Full Year 2024 Umicore SA Earnings Call
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Hello, and welcome to the Umicore full year 2020, followed results my name is <unk>.
For today's event.
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Today, we have whatsapp shiel, and once before and CFO as shopping centers.
Speaker Change: I'll hand, you over to your host, but SAP to begin today's conference. Thank you.
Speaker Change: Hello, Good morning, everyone and welcome to our full year results, our 2024th a cool. So today, we have the following agenda for you available first of all we're going to look at some of the key figures and our full year highlights then I'll go with a bit more of a business with you.
Speaker Change: Those will come back with the financials with you.
Speaker Change: Then I'll return with the outlook 2025, we will wrap it up and then I look forward on the Q&A together with you.
Speaker Change: So let's have a look at the highlights of our 2024.
Speaker Change: So revenues for the group came in at $3 5 billion Euro.
Speaker Change: We had still an EBITDA of 763 million euro for the year EBITDA margin to 22%.
Speaker Change: Instead of strong operational cash flow of 384 million Euro Capex came in at 555 million Euro well below the new targets, we set of 660 million euro at the midst of the year that we start to come in below that 650, we came in at $5 65.
Speaker Change: We have return on capital of 12, 3% and a leverage ratio of a $1 nine roughly.
Speaker Change: Now if I have a first glance at our foundation businesses and that are really really would like to highlight that we have here a strong and robust performance of the foundation business in catalysis, we are publishing EBITDA margins close to 26% return on capital of.
Speaker Change: More than 40% despite the slower internal combustion engine market for recycling return on capital close to 80% EBITDA margin after.
Speaker Change: Sorry is there anything on the line.
Speaker Change: Okay.
Speaker Change: <unk> of 36%.
Speaker Change: And here, we have seen a lower revenues in the recycling segment with our come to that later all specialty materials EBITDA margin came in below 20% and return on capital of 9%. This is not where we want to be and this is mainly related to cobalt cobalt <unk> specialty materials, all of which I will give a bit more color also.
Speaker Change: After all.
Speaker Change: Now if he doesn't look of course, our battery materials and this is a business on which we already exchanged quite a bit over the last two quarters.
Speaker Change: And this business as you all know is characterized by a slowdown in demand for electric vehicles and this also has a reflection on the ramp up of our customers and the volume developments at Umicore.
Speaker Change: Now as you all know we have the strategic review ongoing and we're finalizing that one and I really look forward to exchanging with you all on these key messages of course and the upcoming capital market stay in the end of March.
Speaker Change: In the Meanwhile.
Speaker Change: <unk> not waiting of course to see them be updates we have been targeting all our capex and these came in 35% lower year on year.
Speaker Change: And this excludes still an equity contribution of 175 million Euro to watch on expansion with I N way with a specific Oh God of course coming with that joint venture.
Speaker Change: We also announced that we're going to pass the battery materials plant construction in Canada and I'm also of course pleased to share that we were successful in integrating these customer contracts in all our plants in Korea. So always in the spirit of filling our capacity utilization in line with our customer commitments.
Speaker Change: Now we also happen to be aligning our operations, there's of course, reflecting the base or the slow the ramp up of a customer.
Speaker Change: Adjusted Oh, one even projections.
Speaker Change: We are focusing with our capex expansion is really on the existing footprint. So MISO.
Speaker Change: And Korea that spread the Capex, it's going.
Speaker Change: Next of course, the standard maintenance Capex that we foresee for the business now.
Speaker Change: Now if you look at the 'twenty 'twenty four is adjusted EBITA for battery materials. We gave you an updated guidance at the mid year.
Speaker Change: Come and go.
Speaker Change: Loss to breakeven for the year end and that is also what we see for the business now at the close of the year.
Speaker Change: Of course, I also would like to come back on the very painful $1 6 billion of impairments, which we had to take and H. One we all know that this is not where we want to be but we will continue to focus on that as Iot coffee for this business.
Speaker Change: Now at group level of course, we did not just focus on battery materials, we have been significantly stepping up our efficiency and cost saving measures across the group, we accelerated even more in the second half of the year and we came in with 100 million EBITDA on efficiency and value based initiative.
Speaker Change: That's realized in this 100 million EBITDA well ahead of the 17 billion targets, we had put for ourselves.
Speaker Change: Now transiting to the dividends, we know that the environment around us at this point in time remains uncertain, we have a delayed ramp up with our customers.
Speaker Change: And also on earnings.
Speaker Change: As a consequence have dropped significantly for 2024 and that context, the supervisory board proposes across annual dividends or 50, Europe, a shared which is 25 cents on top of the earliest Bates interim dividends over summer.
Speaker Change: Now there's still represents a payout ratio of 47, 47% all of the current Ah that's earnings are bullshit.
Speaker Change: The supervisory board also intends to reset.
Speaker Change: Annual baseline for the dividends at 50 cents per share and that is well in line with the ongoing policy of a stable or rising.
Speaker Change: That's.
Speaker Change: Let me now zoom in a bit more on the different business segments.
Speaker Change: Battery materials.
Speaker Change: So.
Speaker Change: We clearly have a decrease in revenues and EBITDA for battery materials compared to the previous gifts and let me start off but if the revenues.
Speaker Change: We know that we have lowered our sales forums, we did basically discussed already on that before as well we have a lower refining income.
Speaker Change: And this was mainly reflecting the slowdown in the EV sales and also the slower ramp up of our customers and the tailing off of a legacy contract faster than we initially expected.
Speaker Change: Of course also in 2023, there was a nonrecurring effect, which was sizable which is affecting you don't get a comparison if you look at the EBITDA.
Speaker Change: Hmm.
Speaker Change: That also was a substantial nonrecurring effect in 2023, which we will not have a full 2024, and we have been able to partially offset.
Speaker Change: This drop in EBITDA with lower overheads, and a positive one off of roughly 40 million Euro in 'twenty 'twenty four.
Speaker Change: Capex came in at 307 billion Euro well below 2023, and I'll repeat myself focussed on the finishing of the plants in Europe as well as school react to surf against all customer commitments.
Speaker Change: We boast of course the plants in Canada.
Speaker Change: If we now go to catalysis.
Speaker Change: Now lets us have supposed to have looked at the market for catalysis and there we see that's a if we look at 2023 that was roughly 79 million ice vehicles sold.
Speaker Change: And if it doesn't look to the years 'twenty 'twenty four we do see a reduction of close to 3 million vehicles, and especially in the second half of the year.
Speaker Change: We exchanged on that also during the half year than we anticipated in our forecast for the second half and so basically predictions came in according to what we expected at that point in time now let me give some more color on the specifics.
Speaker Change: Markets, Let me start off with China, China was roughly stable in terms of IC production, but underlying there was a significant shift in that market. We clearly see that local Oems Chinese Oems are taking more market share at the expense of western Oems.
Speaker Change: Basically the Army Corps has grown with western Oems in the Chinese market within the last two or three years. We also heavily focused on gaining market share.
Speaker Change: With the local Oems were quite successful with this but despite that we still lost some market share in China, but again, good progression with the local Oems and we remain positive about this market going into 2025.
Speaker Change: In North America are slower contraction of the market and that we lost market share mainly because of an unfavorable customer mix.
Speaker Change: If we then go to Europe, it's the opposite.
Speaker Change: The markets lost close to 7%, but their overall market share a cool for this segment in Japan, and Korea, we performed well, but the market in general dropped by 6% we had strong business in South America as well, but also our market position remains very strong.
Speaker Change: If we then look at the HDD business, we do see a weaker economy being reflected in the H D. D numbers in Europe, but also in China, and then China more specifically, we also see much more <unk> trucks being sold at the expense of HCP. Our production. So this is also an underlying volume affect that place.
Speaker Change: In our business for catalysis.
Speaker Change: No. If you now look at the numbers let.
Speaker Change: Let me talk first of catalysis, as a whole and in catalysis as a whole.
Speaker Change: We also have impacts of course of an exposure to the PGM prices and we are very clear that some of the favorable PGM price lock in effect that we have are tailing off across this business group.
Speaker Change: And find out when the bitch, all the different underlying business groups here as well for automotive catalyst.
Speaker Change: I must say, we had an outstanding performance, which is really reflecting the impact of our structural measures towards efficiency and value orientation also what footprint optimization and are focused on having selected R&D and reduced overhead spend it's really paying off but also the general culture definitely.
Speaker Change: Embedded in this.
Business units.
Speaker Change: It was really showing paying off results with.
Speaker Change: Really impressive results I would say the fuel cells have stationary catalyst that we had basically two elements on the one hand the station that kept the catalyst business performed really strong while the fuel cell business. We saw a slower 2024, mainly related to volumes being lower in China at the back of a subsidy scheme that was.
Speaker Change: Not yet into effects the construction of a fuel cell.
Speaker Change: Plant so the perm fuel cell plant in Changsha in Shanghai, it's progressing well well within budget well bid in time, and we would expect this to become operational in early 'twenty 'twenty six.
Speaker Change: Actually it's metals chemistry that the main impact on our results was basically also the reduction in the PGM prices and vitamins, but we saw a stable sales four o'clock, so what a homogeneous catalysts business.
Speaker Change: Now, let's have a look at recycling.
Speaker Change: For recycling there are two main drivers here first of all we have to highlight that there's an unfavorable trading context, especially for the precious metals management environments.
Speaker Change: Especially for rhodium and Palladium if.
Speaker Change: We then look for instance at precious metals refining they're the main infect a space around forums. So we had the plants shut down in the first half of the year and we had a and operational smelter issue in the second half of the year affecting our.
Speaker Change: The volumes smelter is again of course, well up and running and processing well.
Speaker Change: If you look at the gym business that I would say revenues were stable.
Speaker Change: And so overall, a good business intake and we're happy with the performance of this business 40 years.
Speaker Change: Now, let's have a look at specialty materials specialty materials is the first time that we report full year results on it.
Speaker Change: And here, we see that the performance of specialty materials slightly worse than last year and can mainly be attributed to the business units cobalt <unk> specialty materials, which is the heavy based also in that group.
Speaker Change: Where do we see a weak cobalt and nickel markets are out there and this has of course led to a competitive pressure.
Speaker Change: And then it took optic materials revenues were slightly higher so we continue to grow that with good volumes for the germanium substrates and the recycling business and a good performance of the Internet applications earnings slightly lower because we had some production challenges in the infrared solutions, which are being tackled and really making again.
Speaker Change: Good progress for the years 'twenty to 'twenty, five and M. D S and all in all stable markets, although that the underlying product mix was changing but a good performance for this business unit.
Speaker Change: Well.
Speaker Change: So let me now pass the word to you for more of a deep dive and financials.
Speaker Change: Thank you Bart and good morning to you all.
Speaker Change: I said earlier by Boston in 'twenty, four we faced substantial headwinds in different markets.
Speaker Change: We succeeded in implementing fastball cash saving measures to offset some of these headwinds.
Speaker Change: When we look at their revenues the revenues decreased with 11% year over year and amounted to $3 5 billion euros 424.
Speaker Change: The decrease is primarily reflecting the slowdown in electrification battery materials and the global decline in light duty and heavy duty vehicle predictions in catalysis.
Speaker Change: In recycling revenues were affected by the maintenance shutdown and the less favorable trading environment.
Speaker Change: And revenues in catalysis, and recycling were also impacted by the lower price environment, but our hedging strategy continued to create a substantial support for spot prices in particular for rhodium and palladium.
Speaker Change: The adjusted EBITDA amounted to 763 million euros, which is 209 million below previous year.
Speaker Change: In battery materials volumes weakened in the second half of the year and the year over year comparison was also impacted by the lower level of one offs compared to last year.
Speaker Change: Following the lower than expected growth of electric vehicles, and the delayed ramp up in bedroom meals. We immediately initiated additional measures to adjust our cost basis.
Speaker Change: This included the six review and control of all group wide spending a hiring freeze and additional right sizing of the group.
Speaker Change: As a result, we achieved over 100 million euros in efficiency gains across the group, which is substantially higher than our initial target of 7 billion euros 424.
Speaker Change: In catalysis quality of earnings photos further increased this.
Speaker Change: Despite volumes in PGM prices.
Speaker Change: EBITDA remained roughly flat, which is another impressive performance versus last years record results in a maturing market.
Speaker Change: And corporate net operating expenses improved by almost 10% again, reflecting the efficiency measures taken.
Speaker Change: And EBITDA margin for the group remained strong at 22%.
Speaker Change: Now moving to the consolidated P&L.
Speaker Change: As you can see depreciation and amortization decreased to a level of 285 million euros due to the impairment in battery materials.
Speaker Change: Adjusted EBIT amounted to 478 million euros versus 674 million last year.
Speaker Change: Adjusted net finance costs slightly decreased to 108 million euros. The interest income on our cash deposits went up while the cost of gross debt remained stable.
Speaker Change: The average cost of gross debt amounted to three 2% and is expected to remain well under control given the long term debt maturities and the high share of fixed rate debt.
Speaker Change: The adjusted tax charge decreased to 109 million euros falling to Laura just a textbook profit.
Speaker Change: Due to increased provision for uncertain tax positions the adjusted effective tax rate increased to 29% versus roughly 22% last year.
Speaker Change: Yeah.
Speaker Change: The adjusted net profit group share amounted to 255 million euros, which resulted in an adjusted EPS of one euro and six cents.
Speaker Change: The net result was impacted by adjustments to EBITDA of $1 8 billion euros, which is mainly due to the $1 6 billion noncash impairment and write down in battery materials.
Speaker Change: As a consequence, the net result group share amounted to minus 148 billion euros.
Speaker Change: Now moving to the consolidated balance sheet.
Speaker Change: As you can see property plant and equipment inventory inventories and equity and equity were substantially impacted by the impairment in battery materials.
Speaker Change: Yeah, we'd like to highlight the strong liquidity of the group with a cash position of 2 billion years.
Speaker Change: The average deposit rate increased to three 6%, which is exceeding our cost of debt.
Speaker Change: The gross financial debt increased to $3 4 billion versus $2 6 billion last year.
Speaker Change: Come back to the debt movements later in this presentation.
Speaker Change: The equity of the group amounted to $1 9 billion yours and against the net financial debt of $1 4 billion U S. Net gearing ratio remains balanced at 42, 6%.
Speaker Change: Now on this slide we show the breakdown and the evolution of the free operating cash flow.
Speaker Change: Free operating cash flow for 'twenty four remains strong at 384 million euros.
Speaker Change: We managed to reduce net working capital needs with 392 million viewers across the different businesses. Thanks to a strong focus on timely collection payment terms and inventory management.
Speaker Change: We reduced capex at 303 million euros, or one third versus previous year.
Speaker Change: Including capitalized development expenses amounted to 582 million views and as Bart mentioned earlier it is well below the guidance that we shared during the half year results.
Speaker Change: The reduction in Capex is primarily driven by battery materials. When we passed the investment in Canada, and we also maintained investments in Europe and Korea in line with the long term commercial agreements.
Speaker Change: Now looking at the net cash flow movements.
Speaker Change: As you can see in this bridge the free operating cash flow of 384 million euros did not fully cover the cash out related to taxes and financing the equity contribution of 175 million Europe to Iowa and dividends.
Speaker Change: As a result, the net financial debt increased with 159 million euros and amounted to $1 4 billion views.
Leverage ratio increased to 187 times last 12 months adjusted EBITDA.
Speaker Change: Now we continue to be committed to a strong balance sheet going forward.
Speaker Change: The delayed ramp up in bathroom deals, we accelerated sales initiatives to further reduce ketchup in.
Speaker Change: In 2040 efficiency measures contributed over 100 million euros, capex supposed to use that 35% and working capital needs, where it's used at 392 million euros.
Speaker Change: 425, we target to generate an additional 100 million years of efficiency savings, which come on top of the savings of 24, and we also anticipate to reduce capex with another 20%, maybe even better deals.
Speaker Change: For Iowa, both partners continue to send to the investment through equity injections until the project financing is in place.
Speaker Change: At the start of 'twenty five give me called injected 250 million euros.
Speaker Change: Out of a total plan contribution of 400 million for the full year.
Speaker Change: Both partners are talking to at the non recourse debt financing in place in the second half of 'twenty six.
Speaker Change: Now the combination of all of these measures to support the balance sheet and ensure that the leverage go to make an investment grade territory.
Speaker Change: 25, we expect that the leverage ratio will increase towards the level of 2.5 stopes.
Speaker Change: No as I mentioned earlier the group has a strong liquidity with 2 billion euros cash on balance and on top of that over 1 billion euros of committed and Undrawn long term credit facilities.
Speaker Change: In 'twenty four we successfully raised 750 million of long term debt with European investment bank in the U S private placement.
Speaker Change: And as you can see in this graph the debt maturity profile is well spread with an average maturity of five six years after repayment of the convertible bond in June 25.
Speaker Change: The debt that we need to refine it and 25 and 26 is well covered by the current cash position.
Speaker Change: Now finally, I would like to highlight that in 'twenty four we continue to look and future strategic metal exposure to forward contracts.
Speaker Change: Over the past six months, we increased forward metal hedges in particular for platinum until 28.
Speaker Change: But also for rhodium palladium and silver in 2008.
Speaker Change: And we also initiated the first hedges for 2009.
Speaker Change: The group also manages a portion of its energy price truthful, but some things did they have we have hedged more than 75% of the expected European activity and natural gas consumption until 'twenty seven.
Speaker Change: Thanks to this hedging approach, we protect future earnings from price volatility, but we also increased the visibility on our future cash flows.
Speaker Change: Now before handing it back to Bob for the outlook I would like to repeat that we have taken a wide range of measures to improve the financial performance across the group and to increase the cash generation across the group.
Speaker Change: And this will help us to maintain a robust balance sheet.
Speaker Change: Thank you.
Speaker Change: Yes, Thank you want us and let's know haven't outlook I look at the outlook for 2025.
Speaker Change: So in general we should say of course, that's a there's still limited visibility in the markets I mean still a lot of elements at influx and of course, we will continue our focus on maintaining resilience adaptability and of course, the efficiency and value focused initiatives I talked about earlier.
Speaker Change: So we are guiding a early in the year, giving despite all these uncertainties, we're gaining early in the year.
Speaker Change: We will have group earnings so adjusted EBITDA between 720, and 780 million Euro but.
Speaker Change: But I want to be very explicit on this and that's also why the disclaimer is there. This is not taking into account any markets affects our conditions related to geopolitical tensions or tariffs.
Speaker Change: Hum, which could come into effect in the current markets.
Speaker Change: No.
Speaker Change: For battery materials, we anticipate that the adjusted EBITDA will be in the range of last year, yet without the one off of 'twenty 'twenty four for catalysis earnings are expected to be around the outstanding performance of the previous years recycling earnings will be below 2024.
Speaker Change: Some of these favorable hedging had just PGM hedges are tailing off and in specialty materials will be slightly ahead of last year's earnings.
Speaker Change: We do anticipate that our corporate costs will be down.
Speaker Change: Compared to 2020 full we reduced our capex by another 20% and we are upping our efficiency goal from the initial goal our accumulated for 2025 up 100 million, we upped that to $200 million and this is well integrated into the guidance, we give at group level, So to 722 to 700.
Speaker Change: 80 million Euro.
Speaker Change: Now wrapping up everything a bit up.
Speaker Change: No.
Speaker Change: It's fair to say that 2024 was a sobering and intense year for umicore its shareholders, but also its a its employees. So it was a year marked by significant headwinds.
Speaker Change: And then three during which we had to take difficult decisions and also have had to embed a big part of our battery materials business.
Speaker Change: Despite this challenging context and the slowdown of the EV growth, we really had a solid performance in our foundation businesses.
Speaker Change: We have taken decisive actions in capital discipline and efficiency and cost measures.
Speaker Change: And we are committed to keep a solid balance sheets.
Speaker Change: We are determined to lay the groundwork for the future and I'm looking very.
Speaker Change: Very much forward on exchanging which with you.
Speaker Change: On this during our markets our capital our capital markets day on March 27th in London.
Speaker Change: I continue to believe in the value creation of this great Great group, we have grades.
Speaker Change: But underlying trends that strengthen our position going forward and once again are now open to the Q&A and very much looking forward to exchange on a midterm future during the capital markets our upcoming end of March.
Speaker Change: Thank you very much ladies and gentlemen.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: We will take our first question from runoff or from Citi. Your line is open. Please go ahead.
Speaker Change: Hi, Thanks for taking the question just one on one way. He can you give a bit of an update on the on the program that the timeline.
Speaker Change: And you know why you expect minimum returns to to come on the equity injections. Thank you.
Speaker Change: Good morning.
Speaker Change: Looking at <unk>, we are well on track.
Speaker Change:
Speaker Change: So looking at the capital injection. This is where they kept on injections or what some somewhat more front loaded because the project financing is a process that is lengthy in the montney. So it does take time to put as a to put it into place.
Speaker Change: We have confirmation from banks. If this is a bankable projects. So that gives us the confidence and that's also where both partners are talking to.
Speaker Change: To hefty proteins fats and financing in place as from the second half of 'twenty six looking.
Speaker Change: Looking at the return targets.
Speaker Change: At the same time, we cannot be explicit.
Speaker Change: Or is that too much commercial the details on this but we continue to have trust in the social relationship.
Speaker Change: So that one is of course, that's a value creation, there's always a guiding principle that we have here at Umicore. So also for the item Rachel and friendship.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you we will take our next question from Chetan <unk> from Jpmorgan. Your line is open. Please go ahead.
Yeah, Hi, good morning, I, just wanted to maybe for Scott discuss what are the implications on umicore from any trade tariff store input that you can see on my toes et cetera, how are you.
Speaker Change: Oh, how might you be directly and indirectly impacted from that.
Speaker Change: The other question is.
Speaker Change: I'm, sorry to be a bit blunt here, but.
Speaker Change: And I appreciate you are cutting capex in our battery materials, but it still implies you are probably going to spend 200 million capex in 2025.
Speaker Change: On top of four 9 billion that you are aiming to contribute to the item of H E. B I mean your EBITDA in this business is zero last year was the Oh I'm just curious where is all this I mean I understand that but you know what it's like 200 million on battery materials being spent five.
Speaker Change: Facilities are figured somebody under utilized everywhere. So I'm just curious.
Speaker Change: Why.
Speaker Change: Capex is normally wouldnt.
Speaker Change: Down more than what Youre guiding to.
Speaker Change: Yeah. Thank you for the questions.
Speaker Change: Highly appreciate it so first one of course trade and geopolitical that's of course, a very big question and a not an easy one to answer we have seen for instance are just the movement in steel and aluminium based on certain tariff announcements out we know that for instance, there's also threats against our Mexico and Canada.
Speaker Change: So very difficult to predict how things will move because.
Speaker Change: First of all how will the overall competitive landscape move in such as way, how well metal flows be impacted but here, we really have to focus on our core strengths and of course strength is that we havent ICL footprint from which we can supply.
Speaker Change: Supply customers. We also have a diversified supply basis. So if any countries would be maybe struck or hits with certain tariffs for pjm's than we might have optionality as to supply from a different country, but again.
Speaker Change: He had a number that I would call really in the territory of pure speculation because I have no clue, what the legislative Havent lines and what's potential reactions to some decisions might be from from other countries. So I'm sure. You appreciate that and that's also why we have the disclaimer really oh the outlook because I mean, that's sort of their I would say no.
If you look to the Capex and I N way I mean, I'll take a iwate first I stepped out okay, and we have strong garfields and this comes back to value creation is.
Speaker Change: Is what we focus on as Umicore. So that's really an investment in a in a partnership on the Capex for battery materials for 2025, well first of all let me go to Canada.
Speaker Change: In the sense that we decided not to continue to kind of always Canada to really save significantly on capex because there we would have to spend big if he would have continued with that project. The consequence of course is that we have to repatriate the customer contract into Korea, and that's really a strong proof point that was really a success that we were able to do that but in order to do.
Speaker Change: Against this future customer commitments, we do have to Debottleneck. The plant in Canada are sort of in Korea, and that's where of course capex ex schooling and indeed, we're also still having some capex going into Europe to finish off the current footprints against our customer commitments, but let's say the longer term profile and inputs I will be glad to.
Speaker Change: To discuss that's also of course end of March and at the same to each of them.
Speaker Change: Okay.
Speaker Change: So after the trade tariffs and potential try to two eight times and we have been reading a program in the company in order to match the different flows.
Speaker Change: And this is also where we see having the footprint global footprint in catalysis that this can create options also to to circumvent the trove to reduce or mitigate some of the impact of the same for the precious metal flows but also here we have the global set up where we can source and deliver out of different regions and this can also help to mitigate a potential impact is.
Speaker Change: There are certain measures would be taken that's why it wasn't us.
Speaker Change: Yeah.
Speaker Change: Can I can I follow up on the volumes that you were talking about battery materials can you discuss where are we in terms of volumes now because you have talked about an 18 month delay is that deal is getting longer because I'm. Just curious are you guys starting to debottleneck the Korean plant.
Speaker Change: And frankly, we don't even have any volume. So I'm just curious how why is there a disconnect of to be honest.
Speaker Change: Yeah, I mean, not any volume is probably an absolute statement that you make there chita. So I mean, we also hinted during the mid tiers are results that we have to maybe do have a capacity utilization in Korea, and then it's moving to a pretty good level in the years to come and that's that's what they clearly are.
Speaker Change: In the cases, but on the volume picture and beats the outlook remains mixed for the time being because if he sells remains a somewhat slow at this point in time now at the same time, we always talked also about the strong contractual doctors that we have Uh huh.
Speaker Change: Basically we also have the take or pay provisions, which will protect our EBITDA profile. So that's why we cannot be a longer period of 18 months and the ramp up possibly it's difficult to say because the the outlook remains mixed but again, we have pretty strong contracts in place for situations like this and.
Speaker Change: We will utilize these contracts.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you Tito.
Speaker Change: Thank you we will take our next question is from Geoff Haire from UBS. Your line is open. Please go ahead.
Yeah. Good morning, I, just wonder if I could focus in on the battery materials business.
Speaker Change: Question one.
Speaker Change: The cash costs for the restructuring so first of all on battery materials.
Hum.
Speaker Change: When you were looking at all of the contracts that you have and where you want the depressed carfax, what's at any time, if there ever a consideration that actually exiting some of the larger contracts that you have so that you can actually save more capex.
Speaker Change: And then secondly, with the increase in the eye and weight equity contribution do you expect to create positive free cash flow in 2025, and then finally could you just update us on what the cash costs are related to the additional savings that you expect to get in 2025.
Speaker Change: Okay. Let me talk about let me take the customer part and then you take the second part.
Speaker Change: Well, Josh I mean, we have a strong contractual contracts. So we have these are these take or pays instead, but we also of course have customer commitments and we are building against these customer commitments.
Speaker Change: I also indicated at the midyear that while we still see the progression of course, when that volume curve for the existing customer portfolio.
Speaker Change: That's we have that we continue also to look and further our customer diversification. There's a continued interest.
Speaker Change: In Europe I also by by Asian players. So I continue to believe and that's differentiating asset that we have here are in Europe.
Speaker Change: So one is maybe you can go to the other two yep.
Speaker Change: So so looking at the free cash flow for the group in 'twenty five.
Speaker Change: I mean looking at the different components. So we have to EBITDA range or the guidance that we give between 720 and 780 <unk> we have to Capex. Let me say below 450, we have the equity contribution of 400.
Speaker Change: So free cash flow.
Speaker Change: We will be a will be negative I would say and this is also where we expect the net debt to increase the leverage could also.
Speaker Change: We used to what's the level of 2.5 now looking at the.
Speaker Change: Cash cost restructuring and this is what we have.
<unk> provided for so what we have included in the provision for 24.
Speaker Change: I would say a rescue 70 million, which is linked to the restructuring in catalysis, which we announced in the first half, but also linked to the right sizing of the group, which we announced in the second half of the year.
Speaker Change: And this will add them into the cash cost savings of 425, where we say that we are aiming to generate another 100 million euro for savings on top of the woman that many U W have generated in 24, yeah Sandeep on this restructuring, especially also in Belgium, I think I think they made great progress in a it was a very good and constructive dialogue.
Speaker Change: With the with our social partners I think we have panned out the right support measures for our customers and now we are actually in the implementation phase.
Speaker Change: Often these measures so we shouldn't see that effect and and in 2025.
Speaker Change: So just to clarify that there was no further cash costs related to <unk>.
Speaker Change: The cost savings program that you've got in 2025 that was all taken in 'twenty four yep.
That is correct.
Speaker Change: Thank you.
As a reminder.
Speaker Change: If you'd like to ask a question. Please signal by pressing star one on your telephone keypad.
Speaker Change: We will move to the next question is from Tristan Lamotte from Deutsche Bank. Your line is open. Please go ahead.
Tristan Lamotte: Hi, Thanks for taking my questions I've got three the first is what are the remaining restructuring costs.
Speaker Change: The cost programs and how will that impact cash.
Speaker Change: You talked about an impact from metal hedges rolling off in 2025 mm given your hedges it kind of screwed up to four years do you expect to have another impact in 2020 six again.
Speaker Change: And then it's a question about your materials I'm, just wondering with the take or pay contracts that kind of the minimum.
Speaker Change: What kind of EBIT dollar could you do in 'twenty 'twenty six thanks a lot.
Speaker Change: Okay. So looking at the restructuring just to be clear. So we've provided for the the restricting of months, but the cash out will be in the year of 25 and this is what they refer to the same degree.
Speaker Change: Then looking at the metal hedges so in 'twenty four we had solicit central support looking at methodologies in particular for Palladium and rhodium and this is where we see a roll off in 'twenty fives, and there will be a photo roll off in 'twenty six.
Speaker Change: And then looking at the last question take or pay.
Speaker Change:
Speaker Change: Yeah, I can take that one want us all to take or pay I mean in 2025, some take or pay will be in effect. It's a 40 year and we also in terms to include this as part of our EBITDA because it's an integral part of all of our business and these contracts, but we're not going to guide for 2026 on this number and we can discuss more at CMT.
Speaker Change: And have much.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We'll take our final question is from Charles Bentley from Jefferies. Your line is open. Please go ahead.
Charles Bentley: Oh, thanks, so much for taking my question. It was just a simple one just on the.
Speaker Change: I own wide investment if I remember correctly. It was 2.9 billion social funding of which half was meant to come from that and then.
Speaker Change: It kind of half from each of the partners are at 725 million in total that would suggest that by the end of this year, there's still too many and remaining is that is that the right number and it's the kind of debt to equity component. So its a funding structure.
Speaker Change:
Speaker Change: Is that is that unchanged or is there any risks at all thank you.
Speaker Change: Yep, so both parties still target to at.
Speaker Change: At least 50% of the <unk> of the cash needs through debt financing so that remains a look.
Speaker Change: At the projections on the on the equity contributions again this is where we are a bit more front loaded.
Speaker Change: And there were 425, we expect another 400 million.
Speaker Change: Versus the $250 million year to date will contribute it looking at parties and then the outlook for 26 years is that it will depend on the timing of the effective.
Speaker Change: The effective project financing I think overall looking at the overall Capex budget. This is of course, something that's commercially sensitive debt.
Speaker Change: That we cannot assets sure but at the same time, there's also some inflation.
Speaker Change: Oh.
Speaker Change: Looking at that project.
Speaker Change: Yeah, So I mean want us maybe to the point that lead to I mean, the contract was closed let's say in the 2020 and 21 billion. So indeed, we do see some inflation on this project like many other projects of course are within Europe, but again, let me.
Speaker Change: The guide again, that's we worked with a committed waste for this project and of course for these projects or these kind of set up we do have strong guardrails.
Speaker Change: So our commitment and belief in this joint venture this.
Charles Bentley: <unk> completely in fact Charles.
Charles Bentley: And then just for clarification, so looking at the equity contribution so looking at the years 'twenty.
Charles Bentley: The 23.
Charles Bentley: Three and 24, we had $250 million of equity contribution for this year, we expect to have up to 400 million of equity contribution.
Charles Bentley: Yeah.
Speaker Change: Thanks, very much guys.
Charles Bentley: Thanks Charles.
Charles Bentley: That was the last question for today I will now hand over back to them to set for any closing remarks. Please go ahead Sir.
Charles Bentley: Yes. Thank you for attending the 2024 full year results as said before it was a sobering and intense here not an easy year for us. Our shareholders are also for here for us at Umicore, but I really would like to four times are engaged with you on the future of this great.
Charles Bentley: Company that we have at the capital markets day at the end of March So see you all in London, and looking forward to that exchange have a wonderful day.
Charles Bentley: Thank you for joining today's call you may now disconnect.
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