first half of last year. The revenues from the refining activity decreased and Additionally, last year's revenues still included a nonrecurring lithium margins.

Speaker Change: Let's now come to the specialty materials business group and we report for the first time on this business group and that is a business group, which highlights which actually turn centers around three business units, so cobalt <unk> specialty materials.

Speaker Change: In recycling revenues were down due to the plant maintenance shutdown in precious metals refining and a lower contribution from the trading activities.

Now the adjusted EBITDA amounted to 393 million, which is 125 million below last year's first half.

Speaker Change: It's really working on cobalt and nickel chemicals.

Speaker Change: And in all a variety of applications with a very strong distribution footprint.

Speaker Change: The good traction of initiatives around efficiency together with the PGM hedges helped us to offset some of these market headwinds in particular in catalysis and restocking.

Speaker Change: The metals deposition solution, it's all about layering semiconductors micro electronics, that's what this business is focusing on so coatings that is the focus of that business and then electro optic materials and you can think about solar solar panels and space, but.

Speaker Change: In battery materials EBITDA declined due to the absence of last year's one off items and due to the increased cost basis related to the greenfield investments in Poland and Canada.

Speaker Change: The EBITDA margin for the group remains strong strong at 21, 8%.

Speaker Change: So night vision.

Speaker Change: You can think about.

Speaker Change: Margins in catalysis increased despite lower volumes.

Speaker Change: From fiber for your Internet, So germanium and then quite a lot of applications here as well now.

Speaker Change: Clearly illustrating the increased quality of earnings.

Speaker Change: There is also the group reached 11, 3%. This takes into account the intent and want US Scotland plant in battery materials for $1 6 billion.

Speaker Change: Now the cobalt <unk> specialty materials business unit is operating in a difficult market context, especially for cobalt and this is of course also related to the weaker inviting.

Speaker Change: Last summer, we introduced a company wide efficiency program called efficiency for growth.

Speaker Change: Environment that we see for the battery materials business as these metals are of course.

Speaker Change: For this year, we target savings of 70 million Europe and today, we achieved more than 60% of the target.

Speaker Change: Playing in both markets at the same time and these are communicating vessels for metals. The earnings I'd also resetting that while our revenues are relatively stable now.

Speaker Change: The implemented initiatives include charging partners for additional services.

Speaker Change: Now the metal deposition solutions.

Speaker Change: Better prices and payment terms for raw materials and services.

Speaker Change: The AUC.

Speaker Change: Solid performance solid earnings solid settlements electro optic materials, we see an increase in revenues, while germanium solutions business is doing well.

Speaker Change: Increased throughput in operations optimizing the usage of raw materials, and our product and improving the yields in our processes, so basically reducing waste or the cost of rework.

Speaker Change: We see a slower demand in the optic fibers and.

Speaker Change: Now considering the latest challenges in battery materials and the overall market softness we are now identifying additional cost savings and cash improvement measures across the group and we expect to land on this target in the second half of the year.

And we have some production backlog in the in progress solutions. We also would like to highlight that we signed a long term partnership with a company called STL on the refining of germanium in the Democratic Republic of Congo.

Speaker Change: Now moving to the consolidated P&L.

Speaker Change: Now.

Speaker Change: This is wrapping up the business group overview and section so maybe want us if you could guide us through the financial numbers space, Yes sure Marc.

Speaker Change: Taking into account depreciation and amortization of <unk>.

Speaker Change: 152 million euros, adjusted EBIT amounted to 241 million <unk>.

Marc: Good morning to you all.

Speaker Change: Versus 373 million in the same period last year.

Speaker Change: As mentioned earlier by box the performance across the different business segments was impacted by the softer macro economic environment and by a less favorable metal price environment.

Speaker Change: The adjusted net finance cost decreased to $56 million, reflecting higher interest income on our cash deposits.

Speaker Change: This resulted in revenues being 30% lower versus the same period last year now amounting to $1 8 billion.

Speaker Change: The financing cost of gross debt remained stable with the average cost of gross debt at three 3%.

Speaker Change: And the cost of debt is expected to remain well under control considering the maturities of the existing instruments and the conditions of the recently secured funding instruments.

Speaker Change: In packaging materials, while <unk> sales were broadly in line with the first half of last year. The revenues from the refining activity decreased and Additionally, last year's revenues still included a nonrecurring lithium margins Inc.

Speaker Change: The adjusted tax charge decreased to 67 million Euro this is driven by the lower adjusted taxable earnings.

Speaker Change: In combination with a high provision for uncertain tax positions. There has also resulted in an adjusted effective tax rate of 36, 3%.

Speaker Change: In recycling revenues were down due to the plant maintenance shutdown in precious metals refining and a lower contribution from the trading activities.

Speaker Change: The adjusted net profit group share amounted to 118 million Euro which results in an adjusted EPS of <unk> 49.

Speaker Change: Now the adjusted EBITDA amounted to 393 million.

Speaker Change: Which is 125 million below last year's first half.

Speaker Change: <unk>.

Speaker Change: The supervisory board proposes an interim dividend of 25 <unk> per share, which will be paid on August 20 <unk>.

Speaker Change: The good traction of initiatives around efficiency together with the PGM hedges helped us to offset some of these market headwinds in particular in catalysis and restocking.

Speaker Change: The net results group share was impacted by the noncash impairments and write offs in bedroom sales of $1 6 billion euro and amounted to approximately minus one.

Speaker Change: In battery materials EBITDA declined due to the absence of last year's volatile items and due to the increased cost basis related to the greenfield investments in Poland and Canada.

Speaker Change: Bill.

Speaker Change: Now moving to the balance sheet.

Speaker Change: The balance sheet of the group continues to be strong despite the $1 6 billion, new impairments and write offs in battery materials.

Speaker Change: The EBITDA margin for the group remains strong strong at 21, 8%.

Speaker Change: Liquidity is high with close to $1 3 billion of cash at the end of June.

Speaker Change: In catalysis increased despite lower volumes.

Speaker Change: Clearly illustrating the increased quality of earnings.

Speaker Change: When considering the net financial debt of $1 4 billion Euro and the equity of 2 billion Euro the net gearing ratio remains balanced at 41, 6%.

Speaker Change: There is also the group reached 11, 3%. This takes into account the intent and want US Scotland plant in battery materials for $1 6 billion.

Speaker Change: Okay.

Speaker Change: Now looking at the cash flows I would like to highlight that the free operating cash flow amounted to $168 million.

Speaker Change: Last summer, we introduced a company wide efficiency program called efficiency for growth.

Speaker Change: For this year, we target savings of 70 million Euro and today, we achieved more than 60% of the target.

Speaker Change: Cash flow from operations before movements in networking capital amounted to 185.

Speaker Change: The implemented initiatives include charging partners for additional services.

Speaker Change: While net working capital for the group decreased with 269 million Euro next.

Speaker Change: Better prices and payment terms for raw materials and services.

Speaker Change: The next two decline in PGM prices, the strong focus on payment plans and inventory management helped us to reduce the working capital needs in catalysis and in Houston.

Increased throughput in operations optimizing the usage of raw materials, and our product and improving the yields in our processes, so basically reducing waste or the cost of rework.

Speaker Change: Capital expenditures, including capitalized development expenses decreased to 285 million Euro, which is almost 20% lower than last year's first half.

Speaker Change: This reduction is primarily driven by better with us.

Speaker Change: Key investments in the first half of the year being the expansion of the European and North American footprint and solid rich to the Korean plant.

Speaker Change: Now moving to the consolidated P&L.

Speaker Change: As mentioned earlier by Bob we are actively managing the casualty across the company for 24, we aim to keep the capex below $6 15 in Europe.

Speaker Change: Taking into account depreciation and amortization of 152 million euros, adjusted EBIT amounted to 241 million versus 373 million in the same period last year.

Bob: By pausing or delaying projects across the company.

Speaker Change: Now looking at the net cash flow bridge, you can see that the net financial debt increased with 166 million and now amounts to one 4 billion. This equals a leverage of one seven times the last 12 months adjusted EBITDA.

Speaker Change: Yes.

Speaker Change: Net finance cost decreased to $56 million, reflecting higher interest income on our cash deposits.

Speaker Change: The financing cost of gross debt remained stable with the average cost of gross debt at three 3%.

Speaker Change: The free operating cash flow of 168 million Europe covered partially the cash outs related to taxes and financing dividends and also an equity injection into <unk> rate of 100 million Euro.

Speaker Change: Sure.

The adjusted tax charge decreased to 67 million Euro this is driven by the lower adjusted taxable earnings.

Speaker Change: We continue to be committed to a strong balance sheet going forward.

Speaker Change: And although we expect net financial debt to move up towards the end of year. We continue to expect leverage to remain low blow two funds by the end of the year.

Speaker Change: In combination with a high provision for uncertain tax positions. There has also resulted in adjusted effective tax rate of 36, 3%.

Speaker Change: Now.

Speaker Change: As Bart mentioned earlier, we want to highlight also that the group is it debt profile that is well split as you can see in this graph we have an average maturity of five six years and the long term debt is fixed rate.

Speaker Change: The adjusted net profit group share amounted to 118 million Euro which results in an adjusted EPS of <unk> 49.

Speaker Change: <unk>.

Speaker Change: The supervisory board proposes an interim dividend of <unk> 25, euro cents per share, which will be paid on August 20 <unk>.

Speaker Change: Also important to highlight is that the debt to refiners between 2004, and 2006 and is inclusive 20 repayment of the 500 million Euro convertible bonds is fully covered by the new debt contracted in the first half of this year.

Speaker Change: The net results group share was impacted by the noncash impairments and write offs in bedroom sales of $1 6 billion Euro and amounted to approximately minus one 5 billion.

Speaker Change: No.

Speaker Change: So this year, we concluded an eight year loan agreements with European investment Bank for 350 million Euro supporting the financing of our R&D activities at <unk>.

Now moving to the balance sheet.

Speaker Change: The balance sheet of the group continues to be strong despite the $1 6 billion, new impairments and write offs and battery materials.

Speaker Change: Attractive conditions.

Speaker Change: Liquidity is high with close to $1 3 billion euro of cash at the end of June.

Speaker Change: The first tranche of 250 million was drawn in February and a second tranche of 100 million euros will be called early 'twenty five.

Speaker Change: When considering the net financial debt of $1 4 billion Euro and the equity of 2 billion Euro the net gearing ratio remains balanced at 41, 6%.

Speaker Change: Next to the EIB loan we completed in April of fixed rates sustainably linked responses placement note for $499 million.

Speaker Change: Okay.

Speaker Change: Now looking at the cash flows I would like to highlight that the free operating cash flow amounted to $168 million.

Speaker Change: This consists out of <unk> maturities ranging from seven to 12 years and a weighted average maturity of more than nine years, we have drawn defend in the meantime.

Speaker Change: Cash flow from operations before movements in networking capital amounted to 185.

Speaker Change: In the course of the genome.

Speaker Change: While net working capital for the group decreased with 269 million euros next.

Speaker Change: No.

As we shared earlier we.

Speaker Change: We have entered into forward contracts looking in logic shares in longer periods of strategic metal exposure at historically attractive prices.

Speaker Change: <unk> declining PGM prices the strong focus on payment terms and inventory management helped us to reduce the working capital needs in catalysis and in Houston.

Speaker Change: In these graphs you can see that over the past six months, we increased forward nickel hedges in particular for rhodium in 2007 and even in 2008 now.

Speaker Change: Capital expenditures, including capitalized development expenses decreased to 285 million Euro, which is almost 20% lower than last year's first half.

Speaker Change: And of course, the entitled for Gold and silver.

Speaker Change: We also increased for retention for platinum, but to a lesser extent as we expect more upside on this metal given its usage for future usage in fuel cell catalyst applications.

This reduction is primarily driven by better with us.

Key investments in the first half of the year being the expansion of the European and North American footprint and solid bridge to the Korean plant.

Speaker Change: These metal hedging approach enables us to protect future cash flows from metal price volatility and it also provides better visibility on our future earnings.

As mentioned earlier by Bob we are actively managing the cash outs across the company for 24, we aim to keep the capex below 650 million by pausing or delaying projects across the company.

Speaker Change: So here I would like to conclude this section of the financial performance and hand, it back to Bob. Thank you.

Bob: Yes. Thank you want us for that let's now have a look at the outlook for 2024.

Bob: So based on the performance in the first half of the year and assuming precious metal prices remain at current levels for the remainder of the year <unk>.

Speaker Change: Umicore Reconfirms that it anticipates 2020 for group adjusted EBITDA to be within a range of 760 to 800 million.

Speaker Change: The free operating cash flow of 168 million Europe covered partially the cash outs related to Texas and financing dividends and also an equity injection into <unk> rate of 100 million Euro.

Speaker Change: So for the battery materials business, we are expecting volumes.

Speaker Change: We continue to be committed to a strong balance sheet going forward.

Speaker Change: In line or slightly below versus last year.

Speaker Change: And although we expect net financial debt to move up towards the end of the year. We continue to expect leverage to remain low blow two funds by the end of the year.

Speaker Change: We will have an EBITDA around breakeven with a one of a 50 million Euro which is positive included in that number.

Speaker Change: For catalysis, we are expecting the EBITDA of the business group 2024 to be in line with the previous records here and this despite the lower price environment.

Speaker Change: Now.

Speaker Change: As Bart mentioned earlier, we want to highlight also that the group is it debt profile that is well split as you can see in this graph we.

Speaker Change: For the recycling business units, the EBITDA will be below the level of previous year, but broadly in line with the current market expectations.

Bart: We have an average maturity of five six years and the long term debt is fixed rate.

Speaker Change: Also important to highlight is that the debt to refiners between 2004, and 2006 and is inclusive 25.

Speaker Change: And for specialty materials and also the expected EBITDA will be below <unk>.

Speaker Change: Repayment of the 500 million Euro convertible bonds is fully covered by the new debt contracted in the first half of this year.

Last year and this is somewhat below the current market expectations.

So now before going to the Q&A I would like to still make a wrap up.

Speaker Change: So this year, we concluded an eight year loan agreements with European investment Bank for 350 million Euro supporting the financing of our R&D activities at attractive conditions.

Speaker Change: So what we're sharing with you right now.

Speaker Change: First thing to remember is that we are adjusting to the new reality and battery materials.

Speaker Change: The first tranche of 250 million was drawn in February and a second tranche of 100 million euros will be called early 'twenty five.

Speaker Change: The market situation has changed it is affecting the overall industry and also umicore has to react to that and respond to that and see that reality. That's what we are doing and we're taking actions immediately.

Speaker Change: Next to the EIB loan we completed in April of fixed rates sustainably linked responses placement note for $499 million.

Speaker Change: We have price we have actually shared with you today our view on 2024, we have shared with you a base scenario.

Speaker Change: This consists out of <unk> maturities ranging from seven to 12 years and a weighted average maturity of more than nine years, we have drawn defend in the meantime in the course of genome.

Speaker Change: We have today.

Speaker Change: Trax and footprints that we have.

Speaker Change: We have mentioned to you that there is a significant painful impairments that we have been taken.

Speaker Change: No.

Speaker Change: As we shared earlier.

Speaker Change: We have entered into forward contracts looking at larger shares in longer periods of strategic metal exposure at historically attractive prices.

Speaker Change: And therefore, we know from this basis, we'll continue to review our battery materials business.

Speaker Change: And I'll come back to that in a capital market day in Q1 2025.

Speaker Change: In these graphs you can see that over the past six months, we increased forward nickel hedges in particular for iridium in 2007, and even in 2008 now.

Speaker Change: Now when situations are difficult of some areas are not going as planned it's always tempting to look at the things that can be better that's human that must be that way.

Speaker Change: And across the entire period for gold and silver.

Speaker Change: We also increased for retention for platinum, but to a lesser extent as we expect more upside on this network given its usage for future usage in fuel cell catalyst applications.

Speaker Change: At the same time, we should also remind ourselves what we do have and also focus on the strong fundamentals that we are building on.

Speaker Change: These metal hedging approach enables us to protect future cash flows from metal price volatility and it also provides better visibility on our future earnings.

Speaker Change: Our three other business groups are performing well they are world class businesses and they really are the bedrock of the company and this helps us to go through this more difficult moments, especially for our battery materials business.

Speaker Change: So here I would like to conclude this section of the financial performance and hand, it back to Bob. Thank you yes. Thank.

Speaker Change: Another strong fundamentals and our organization is our people.

Bob: Thank you one us for that.

Now have to look at the outlook for 2024.

We have a deep expertise we have a deep knowledge and this is what you hit each and every time when you talk with industry participants out there that credibility that we have.

Bob: So based on the performance in the first half of the year and assuming precious metal prices remain at current levels for the remainder of the year.

Speaker Change: I also have seen from our Cogs, the resilience and the courage.

Speaker Change: Umicore Reconfirms that it anticipates 2020 for group adjusted EBITDA to be within a range of 760 to 800 million.

Speaker Change: And the willingness to succeed and we're going to face. These challenges head on and have full trust that together, we'll get through this step by step day by day.

Speaker Change: So for the battery materials business, we are expecting volumes.

Speaker Change: Today is a period of repositioning for sizing opportunities, which will come in the future if that <unk>, we will be ready.

Bob: In line or slightly below versus last year.

Bob: We will have an EBITDA around breakeven with a one of a 50 million Euro which is positive included in that number.

So thank you for that.

Speaker Change: I would like now to go to Q&A.

For catalysis, we are expecting the EBITDA of the business group 2024 to be in line with the previous record year.

Thank you.

Speaker Change: A reminder, if you would like to ask a question. Please signal by pressing star one on your telephone keypad kindly limit to one question.

Bob: And this despite the lower price environment.

Bob: For the recycling business units, the EBITDA will be below the level of previous year, but broadly in line with the current markets expectations.

Speaker Change: We will take the first question from the line runoff from Citi. Your line is open now. Please go ahead.

Bob: And for specialty materials and also the expected EBITDA will be below <unk>.

Speaker Change: Your line is open. Please go ahead.

Bob: Last year and this is somewhat below the current market expectations.

Bob: So now before going to the Q&A I would like to still make a wrap up.

Bob: So what we're sharing with you right now.

Speaker Change: There is no response from Ron offline, we will take the next question from Jason <unk> from Jpmorgan. Your line is open. Please go ahead.

Bob: First thing to remember is that we are adjusting to the new reality and battery materials.

Jason: Yeah, Hi, Thanks for taking my question I was just.

The market situation has changed its affecting the overall industry and also umicore has to react to that and respond to that and see that reality. That's what we are doing and we're taking actions immediately.

Jason: Just wondering first just coming to your auto catalyst business pretty strong margins.

Jason: Is this all underlying or was there some unique specific one off that may have supported the numbers because clearly the margins in New York at this business has been surprising.

Bob: We have price we have actually shared with you today our view on 2024, we have shared with you a base scenario.

Bob: We have today.

Jason: On the upside now for the last two three years consistently and.

Bob: Trax and footprints that we have.

We have mentioned to you that there is a significant painful impairments that we have been taken.

Speaker Change: And just in the context of some recent data, suggesting maybe things are worsening in autos can you also remind us.

Bob: And therefore, we know from this basis, we'll continue to review our battery materials business.

Speaker Change: Does this indicate to us what you see in the business as we look into <unk>.

Bob: And I'll come back to that in a capital market day in Q1 2025.

Speaker Change: Third quarter at this point.

Speaker Change: Just coming back to battery materials, it feels like at the moment the S U R.

Bob: Now when situations are difficult of some areas are not going as planned it's always tempting to look at the things that can be better that's human that must be that way.

Speaker Change: Adjusting to the new reality, but it doesn't feel like you are taking any dramatic actions at this point in terms of footprint optimization.

Bob: At the same time, we should also remind ourselves what we do have and also focus on the strong fundamentals that we are building on.

Speaker Change: Exit to exit or if anything youre, saying Youre EBIT will remain.

Speaker Change: Hello greatly breakeven now till 2026, so is it the base case for Umicore now to just rate.

Bob: Our three other business groups are performing well they are world class businesses and they really are the bedrock of the company and this helps us to go through this more difficult moments, especially for our battery materials business.

Speaker Change: For the market to recover and then participate in that recovery is that the maybe.

Speaker Change: Maybe we should think about your battery motor your strategy going forward.

Bob: Another strong fundamentals and our organization is our people.

Speaker Change: Yes, thank you for that and maybe want us to take the first part on the on the auto cats.

Bob: We have a deep expertise we have a deep knowledge and this is what you hit each and every time when you talk with industry participants out there that credibility that we have.

Speaker Change: Creating the financials, yes sure Bob.

Speaker Change: Looking at automotive catalyst on the one hand, we have.

Bob: I also have seen from our Cogs, the resilience and the courage.

Bob: The volumes and the revenues.

Speaker Change: We are at a level, where the volumes are peaking in 2004, you see that the voluntary consumption somewhat come down at the same time structurally in catalysis.

Bob: And the willingness to succeed and we're going to face. These challenges head on and have full trust that together, we'll get through this step by step day by day.

Speaker Change: <unk> has been working on ESG and ESG consisted of different components first of all these are top line looking at the pricing element.

Bob: Today is a period of repositioning for sizing opportunities, which will come in the future if that <unk>, we will be ready.

Speaker Change: The teams have been very active in pricing.

Bob: So thank you for that.

Speaker Change: Plus I would say also including additional elements in the pricing, but also if you look at procurement and procurement of raw materials raw materials used in production and.

Speaker Change: I would like now to go to Q&A.

Speaker Change: Thank you.

Speaker Change: A reminder, if you would like to ask a question. Please signal by pressing star one on your telephone keypad kindly limit to one question only.

Speaker Change: And in the product.

Speaker Change: <unk> are also subject to negotiation to price negotiations.

Speaker Change: We will take the first question from the line runoff from Citi. Your line is open now. Please go ahead.

Speaker Change: And also looking at efficiency in the process. This is a continuous improvement continues to be made in order to drive the cost down so it's really a structural improvement of.

Speaker Change: The year of the quality of earnings I think also looking at the return on capital employed what we also see is that the team is working on the networking capital so reducing inventory necessary.

Speaker Change: Your line is open. Please go ahead.

Ross: Ross the operations.

Ross: It also can payment terms, which suppliers improving those payment terms also in helping to bring down the net working capital. So it also plays into the overall equation looking at grocery.

Speaker Change: There is no response from Ron offline, we will take the next question from Chetan <unk> from Jpmorgan. Your line is open. Please go ahead.

Chetan: Yeah, Hi, Thanks for taking my question.

Speaker Change: Exactly exactly.

Speaker Change: Just wondering first just coming to your auto catalyst business pretty strong margins.

Speaker Change: This is basically the result in an applause too to the many colleagues and the change in culture that we have over the last three years in that business. So going forward. Please don't only look at top line, but also look at the structural improvements in the quality of earnings and basically the lower PGM dependency that we will see going forward. So yes.

Is this all underlying or was there some unique specific one off that may have supported the numbers because clearly the margins in New York at this business has been surprising.

Speaker Change: On the upside now for the last two three years consistently and.

Speaker Change: We are proud of that and yes, it's exceptional.

Speaker Change: And just in the context of some recent data, suggesting maybe things are worsening in autos can you also remind us.

Speaker Change: The merit of hard work and the position that we have in the industry. Now your question on <unk> is that in our forecast we did factor in some slowdown in the in those sales. So we see some softness in the market is still not at the level of 2019, that's for sure and we also see that in overall the average lifetime.

Speaker Change: Does this indicate to us what you see in the business as we look into <unk>.

Speaker Change: Third quarter at this point.

Speaker Change: Just coming back to battery materials, it feels like at the moment the SCR.

Speaker Change: <unk> is now 12 years instead of 10 years. So we do see that in this macroeconomic environment.

Speaker Change: Adjusting to the new reality, but it doesn't feel like you are taking any dramatic actions at this point in terms of footprint optimization.

Speaker Change: Consumers have been postponing already quite a while buying a new car. So I am not sure how the next years will evolve, but if these consumers ultimately buy a new car. This could lead to upside for this business potentially later on especially if the electrification growth rates would remain.

Speaker Change: Exit to exit or if anything youre, saying your EBIT will remain.

Speaker Change: Hello greatly breakeven now till 2026, so is it the base case for Umicore now to just rate.

Speaker Change: For the market to recover and then participate in that recovery is that the maybe.

Speaker Change: A bit more muted as they are looking now today.

Speaker Change: Maybe you should think about your battery motor your strategy going forward.

Speaker Change: Now coming to your question on the battery materials.

Speaker Change: <unk>.

Speaker Change: One I've been focusing on for the first.

Speaker Change: Yes, thank you for that and maybe one of still take the first part on the on the auto cats.

Speaker Change: Months that I'm here now it's now roughly two five months if I'm calculating in the railway.

Creating the financials, yes sure Bob.

Speaker Change: Is that we want we want to bring clarity and amusing layered structured approach. So first clarity on 2024, that's what the market needs immediately that's what we need to do we brought that clarity.

Speaker Change: Looking at automotive catalysts on the one hand, we have the volumes and the revenues.

Speaker Change: We are at the level, where the volumes are peaking in 2004, you'll see that the voluntary consumption somewhat come down at the same time structurally in catalysis. The teams have been working on ESG and ESG consisted of different components first of all is a top line looking at the pricing element.

Speaker Change: Now secondly, we're taking stock of what we have and we've looked at the customer commitments to customer contracts that we have.

Speaker Change: On which we've built and we look at the capacity that we have available in China Korea.

Speaker Change: The teams have been very active in pricing.

Speaker Change: And of course, Europe, we brought those together in our base scenario and this is the basis from which we now continue our battery materials review.

Speaker Change: Plus I would say also including additional elements in the pricing, but also if you look at procurement and procurement of raw materials raw materials used in production and in the product. Those are also subject to negotiation to price negotiations and also looking at efficiency in the process. This is where continuous improvement continue.

Speaker Change: So you should not read any conclusions in these statements.

Speaker Change: It's the base from which we are starting our review we're looking at many opportunities many different scenarios and we will be further refining those as we go forward in the next months and our conclusions will come in Q1 2025, we're following a structured detailed process.

Speaker Change: So you can make in order to drive costs down. So it's really a structural improvement of the year of the quality of earnings I think also looking at the return on capital employed what we also see that the team is working on the networking capital so reducing inventory necessary.

Speaker Change: <unk>, that's what we do here at chemical.

Speaker Change: Across the operations, but also can payment terms, which supplies improving those payment terms also helping to bring down the net working capital. So it also plays into the overall equation looking at protein.

Speaker Change: And we will take our time and that's why I decided that the capital markets day, It will be in Q1 2025.

Speaker Change: Okay.

Speaker Change: So can I confirm so are you, saying the numbers you are putting in the slide which is EBIT are anticipated to be below breakeven in 'twenty five and 26, that's before any actions that you might take.

Speaker Change: Yes.

Speaker Change: Exactly exactly.

Speaker Change: I think this is basically the result in an applause too to the many colleagues and the change in culture that we have over the last three years in that business. So going forward. Please don't only look at top line, but also look at the structural improvements in the quality.

Speaker Change: Yesterday the accretive.

Speaker Change: Exactly and Thats, a very important market to make here and would have been better if asphalt at myself, but indeed this is the assumption for the base plan. So any further actions.

Speaker Change: Quality of earnings and basically the lower PGM dependency that we will see going forward. So yes, we are proud of that and yes, it's exceptional.

Speaker Change: Talking about cost improvements talking about.

Speaker Change: Well bigger decisions as you are more bold decision as you referred to it are not included in that so this is what we know to date with what we have today without doing any further actions.

Speaker Change: That's the merit of hard work and the position that we have in the industry.

Speaker Change: Now your question on <unk> is that in our forecast we did factor in some slowdown.

Speaker Change: Okay and last question sorry, not to give I'm sure. This question as well in terms of your take or pay agreements.

Speaker Change: And those sales so we see some softness in the market. We are still not at the level of 2019, that's for sure and we also see that in overall the average lifetime of a car is now 12 years instead of 10 years. So we do see that in this macroeconomic environment consumers.

Speaker Change: Have you really retested them industry market scenario, because we've seen in the past with Umicore.

Speaker Change: The take or pay agreements have on hold.

Speaker Change: Consumers have been postponing already quite a while buying a new car. So I am not sure how the next years will evolve, but if these consumers ultimately buy a new car. This could lead to an upside for this business potentially later on especially if the electrification growth rates would remain.

Speaker Change: Haven't had in the past.

Speaker Change: So I guess this is the concern that why would customers hold them in this environment.

Speaker Change: Well.

Chatham: There is a reason why they are take or pay mechanisms Chatham.

Speaker Change: The reason is that the battery materials business is a nascent business that means supply chain has to be shaped and if you want to do investments there has to be an outlook on offtake right and it has to be a level of security because I mean these are business. These are expensive and these are huge investments that we're making right now.

Speaker Change: A bit more muted as they are looking now today.

Speaker Change: Now coming to your question on the battery materials.

Business.

While I've been focusing on for the first.

Speaker Change: Months that I'm here now it's now roughly two five months if im calculating in the railway.

Speaker Change: That's why these contracts have been drafted that way that.

Speaker Change: That is the underlying spirit of both parties signing these contracts and both parties have signed knowingly. These contracts I can confirm that today. These contracts are in full force and.

Speaker Change: And of course that we will stand by these contracts and there is not any discussion ongoing on these mechanisms as we speak.

Speaker Change: Now secondly, we're taking stock of what we have and we've looked at the customer commitments to customer contracts that we have.

Speaker Change: On which we've built and we look at the capacity that we have available in China Korea.

Speaker Change: Thank you.

Speaker Change: And of course, Europe, we brought those together in our base scenario and this is the basis from which we now continue our battery materials review.

Speaker Change: Thank you we will take the question. The next question from Ryan <unk>.

Speaker Change: <unk> from Citi. Your line is open now please go ahead.

Ryan: Hi, there can you hear me now.

Speaker Change: So you should not read any conclusions in these statements.

Speaker Change: Yes, yes, welcome yes, great. Thanks for the question so.

It's the base from which we are starting our review we're looking at many opportunities many different scenarios and we will be further refining those as we go forward in the next months and our conclusions will come in Q1 2025, we're following a structured detailed process.

Speaker Change: Firstly just on <unk>.

Speaker Change: On on way I mean, I guess in light of the discussions today I mean, what should we make of the recent press articles.

Speaker Change: Regarding <unk> scoping, new sites in Canada talking to the government and.

Speaker Change: In the north.

Speaker Change: North, Spain as well.

Speaker Change: Does that sort of signal a shift to even more reliance on jv's.

Speaker Change: <unk>, that's what we do here at Umicore.

Speaker Change: And we will take our time and Thats why I decided that the capital markets day, It will be in Q1 2025.

Speaker Change: The partnership funding.

Speaker Change: Second question.

Speaker Change: Yeah.

Speaker Change: Given maybe now feels like the time to transparency I mean can you give more specifics on what the positive one offs in battery materials.

Speaker Change: So can I confirm so are you, saying the numbers you are putting in the slide which is EBIT anticipated to be below breakeven in 'twenty, five and 26% that's before any actions that you might take.

Speaker Change: Last year.

Speaker Change: And then thirdly could you just talk about the mood across the employee base in the company given our struggles in battery materials and how he will sort of supporting that thank you.

Speaker Change: Yes.

Speaker Change: Exactly and Thats, a very important market to make here and would have been better if asphalt up myself, but indeed this is the assumption for the base plan. So any further actions.

Speaker Change: Yes.

Speaker Change: Thank you indeed on iron way.

Speaker Change: Talking about cost improvements talking about.

Speaker Change: Bigger decisions as you are more bold decisions as you referred to it are not included in that so this is what we know today with what we have today without doing any further actions.

Speaker Change: Their position and their belief in that path and as you know <unk> is a joint venture that we have together with powerful and our conversations are and a positive <unk>.

Speaker Change: Okay and last question sorry, not to give I'm sure. This question as well in terms of your take or pay agreements.

Speaker Change: Have you really read tested them industry market scenario, because we've seen in the past with Umicore.

Speaker Change: Garrett we continue on our path.

Speaker Change: We have included in our base scenario is what we know today the waste that we are building and basically committing to at this point in time.

Speaker Change: The take or pay agreements have and hold.

Speaker Change: Haven't had in the past.

Garrett: Anything that would come in the future would come on top of course of that base model, which is not included.

Speaker Change: So I guess this is a concern that why would customers hold them in this environment.

Speaker Change: Today, So we stand by our <unk> joint venture and of course, we're looking into different options and scenarios as any other joint venture will do together with the other shareholder.

Speaker Change: Well.

There is a reason why they are take or pay mechanisms checkup.

Speaker Change: So yes, we're still very excited about this venture.

Speaker Change: Now maybe on that on your question on the.

Speaker Change: For 2023, one offs could you please take that one.

Speaker Change: Yes, so looking at transparency in looking at.

Speaker Change: Showing better the underlying performance.

Speaker Change: That's why these contracts have been drafted that way that.

Speaker Change: Have decided today is to show 24 to break up the business groups into bathroom teas, and specialty materials and also to be explicit on 2000 and for what our 80 unusual elements and this is something we highlighted earlier.

Speaker Change: And of course that we will stand by these contracts and Theres not any discussion ongoing on these mechanisms as we speak.

Speaker Change: And it goes up.

Speaker Change: June now today, we are further in setting that based on looking at the baseline that led to the embedded also here, we're trying to create clarity tragically transparency on where we are so going forward. We will focus on 24, explaining what is driving the results the underlying performance.

Speaker Change: Thank you.

Thank you.

Speaker Change: Thank you we will take the question. The next question from Ryan.

Runoff from Citi. Your line is open now please go ahead.

Speaker Change: Where we are at 24 weeks versus the baseline that we will welcome.

Ryan Runoff: Can you hear me now.

Speaker Change: Yes, yes welcome.

Speaker Change: Yes, so thank you want us and regarding the mood of the employee base.

Ryan: Yeah, great. Thanks for the question so.

Speaker Change: Firstly just on <unk>.

Speaker Change: Well I came a bit to it in my.

Speaker Change: On on way I mean, I guess in light of the discussions today I mean, what should we make of the recent press articles regarding <unk> skirt to new sites in Canada talking to the government.

Speaker Change: Concluding slides I'll wrap up slides.

Speaker Change: And of course, everybody recognizes that the situation, where we are with battery materials is not where we want to be of course. This is not fund we understand the seriousness and yes.

Speaker Change: North.

Speaker Change: North, Spain as well.

Speaker Change: Does that sort of signal a shift to even more reliance on jv's.

Speaker Change: That impacts our colleagues now what I've seen in the last two months as an enormous resilience I mean, when I walk through the corridor here in the office or I go into the plants.

Speaker Change: Partnership funding.

Speaker Change: Second question.

Speaker Change: Given you know maybe now feels like the time to transparency I mean can you give more specifics on what the positive one offs in battery materials.

Speaker Change: People come to me and say, but we're going to do this together I mean, we know that in difficult times. We are at our best So I feel a lot of resilience a lot of passion a lot of belief and I truly feel that we are uniting throughout the group. The group together wants to win the group together at once to get through this more difficult times.

Speaker Change: Last year.

And then thirdly could you just talk about the mood across the employee base in the company given the struggles in battery materials and how he was sort of supporting that thank you.

Speaker Change: We will have to make tough decision that's real we're open to that our colleagues know that.

Speaker Change: Yes.

Speaker Change: Thank you indeed on Iowa.

Speaker Change: But we are resilient we have experience.

Speaker Change: I think you also saw the news article that came out yesterday with the CEO bloemer from the from powerful I mean, they still see a very strong trend going forward the reconfirm their position and their belief in that path and as you know <unk> is a joint venture that we have together with powerful and our conversations.

Speaker Change: We are strong we have a basis to grow from with a contract that we have and throughout the group.

Speaker Change: I feel the support and we will get through this day by day step by step.

Speaker Change: Great. Thank you very much but maybe I could just try and clarify one more time I mean, the positive one off in 2023 was up bigger or smaller than the 50 million positive one off this year.

Speaker Change: R and a positive spin.

Speaker Change: Spirit, we continue on our path.

Speaker Change: What we have included in our base scenario is what we know today the waves that we are.

Speaker Change: It was substantially essentially larger yes.

Speaker Change: <unk> and basically committing to at this point in time.

Speaker Change: Great. Thank you and as we said at the time it was driven by the by the lithium margin, but also looking at some of the valor origination we did on the scraps containing lithium that also helped.

Speaker Change: Anything that would come in the future would come on top of course of that based model, which is not included.

Today, So we standby our iron way in joint venture and of course, we're looking into different options and scenarios as any other joint venture will do together with the other shareholder.

Speaker Change: Thank you very much.

Speaker Change: Thank you we will take the next question from the line.

Speaker Change: From Bank of America. Your line is open now please go ahead.

So yes, we're still very excited about this venture.

Speaker Change: Hi, Good morning. This is we're speaking I've got a couple of questions. Please my first one is on the battery cables impairment.

Speaker Change: Now maybe on that on your question on the.

Speaker Change: For 2023, one of which you would expect that one.

Speaker Change: Yes, so looking at transparency in looking at.

Speaker Change: The impairment is mainly on the Asia assets and why do you think the European ones, maybe aren't the same at some point given we're seeing similar trends.

Speaker Change: Showing better the underlying performance.

Speaker Change: We have decided today is to show 24 to break up the business group into bathroom teas, and specialty materials and also to be explicit on 2000 and for what our 80 unusual elements and this is something we highlighted earlier.

Speaker Change: The European market in terms of shifts in battery technology.

Speaker Change: My second question is.

Speaker Change: It's a bit more on the value creation of nature of the business and so now you've pushed out when do you think this business will make its cost of capital, which is the last days of the decade.

Speaker Change: And it goes up.

Speaker Change: June now today, we are further in setting that based on looking at the baseline that led to the embedded also here, we're trying to create clarity and client tragically transparency on where we are so going forward. We will focus on 24, explaining what is driving the results the underlying performance in that.

Matt: Matt. This is just one year ago, when that was expected to be closer to mid decade. How convinced are you internally in this projection and therefore, whether this is a good business to pay and when things can change so clearly.

Speaker Change: And just following up on that over the past one month since the faster the market bought evs have arguably become less ice maybe about <unk> and.

Speaker Change: We also had 24 hours versus the baseline that we will welcome.

Speaker Change: Yes, so thank you want us and regarding the mood of the employee base.

Speaker Change: Well I came a bit to it in my concluding.

Speaker Change: One H result, we can see that the restaurant, you're making in catalysis and PGM recycling, a brilliant F 40% in catalysis and 70% in recycling annual essentially recycling cash at that entity business that made a negative 5% rocky at the first half, which obviously is onto adding.

Speaker Change: Concluding slides I'll wrap up slides.

Speaker Change: And of course, everybody recognizes that this situation, where we are with battery materials is not where we want to be of course. This is not fund we understand the seriousness and yes.

Speaker Change: Internally what are the debates you having as to why you think this is a good business to pain, rather than an exit or sale from the assets.

Speaker Change: People come to me and say, but we're going to do this together I mean, we know that in difficult times. We're at our best So I feel a lot of resilience a lot of passion a lot of belief.

Speaker Change #100: Okay, maybe let me start with the impairment exercise.

Speaker Change #101: So looking at the impairment exercise what we did is we looked at the existing assets and the existing contract and as you know and looking at the existing business.

Speaker Change: And I truly feel that we are uniting throughout the group the group together wants to win the group together at once to get through this more difficult times.

Speaker Change #102: We have the China volumes that did not take off this year, we have legacy contracts that are tailing off and we also have the the other contracts, where we expect Italy.

Speaker Change: We'll have to make tough decision that's real we're open to that our colleagues know that.

Speaker Change: But we are resilient we have experience.

Speaker Change #102: Delay over 18 months. So this is something we take into account when looking at baseline.

Speaker Change: We are strong.

Speaker Change: We have a basis to grow from with a contract that we have and throughout two group I feel the support and we will get through this day by day step by step.

Speaker Change #102: At the same time.

Speaker Change #102: We also assume that we will minimize.

Speaker Change #102: Expenses going forward that we will use the existing asset base, So basically Europe Korea.

Speaker Change: Great. Thank you very much but maybe I could just.

Speaker Change #102: In China.

Try and clarify one more time I mean, the positive one off in 2023 was up bigger or smaller than the 50 million positive one off this year.

Speaker Change #102: And based on the current volume.

Speaker Change #102: Commitments and volume projections.

Speaker Change #102: In line with your current investment base, we also reduced substantially dose dose volume projections now if you look at the final picture, where you land.

Speaker Change: It was substantially is substantially larger.

Speaker Change: Great. Thank you and as we said at the time it was driven by the by the lithium margin, but also looking at some of the Dell organization. We did on the scraps containing lithium that also helped.

Speaker Change #102: And the impairments till you get to I think this is driven by a couple of elements first of all the assets in China, where we believe in the base case.

Speaker Change #102: We assume that those will remain under utilized and so that is driving.

Speaker Change: Thank you very much.

Speaker Change: Thank you we will take the next question from the line.

Speaker Change #103: <unk> parts or a large share of the impairment and this is why we also highlight is mainly related to Asia, but also look at the ramp of the rapid ramp of the somewhat slower in Europe. So that also address some of the overall impairment I would say.

From Bank of America. Your line is open now please go ahead.

Speaker Change: Hi, Good morning. This is way of speaking I've got a couple of questions. Please my first one is on the back Timothy Robinson Patman to the.

Speaker Change: The impairment is mainly on the Asia assets and why do you think the European one maybe at the same at some point given we're seeing similar trends.

Speaker Change #104: Looking at the value.

Speaker Change #104: Value creation. So yes, we continue to see in the best case scenario is that there is a value creation towards the end of the decade. So this is again driven by the existing assets that we have and by the contracts that we have some contracts that we announced at the same time. This is a base case scenario based on what we have to date and what we see today, but it.

The European market in terms of shifts in battery technology.

Speaker Change: My second question is.

Speaker Change #104: Also a base for future growth I would say for future.

Speaker Change: That is just one year ago, when that was expected to be closer to mid decade. How convinced are you internally in this projection.

Speaker Change #104: For the strategic review, which is still ongoing.

Speaker Change #104: That's right.

Speaker Change #104: The way you have to <unk> is that the base scenario that we're showing right now is showing what we know today.

Speaker Change: And therefore, whether this is a good business to pay and when things can change so clearly.

Speaker Change: And just following up on that over the past one month since you faster address the market bought Tvs have arguably become less ice maybe about <unk> and.

Speaker Change #104: Alright, we're not saying anything else, we're showing what we have today in the meantime, we're still performing offered strategic review, we are engaging with our stakeholders, we're talking to our customers and the last weeks and months. Besides of course working on all of these things I have been heavily engaging also with our customers and I'm talking here battery.

Speaker Change: One H result, we can see that the west and you're making in catalysis and PGM recycling, a brilliant F 40% in catalysis and 70% in recycling annual essentially recycling cash at that entity business that made a negative 5% rocky at the first half, which obviously is onto adding.

Speaker Change #104: Makers, but also even further downstream Oems.

Speaker Change #104: And I can tell you a bit what was what we were talking about in these meetings.

Speaker Change: Internally what are the debates you having as to why you think this is a good business plan, rather than an exit or sale from the assets.

Speaker Change #104: Clearly everybody was talking about the slowdown electrification.

Speaker Change #104: And those growth rates, everybody was talking about low capacity utilization and we see this across also battery makers, but also.

Speaker Change: Okay, maybe let me start with the impairment exercise.

Speaker Change #104: Based on critical things you can see that also other cathode material make us are facing the same.

So looking at the impairment exercise what we did is we looked at the existing assets and the existing contracts and as you know looking at the existing business.

Speaker Change #104: The second part was them. Okay. We now have these low capacity utilization, how long will it take to get back to a normal situation, that's where a lot of the discussion was revolving them.

Speaker Change: We have the China volumes that did not take us. This year, we have legacy contracts that are tailing off and we also have the the other contracts, where we expect Italy.

Speaker Change #104: But every time in every meeting.

Speaker Change #104: And this is with potential as well as existing customers Europeans or Asians.

Delay over 18 months. So this is something we take into account when looking at baseline.

Speaker Change #104: It always came back to Europe and is that what's your view on Europe, you there have a strong assets in Europe.

At the same time.

Speaker Change: We also assume that we will minimize.

Speaker Change #105: What's your view for instance on local content requirements. So you clearly feel we can clearly feel that these battery producers that is downstream producers are really still arguing.

Speaker Change: Expenses going forward that we will use the existing asset base, So basically Europe Korea.

Speaker Change: In China.

Speaker Change: And based on the current one.

Speaker Change: Commitments and volume projections.

Speaker Change #104: Local supply chains in Europe and.

Speaker Change: In line with your current investment base, we also reduced substantially dose dose volume projections now if you look at the final picture, where you land.

Speaker Change #106: <unk> in these customers and discussion with these customers right. They are really also talking about NMC and they're really saying, okay. We see that you have a plant we see that you have contracts huh.

Speaker Change: And the impairments that you get to I think this is driven by a couple of elements first of all there is the assets in China, where we believe in.

Speaker Change #106: Let's see where we can go.

Speaker Change #108: And therefore as a critical are an important element in our first strategic review, which will take time, because these conversations do take time.

Speaker Change: In the base case.

Speaker Change: We assume that those will remain under utilized and so that is driving.

Speaker Change: <unk> parts or a large share of the impairment and this is why we also highlight it's mainly related to Asia, but also look at the ramp of the rapid ramp of the somewhat slower in Europe. So that also address some of the overall impairment I would say.

Speaker Change #106: It will be.

Speaker Change #107: Reflecting okay. How strong is now there's different saving asset that we have in Europe and I do believe that we have a strong differentiation. We have the biggest operational plans in Europe, we have contracts underpinning and I see that other potential customers, including agents are also clearly into Iraq.

Speaker Change: Looking at the value creation. So yes, we continue to see and the best case scenario.

Speaker Change #107: There will be some LSP, but that's also going to be a big space of NMC and Thats one of our customers.

Speaker Change: As a value creation towards the end of the decade.

Speaker Change: This is again driven by existing assets that we have and by the contracts that we have to some contracts that we have at the same time. This is a base case scenario based on what we have to date and what we see today, but it's also a base for future growth I would say for future.

Speaker Change #107: Tell me and that's why I also have that conviction.

Speaker Change #107: And yes, if you look at the capacity available in Europe. This is way below the growth forecast that also our customers show today for NMC in Europe. So yes.

Speaker Change #107: Still see options beyond this and this gives me conviction of course that we can go to value creation, if that path will not be clear of course, the following a structured process and this will ultimately lead to the goods solution alright.

Speaker Change: The strategic review, which is still ongoing.

Speaker Change: That's right one is and the way you have to <unk> is that the base scenario that we are showing right now.

Speaker Change: Showing what we know today.

Speaker Change #107: Alright, that's on that book.

Speaker Change: Alright.

Speaker Change #107: Now.

Speaker Change: Not saying anything else, we're showing what we have today in the meantime, we're still performing offered strategic review, we are engaging with our stakeholders, we're talking to our customers.

Speaker Change #109: For the rest I think you were talking about the great returns.

Speaker Change #110: And our business and maybe you want us if you would like to say that further so maybe coming to the question around the capital allocation.

Speaker Change: And the last weeks and months Besides of course working on all of these things I have been heavily engaging also with our customers and I'm talking here battery makers, but also even further downstream.

Speaker Change #111: Youre right I mean looking at catalysis look at recycling.

Speaker Change #111: Excellent great business will cause businesses, both water performance.

Speaker Change #112: We allocated capital to battery materials as we also saw and still see a unique positioning.

Speaker Change: Oems.

Speaker Change: And I can tell you a bit what was what we were talking about in these meetings.

Speaker Change: Clearly everybody was talking about the slowdown in electrification.

Speaker Change #112: And a great return targets.

Speaker Change #113: Given the current performance. This is where we are clearly taking actions, where we are slowing down the capex and bedroom fuels, where we are making stock of where we are.

Speaker Change: And those growth rates, everybody was talking about low capacity utilization and we see this across also battery makers, but also.

Speaker Change #112: And looking.

Speaker Change: Based on critical things you can see that also other cathode material makers are facing the same.

Speaker Change #112: How to how to further improve this yet so at this very moment, we have that action of selling down capex in <unk> because of the challenges and we have two strategic review going on exactly want to so basically any capital allocation that you now see the battery materials business will be to finish off our mainly our Korean and European assets too.

Speaker Change: The second part was then okay. We now have these low capacity utilization, how long will it take to get back to a normal situation, that's where a lot of the discussion was revolving them.

Speaker Change: But every time in every meeting.

Speaker Change: And this is with potential as well as existing customers Europeans or Asians.

Speaker Change #112: All the contracts that we have on the <unk> date, because we have strong contracts under the under the belt and the future.

Speaker Change: It always came back to Europe and is that what's your view on Europe, you there have a strong assets in Europe.

Speaker Change #118: Excess or more capital allocation on top of what we do today as part of the strategic review and we'll give you more insights in Q1.

Speaker Change: What's your view for instance on local content requirements. So we are clearly feel we can clearly feel that these battery producers that is downstream producers are really still eyeing.

Speaker Change #114: That's really clear. Thank you I've just got two quick follow up questions. If you don't mind SaaS can you help quantify how much of a drag beyond these lines China PON is on your EBIT for vacuum of tape outs.

Speaker Change: Local supply chains in Europe and.

Speaker Change #115: If you were to just shut the plant down any idea of what uplift with gas and my second question is on the combustion engine outlook are you able to give us anything a bit more NASA and does that cause about housing market.

Speaker Change: <unk> and these customers in discussion with these customers right. They are really also talking about NMC and they're really saying, okay. We see that you have a plan we see that you have contracts huh.

Let's see where we can go.

Speaker Change: And therefore as a critical are an important element in our first strategic review, which will take time, because these conversations do take time.

Speaker Change #121: Has has developed are you seeing any suppliers going into early summer shutdowns.

Speaker Change #116: Some context around that would be would be very helpful. Thank you.

Speaker Change: It will be.

Speaker Change #115: Yes.

Speaker Change: Reflecting okay. How strong is now there's different saving assets that we have in Europe and I do believe that we have a strong differentiation. We have the biggest operational plans in Europe, we have contracts underpinning and I see that other potential customers, including agents are also clearly into Iraq.

Speaker Change #117: Of course talking about specific operations that we typically don't do Scott I understand that this could be interesting information but.

Speaker Change #119: It's also interesting information for more than just broader use. So this this we cannot share now right now of course. This capacity is slowly utilized that's also in the plan, but again. This is not the end point right. We're still looking to enter options. How can we take use of this asset going forward.

Speaker Change: There will be some LSP, but there's also going to be a big space of NMC and Thats one of our customers.

Tell me and that's why I also have that conviction.

Speaker Change #120: This is part of the strategic review and this will lead ultimately to the decisions that we take but today, that's not where we are now if you ask on the evolution in the car market, we do see some softness in the in the last months and that is reflected in.

Speaker Change: And yes, if you look at the capacity available in Europe. This is way below the growth forecast that also our customers show today for NMC in Europe. So yes.

Speaker Change: Still see options beyond this and this gives me conviction of course that we can go to value creation, if that path will not be clear of course that following a structured process and this will ultimately lead to the goods solution alright.

Speaker Change #120: In our forecast and if we assume that the current softness prevails, yes of course, our outlook will stand and that's why we confirm so that's where we are today.

Speaker Change: Alright, that's on that book now.

Speaker Change #122: Okay. Thank you that's very helpful.

Speaker Change: For the rest I think you were talking about the great returns.

Speaker Change #123: Thank you.

Speaker Change #127: Thank you we will take the next question from Charles <unk> from Jefferies. Your line is open now. Please go ahead.

Speaker Change: And our business and maybe want us if you would like to say that further so may be coming to the question on the capital allocation.

Charles <unk>: Hi can you hear me.

Speaker Change #123: Yes.

Speaker Change: Youre right I mean looking at catalysis looking at recycling.

Charles <unk>: Im trying to ask on the impairment can you just asked me on the synergies.

Speaker Change: Excellent great business will cause businesses blockbuster performance.

Speaker Change #125: Just give us any detail on the split between Capex and.

Speaker Change: We allocated capital to battery materials as we also saw and still see a unique positioning.

Speaker Change #126: And inventory adjustments, because I remember two Ceos ago.

Speaker Change #128: That being a an amount of permanently tied up working capital.

And a great return targets.

Speaker Change: Given the current performance. This is where we are clearly taking actions, where we are slowing down the <unk>.

Speaker Change #129: To be capitalized are very very high cobalt cobalt price. So I'm just wondering like how much of this is related to pure capex being taken down and how much is working capital.

Speaker Change: And bedroom deals, where we are making stock of where we are.

Speaker Change: And looking.

Speaker Change: How to how to further improve this so at this very moment, we have that action of selling down capex in <unk> because of the challenges and we have the strategic review going on exactly wanted so basically any capital allocation that you now see the battery materials business will be to finish off our mainly our Korean and European assets too.

Speaker Change #130: As it related to that is essentially how much capex is kind of in the remaining.

Capital employed in the business just so we have a good idea like a run rate DNA right.

Speaker Change #135: That would be my first question and the second one is just in terms of the strategic review I mean.

Speaker Change: All the contracts that we have on the Newbuild to date, because we have strong contracts under under the belt and the future.

Speaker Change #132: All options on the table is option.

Speaker Change #131: Obviously, you've got some very well positioned assets in Europe, I guess, if you think about how attractive some of those are potentially like do they is the idea that you could completely exited the business you could divest of everything and in some ways that is that being considered or is that.

Speaker Change: Excess or more capital allocation on top of what we do today as part of the strategic review and we'll give you more insights in Q1.

Speaker Change: That's really clear. Thank you I've just got two quick follow up questions. If you don't mind SaaS can you help quantify how much of a drag on the slides China PON is on your EBIT for vacuum of tape outs.

Speaker Change #131: Purely is that off the table.

Speaker Change #133: Okay, Let me maybe start with the impairment question.

Speaker Change: If you were to just shut the plant down any idea of what uplift with gas and my second question is on the combustion engine outlet.

Speaker Change #134: Trying to break it down so if you look at the impairment exercise.

Speaker Change #136: And then look at the capital employed before and after the capital employed in battery materials stood at three one and we know it by $1 6 billion noncash.

Speaker Change: But to give us anything a bit more into the third quarter about housing market.

Speaker Change: Has has developed are you seeing any supplier going into early summer shutdowns.

Speaker Change #136: And that brings it down to one five now looking at impairment.

Speaker Change #136: Out of the 1615 is related to non current assets.

Speaker Change: Just some context around that would be could be very helpful. Thank you.

Speaker Change: Yes.

Speaker Change #136: And then if you have this non current assets we have.

Speaker Change #100: Of course talking about specific operations that we typically don't do Scott I understand that this could be interesting information but.

Speaker Change #136: Property plant and equipment, where we took a 1 billion impairment.

And looking at the property plant and equipment before impairment at the end of June we were at $2 billion net book value.

Speaker Change #101: It's also interesting information for more than just broader use. So this this we cannot share now right now of course. This capacity is slowly utilized that's also in the plan, but again. This is not the endpoint right. We're still looking to enter options. How can we take use of this asset going forward.

After the impairment we are now at 1 billion of net book value.

Speaker Change #136: And in talking to the non current inventory.

Speaker Change #136: This is where the permanently tied up inventories in the operations.

Speaker Change #137: Indeed is overvalued, if look at today's metal prices and we talked about cobalt, but we also talk about nickel sorry about lithium so looking at Gordon and lithium.

Speaker Change #102: This is part of the strategic review and this will lead ultimately to the decisions that we take but today, that's not where we are now if you ask on the evolution in the car market, we do see some softness in the in the last months and that is reflected.

Is there.

Speaker Change #137: The overvaluation basically in the Mark to market led to an impairment of 400 million, India independent inventory.

Speaker Change #102: In our forecast and if we assume that the current softness prevails, yes of course, our outlook will stand and that's why we confirm so that's where we are today.

Speaker Change #138: Yes and to your broader question on the strategic review well in essence of course, our strategic review looks at everything right I don't have any preconceived ideas.

Speaker Change #103: Okay. Thank you that's very helpful.

Speaker Change #104: Thank you.

Today. So this openness right now at the same time I also said that we're looking at partnerships.

Speaker Change #104: Thank you we will take the next question is from line Charles Bentley from Jefferies. Your line is open now. Please go ahead.

Charles Bentley: Hi can you hear me.

Speaker Change #138: Along the value chain and you should not read too much and thats as any conclusion on partnering of the business or selling of the business know my belief here is that this is a nascent industry.

Yes.

Speaker Change #106: Im trying to ask on the impairment can you just asked me on the system.

Speaker Change #107: Just to give you any detail on the split between Capex and.

And inventory adjustments, because I remember two Ceos ago, Theyre being an amount of permanently tied up working cap. So they appear to be capitalized are very very high cobalt cobalt price. So I'm just wondering like how much of this is related to pure capex being taken down and how much is working.

Speaker Change #138: That means we have to bring visibility and visibility you can only bring if you built supply chains and that start from all the way from raw materials, all the way to the car Oems and yes, I'm open and probably more open than we were in the past because initially umicore fault to do a lot of things on their own now if there are options.

Speaker Change #107: Capital and as it related to that is essentially how much capex is kind of in the remaining.

Speaker Change #138: In certain sections of the value chain that would trigger more value creation or would unlock more potential we will look into those and we are open are open for these options. So again.

Speaker Change #108: Capital employed of the business just so we have a good idea like a run rate DNA right.

Speaker Change #138: We're looking at this thing Holistically, we have a structured process, we have cleared gates.

Speaker Change #108: That would be my first question and the second one is just in terms of the strategic review I mean, all options on the table is option I mean, obviously, you've got some very well positioned assets in Europe I guess, if you think about how attractive some of those are potentially like do they is the idea that you could completely exit the <unk>.

Speaker Change #138: That we're going through and ultimately that will lead to good decisions on which we will share them the direction on the outcome.

Speaker Change #138: Q1.

Speaker Change #138: Okay.

Speaker Change #138: Thanks very much.

Speaker Change #109: <unk> you could divest of everything and in some ways that is that being considered or is that.

Speaker Change #139: Thank you as a reminder, if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker Change #110: Purely is that off the table.

Speaker Change #109: <unk>.

Speaker Change #111: Okay, Let me maybe start with the impairment question.

Speaker Change #112: To break it down so if you look at the impairment exercise.

Speaker Change #140: It appears no further questions at this time I will hand, it back over to your host thank you.

Speaker Change #113: And then look at the capital employed before and after the capital employed in battery materials stood at three one and we know Empire $1 6 billion noncash.

Speaker Change #140: Alright, well once more thank you everyone.

And that brings it down to one five now looking at impairment.

Speaker Change #140: Thank you for attending for US this was an important update.

Speaker Change #113: Out of the 1615 is related to a non current assets.

Speaker Change #141: Mexican understands.

Speaker Change #142: Some of you will see still in the days to come but for everybody online. Thank you for being here and I wish you all a wonderful day.

Speaker Change #113: And then if you have this non current assets we have.

Property plant and equipment, where we took a 1 billion impairment.

Thank you for participating today's call you may now disconnect.

Speaker Change #113: And looking at the property plan and equipment before impairment at the end of June we were at $2 billion net book value.

Speaker Change #142: [music].

After the impairment we are now at 1 billion of notebooks.

Speaker Change #113: And in talking to the non current inventory.

Speaker Change #113: This is where the permanently tied up inventories in the operations.

Speaker Change #113: Indeed is overvalued, if look at today's metal prices and we've talked about cobalt, but we also talk about nickel sorry about lithium so looking at Gordon and lithium.

Speaker Change #114: Is there.

Speaker Change #114: The overvaluation basically in the Mark to market led to an impairment of 400 million, India on dependent inventory.

Speaker Change #115: Yes and to your broader question on the strategic review.

Speaker Change #115: In essence of course, our strategic review looks at everything right I don't have any preconceived ideas.

Speaker Change #115: Today. So this openness right now at the same time I also said that we're looking at partnerships.

Speaker Change #115: Along the value chain and you should not read too much and thats as any conclusion on partnering of the business or selling of the business know my belief here is that this is a nascent industry.

Speaker Change #115: That means we have to bring visibility and visibility you can only bring if you built supply chains and that starts from all the way from raw materials, all the way to the car Oems and yes, I'm open and probably more open than we were in the past because initially umicore fault to do a lot of things on their own now if the option.

Speaker Change #115: <unk>.

Speaker Change #115: In certain sections of the value chain that would trigger more value creation or would unlock more potential we will look into those and we are open are open for these options. So again, we're looking at the screen Holistically, we have a structured process we have cleared gates.

That we're going through and ultimately that will lead to good decisions with with on which we will share them the direction and the outcome.

Speaker Change #115: Q1.

Speaker Change #115: Okay.

Speaker Change #116: Thanks very much.

Speaker Change #117: Thank you as a reminder, if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker Change #118: It appears no further question at this time I will hand, it back over to your host thank you.

Speaker Change #118: Alright, well once more thank you everyone.

Speaker Change #118: Thank you for attending for US this was an important.

Speaker Change #119: Updates Mexican understands.

Speaker Change #120: Some of you will see still in the days to come but for everybody online. Thank you for being here and I wish you all a wonderful day.

Speaker Change #121: Thank you for participating today's call you may now disconnect.

Speaker Change #120: [music].

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