Half Year 2025 Umicore SA Earnings Call
Welcome to the Umicore Half Year 2025 Results Conference Call. My name is Alan, and I will be your coordinator for today's event. Please note, this call is being recorded, and for the duration, your lines will be on listen-only mode. However, you will have the opportunity to ask questions at the end. This can be done by pressing star 1 on your telephone keypad. If you require assistance at any time, please press star 0, and you'll be connected to an operator.
I will now hand you over to your host, Barab Co, to begin today's conference. Thank you. Hello, a very good morning everyone, and welcome to the H1 2025 results for Umicore. I do realize that for many of you it's a very busy season and a very busy week, so I highly appreciate you being here on the call.
CMD. Then we'll have a look at our key figures and highlights. I'll cover the Business Review 1 as well. Then I'll go to the financial review.
I'll be back with the Outlook 2025. We'll wrap it up, and then we'll open the floor for Q&A.
So, let's have a look at our core strategy, which we launched in March 2025.
now, as you might, uh, remember
Um, we are building on our core, which is our business model, right? And our business model is more relevant than ever.
We are building on our business model with four key pillars, focusing on four domains. The first one being Capital, then we have Performance, People, and Culture, and Partnerships. So, on Capital, it's all about a more mid-term balanced capital allocation. So, what does that mean? We continue to invest in better materials, but at a lower pace; but we also allocate a significant portion of our future capex to our Recycling business in Hoboken to further unlock the flow sheet. It means for the Midtown plan that we have been reducing our capex by €1.4 billion over that 2025 to 2028 period, and this is versus the previous plan. On Performance, as you can also see in our numbers, we really focus on increasing our operational efficiency and our overall performance and value extraction across all our activities. The goal for this year is €100 million EBITDA, and we are well on track in H1.
To already be halfway with, uh, $15 million, uh, in the pockets.
Now, if we look at people and culture, it’s all about installing this performance and value-oriented culture and building on the successful cultural shift we have in Automotive Catalyst. This, we now want to bring to the entire group to further unlock that potential that we have with this beautiful company.
Partnerships. We continue to actively export partnerships, especially in the field of our battery materials and activities. At the same time, we continue to focus on our solid midterm plan for our battery materials business.
Now um if we also I also would like to highlight and it's important for also for the analyst Community out there. And anybody who is following umicore closely, we did update our reporting structure with our new strategy. It means that we have expanded the battery cathode material business group with the battery recycling business that we have put in there. So we now have 2 business group battery materials solution. And this actually encompasses All Battery related, uh activities.
But it means that also from a reporting point of view. We are now restating numbers for 2024 and we are.
Actually reporting in H1 2025 for the first time in this new reporting structure. So it means that the recycling activities battery, recycling activities, which used to be reported under the recycling business group has now been moved to the battery material solution, so it's important to shift those numbers in order to have a good comparison. Now, let me now have a look on the key figures and highlights.
Now, um, I would say that we really had an encouraging performance in H1 2025.
Uh, we have seen sustained demand and also very good operational efficiency, so we're happy with this set of numbers.
Now, if we look at our revenues, we came out at 1.8 billion or Aida for H1 4333, uh, million euro. Well, up versus last year, a return on capital of 16.4 or leverage remains, uh, below 2.5. And at the level of 2.3 and a very solid Aid down margin of 24.3% and we are slightly free cash flow negative, uh, for the first half.
If I look at some of the business group out there, you will see that consistently throughout the business groups. We have good Returns on Capital, capitalist 4, 437 percent, Recycling, 154% and also in a specialty materials on the back of a stronger Cobalt momentum, we now have a return on capital above 12.5 or eighty 12.5%, which is in line with our 2028.
Target.
Now, we also recently upgraded our guidance for 2025, and we have updated it in that $790 million to $840 million range. We did that at the start of July.
And now, we foresee for 2025 capital expenditures (capex) projections to be reduced to €350 million.
I remind you that last year we were at 550. We were aiming roughly to be 20% lower. So, still here, we take another, uh, step down in the expected capex, reflecting our strict approach in capital allocation but also in timing of capex at the right, uh, moment.
Now, if we look at the performance, we did, more than, uh, 50 million euro in the first half in efficiency savings, which is a great, uh, objective. And as mentioned before we're aiming for, um, at least 100 million euro for the year now. Uh, if I now go to the next business, uh, review, let me start off with the battery materials Solutions.
That seems to be the solutions for the first half of the year. We see that revenues are somewhat lower. We have an adjusted EBITDA roughly in line with H1 2024.
Now, for battery Capitol Materials, which is the first leg within that maximum material Solutions, uh, business group, we have revenues of about 208 million Euros which is below H1 2024. We have slightly lower refining volumes and also slightly lower cam volumes as we anticipated. So our Legacy contracts are um, are fading out and new contracts are ramping up.
Now, the main customers for the ramp-up in 2025 are Skon, ACC, and Iron Weigh.
Now, skon, uh, we talked about this contract. Uh, it's quite relevant in 2025 from a, uh, volume point of view. So this is also, uh, an interesting customer that we have showing the diversification of our customer portfolio and our technology, uh, position. Now, if I look at just the Aveda for the first half of 2025, it stands at minus 15 million euro while for the full year in the Outlook and I and I'm mentioning here, the outlook for betting material capacity, materials specifically, we are still, um, we are still confident in being around break, even for the full year. So that would mean that the Run rate and the second half of the year, uh, would be 15 million euro positive. So on an annualized basis, 30 million euro positive. If we are run rate for the business
For battery recycling solutions, we see lower spending in H1 2024, and the majority of our spending is really on further optimizing and preparing ourselves on that flow sheet and technical capabilities of this really unique pyrometallurgical process that we have.
so,
on the technology front, we also have a small, uh, yet significant update, uh, uh, for you, that is that now, um, you have seen that BMW and solid power have have brought on all solid state battery vehicle, uh, to the market and we can share with you. That actually, this is unicorn, uh, cattle material, uh, inside. So, it means and that we confirms, and that's also what we see across the board that are solid state, battery, cattle, material technology is really well received. So we're very proud that also, we now have this real test car on the road to get with BMW and solid power.
Let me now transfer it to catalysis.
Now, if we look to the overall, uh, I see passenger car production, uh, for the year, we see a slight decline of H1, uh, 24 versus H1 2025. So we go down from 38.3 to 37 point. Uh, 5.
This means a contraction of the market of 1.7%.
It's a different picture throughout the world, like China's slide in growth and North America.
Well, minus 6%, Europe minus 9%, but South America, plus 8.7%. We had a slow underperformance in the Chinese market, so a marginal underperformance there. We strongly outperformed the market in North America, in Europe, and especially South America. In South America, this has to do with the introduction of PL8.
When we acquired a broader customer base, there's a step up in legislation, so it's an additional brick and also actually a high FPJ and loading. So, we're pretty happy with that in the HDD. Um, we see that the market was a bit softer in Europe, while in China, the market recovered.
So that means we continue to offset. Let's say and improve our quality of earnings and we continue to offset the historical PGM price decline. We have seen. So if I would take you back to 2021 at the bottom, right of the slides, we would have an H1 performance of 240 million euro at much higher PGM prices versus today where we are now posting a 222 uh minor iida a significantly lower PGM prices. So uh it's clear that the quality of earnings is improving and also our average a margin has been trending up over the last years
Um, now if we look at, um, precious metals chemistry there, we have higher revenues in our inorganic chemicals, and that more than offsets our somewhat weaker volume developments in our homogeneous catalyst, uh, business.
Fuels and stationary catalysts. Also, uh, quite, uh, interesting evolutions, both in fuels and stationary catalysts, or, uh, volumes and revenues are, uh, up. The stationary catalyst business has an interesting evolution. As you know, it is on that backup, uh, these backup generators for, uh, data centers. We also have a very interesting business and we see, uh, quite some volume growth in that segment. If we then look at the construction of our fuel cell catalyst plant in China, we are on track. Uh, really also from the capital points, uh, well managed and still to be, uh, expected commissioning in early 2026.
Communicated earlier.
So, let's have a look at recycling.
So recycling, of course, uh, when we talk about recycling, we have to talk about metal prices. And we have seen that, uh, rhodium gold Platinum, uh, silver. Write these levels, uh, the price levels that we have seen in Euros, right? Because the dollar significantly depreciated first is the Euro lately. But in Euro, we see stronger prices than before
A reminder is that we are well hedged. Um,
For rpgm exposure. Uh, it's nh1 but also in H2. Um, and that we were complemented by a supportive minor and specialty metal price environment to which exposure is not hedged. And 1 of us will come back to you later on, uh, on this, uh, PGM hedge, uh, evolution.
Now, let's go to the second slide for this section. So, a deep dive more into the numbers. Also, here I dare to say that it's a really solid performance, with a strong adjusted EBITDA in line with H1 2024. In the Precious Metals refining activities, our revenues were close to H1 2024. We have seen higher volumes yet, slightly less favorable supply conditions. What do I mean by this? We see the stock market still moving more in the same range as we have seen before. The spent industrial catalyst segment shows a weaker chemical sector out there. So there's some softness there, and also with the flooding in South Africa, some complexities arise.
Refined receipts did not, uh, uh, well, were lower than before, as anticipated, but we see that recovering, uh, better in the second half, uh, of the year.
now, um,
As the earnings are somewhat lower than H1. 2024, for Precious Metals refining, this is really reflecting the decreasing average hedge price level, uh, and as well. Of course, we have had some inflation, which is always there yet. We were able to partially offset, uh, this inflation increase, uh, by operational efficiencies in the jewelry and Industrial Metals. We have a higher revenues against H1 2024. We see good volumes strong contribution from the refining and recycling activities. But also really a strong, uh, product demand, uh, for products for the luxury. Uh, and markets.
Precious metals management. We have seen uh, PGM volatility and, and precious metals volatility in uh, in in general. And, of course, volatility means a beneficial and favorable trading environment, and that also the momentum was strong.
Here, again, a margin still well above, uh, 41 percent. So, also here, uh, pretty happy with our performance.
Now, um, of course, um, as you know, for Umicore, we do add a lot of value to...
Uh, to sustainability, uh, meaning that we continue to invest in, um, in sustainability improvements of our facilities and the surroundings. Uh, what does this mean?
To raise the bar and remain committed to being the world's most efficient and environmentally friendly refined fuels business, these statements go hand in hand and protect the long-term potential of this activity.
Let me now transition to specialty materials.
So, Specialty Materials, we had a strong H1 for this business. EBITDA is up 35% with higher margins in the Cobalt product segments. Yet, also here, again, operational efficiency improvements; and you see operational efficiency focusing on that value and capital discipline. It runs throughout the organization, and that's why we almost have to come back to it, because you really see that reflection in our numbers. Now, in Cobalt and Specialty Materials, revenues are somewhat lower; at the same time, we have higher margins for the Cobalt segment.
Products, as mentioned, were a crucial aspect. Moreover, those efficiency measures in metal disposition solutions focused on strong demand in decorative applications and solid demand in semiconductors.
Somewhat offsetting lower revenues in the electronics segments and the electric optic materials. Business units. We had good demands for our high Purity germanian, crystals and we continue to see a strong demand for our germanium refining and Recycling services. Uh, so you know that also there the geopolitics play and having that in-house recycling, capability is also really a differentiator,
For this business, the Aidan margin is now again above 20%, at 21%, close to 22%. So, we have also seen a good step up in performance.
Now, we have seen how the world around us is evolving. We see that, uh, Metals, uh, or resources are often. Yeah. Used to play out the political game or actually, uh, used, uh, to actually put some tension between different blocks in the world. And it means that also for umicore. Um,
The fact that we are active, and so many metals in so many of these core or critical metals, is really a differentiation, especially as we also have a footprint not only in China, but especially also in Europe. You can clearly see here on this slide that Umicore is active in 17 out of the 34 critical raw materials.
So that's on the refining side. At the same time, also for some of these products on the material side. So you can understand as that more critical raw material independence or more balanced dependency becomes more important. You can see that this is a very interesting future undercurrent for our organization. Now, with that, Bart, maybe you can have a look at the financials a bit from a close by? Yes, thank you, Bart. And good morning, everyone.
So I was bought mentioned over the past six months. We continue our disciplined approach to cost and capital allocation.
Our results were boosted by group-wide operational efficiencies, together with solid activity levels in catalysis recycling and specialty materials.
The group margin increased from 22% to 24%.
Adjusted EBITDA was up 10%, or €40 million, amounting to €433 million for the first half of the year.
The efficiency measures supported the earnings by more than €50 million, from initiatives across the foundation, businesses, battery material solutions, as well as the corporate segment. I will come back with insights on the key drivers later in this presentation.
The increased activity levels, as Bark mentioned, in catalysis, recycling, and specialty materials resulted in an earnings before interest and taxes (EBIT) uplift of almost €40 million.
These uplifts allow us to compensate for the €53 million headwind from inflation and foreign exchange, with the Forex impact being largely linked to the translational effect for non-euro subsidiaries.
In the first half, the reduction of favorable price levels for precious metal hitches was almost fully compensated by improved prices for non-heterosexuals.
So, let me provide you with more insight into our efficiency program.
Savings are well on track with a year-to-date contribution of €55 million versus a full-year target of €100 million.
Now, looking at the breakdown of the savings, 25% of the uplift in EBITDA came from topline growth.
15% from reduced cost of goods sold, 40% from SG&A, and around 20% from savings in R&D.
R&D, which we announced at the end of last year, was implemented ahead of plan this year.
In catalysis, the R&D footprint was further optimized with the consolidation of the research center for heavy-duty diesel in Germany. Additionally, in better materials, SGNA was structurally reduced.
Now turning to the Consolidated piano.
The net result group share was €137 million.
The depreciation and amortization decreased to $131.
Following the impairment in better materials in June last year, adjusted EBIT was €302 million.
Up 61 million euro.
Adjusted net finance costs increased to €102 million due to a higher average net debt and lower interest income on cash deposits. This was impacted by decreasing entrance interest rates along with a negative effect from Forex. The average cost of gross debt amounts to 3.2% and remained stable compared to the previous year, thanks to long maturities, with over 80% of that being fixed rate.
The adjusted tax charge amounted to €64 million, stable versus last year. The pre-tax income was up, but the adjusted effective tax rate decreased from 36% to 32% this year.
And this resulted in an adjusted net profit group share of €135 million.
The adjusted earnings per share were up 16% to $0.56.
Moving to the consolidated balance sheet.
The liquidity of the group remains strong, with a cash position of €1.1 billion.
Gross financial debt decreased from €3.4 billion to €2.9 billion after the repayment of the €500 million convertible bond in June.
And the equity for the group amounts to €2.02 billion.
Net financial debt was €1.9 billion, and the net gearing ratio landed at 47.6%.
Now.
Let me provide more insights on our net financial debt position based on the net cash flow bridge.
Cash flow from operations amounts to €260 million.
Networking capital increased by €197 million, reflecting the higher activity levels in catalysis recycling and specialty materials.
Capex, including capitalized development expenses, decreased to €117 million.
We apply a maximum control on the phasing of capex, and spending will be more weighted in the second half of the year. So capex, excluding capitalized development expenses, for 2025 is now anticipated to be around €350 million versus the initially foreseen, let's say, €440 million.
This results in a free cash flow from operations of minus $55 million and minus $54 million.
taking into account a contribution of €250 million into
Of equity into Ironway in January and cash out related to taxes, financing dividends, and other items of €99 million. This resulted in a net financial debt increase of €404 million, leading to a net debt of €1.8 billion for the group.
This is, um,
This is in line with what we anticipated, and as a result, the leverage ratio increased to 2.28 times over the last 12 months, as TBA.
And here I want to repeat that, as mentioned during your Capital Markets Day, leverage will peak during 2025 and 2026. We anticipate leverage to turn below 2 times from 2027 onwards, following the strong cash flow generation in the group and with the finalization of the investments in battery cathode materials.
Now.
Moving to the next slide.
I would like to remind you that for 2025 to 2028, a substantial portion of the future strategic metal exposure has been locked in through forward contracts.
And with this strategic hatching policy, we aim to protect future earnings from price volatility, while ensuring we also do not overheat or anticipate exposure.
Over the past six months, our hedged position remained largely stable. We have increased forward metal hedges for silver in 2029, and we are in the midst of executing additional mandates for 2029 for rhodium. So, as a conclusion, we are putting a strong focus on those things that we can control: costs, cash, and capital.
EBITDA improved and is up €40 million, driven by a solid underlying performance and supported by over €50 million in efficiency measures.
So, your CapEx to be around $350 million. Mhm.
And we continue to keep tight control over net debt and leverage, and we expect to keep the leverage below 2.5 times adjusted EBITDA. And here, I would like to hand it back to Bart for the article. Yes, thank you, Wannes, very clear.
Now, let's have a look at the Outlook and the Outlook, we communicated already early June, of course. And um, but anticipated that we indeed will be in that 790 to 850 million, uh, ibida range. So, there's no change there today versus what we announced, uh, earlier. So, just wrapping it up before we go to, uh, Q&A. Um, yes,
so,
I really dare to say that H1 was re we really had encouraging uh results and a solid performance. So it was driven by a sustained demand and also really strong operational efficiencies. And there was also somewhat a supportive metal price environment so it's 3 elements operational efficiency, sustained amounts and is supported supportive metal prices uh environments.
Now, if we look at H1, there was a strong performance in our foundation business, while we start to see, indeed, that gradual ramp-up in our battery and catalyst materials contracts. So, with that, I think, once more, it is encouraging in H1 and provides good guidance for the second half of the year and, at least, for the full year, right?
And with this, I would like to open the floor for Q&A.
Thank you.
Have a question or make a contribution on today's call? Please press star 1 on your telephone keypad. To withdraw your question, please press star 2. You will be advised when to ask your question. We will take our first question from Ron Off, our city. Your line is open. Please go ahead.
Hi, thanks for taking the question. Just one from me, please. Um, I think you mentioned that the metal price impact, including hedges at the group level, was just minus $1 million. Um, but I was wondering, could you please break this down or give some more color by division just to help us better understand the underlying earnings developments? That would be great. Thank you. Yeah, good morning, Ren.
So looking at the metal price effect, you're right? I mean year over year year list is minimal uh as you know and as we also highlighted uh we have the precious metal Hedges. Uh and those are favorable versus today's rate. At the same time, the contribution is rolling off this year and will continue to roll off. Go also going into next year. So if you look at the first half, this is where uh the the role of resulted in a year-over-year lower contribution and I would say low double digit type of a contribution from those favorable Hedges year over year.
And that has been offset by a more favorable environment looking at the precious metals, gold, uh, thinking of business like jewelry and industrial metals. Uh, but also looking at minor and special metals. And again, this is where it lands in the recycling segment. So, primarily in the recycling segments, uh, is where we see those movements.
Okay, so there's no metal price impact coming through in, in specialty, materials in the, the Cobalt and Specialty. Um, not part of the business. Yeah, so looking at the specialty materials business, uh, in indeed here, we see a solid price level for germanium, uh, for Cobalt, we also have seen a, a hiccup in the price and this is the resulted in somewhat stronger margins, I would say in those segments, that's correct.
Okay, great. Thank you.
We will take our next question from Tia Badura, BNP Paribas. Your line is open, please go ahead. Hi, uh, good morning. Um, two questions from me. If I may, um, the first one is on the Catalyst division.
I'm conscious you've had a pretty strong H1, um, with record profitability reached. Um, but I was wondering if this is all underlying or if there was a specific one-off somewhere, maybe, um, a new contract that has kicked in.
Um, and maybe as a follow-up, how should we think about profitability levels going into H2, um, and beyond?
My second question would then be on the efficiency measures. Can you maybe give us more color on the short-term level levers you're taking actions on?
Thank you.
H1. And I would also like to remind all of you that we took a bit more of a cautious approach in H1 versus the overall market forecast initially.
Uh, yes, the amounts remained, uh, solid. So that was also good news for us. If you talk about customer wins, I would mainly refer, uh, to South America where PL8, or the L8, if we really focus on that light-duty segment, uh, has kicked in, right? So there we see volume growth with indeed, uh, a better customer positioning and additional brick and higher PGM. I would say that if you look at the market in South Africa, it grew roughly, uh, 9%. Our growth was, well, north of 30% in that segment. So yes, there, um, there were some elements, but it was mainly across the board, the strong underlying, uh, uh, performance of the market from the demand, uh, point of view. If we look at H2, there we see the classical, uh, uh, seasonality. We have also taken again a realistic approach to what demand could be for that second half, and we see that for the time being trending in line with, uh, with our expectations. So one is if you could comment on.
On the efficiencies. Yeah, so, looking at the levers for efficiencies? I mean, the one that we pulled, uh, was, um, over the last, uh, in the first half basically, where those linked to the researching into the consolidation of footprints, so looking at SDNA and R&D. So those have been implemented. Uh, believers that we continue to pull is looking at.
Offline, uh, looking at pricing, uh, but also get operational efficiencies. So looking at the plants, looking at the operations improving yields, uh, reducing waste, basically improving quality, uh, and those are elements that we continue to drive. So if you look at the full year normally, if all runs according to plan, you will see that the proportion of uh contribution from Topline and cost of consult will increase uh, versus the versus the, the overheads I would say. Yeah, and maybe adding another additional metric just to give some flavor to. And and some substance is that, uh, as you know, we announced let's say we structuring in, in, in, in November last year where we had indeed. Uh, let's say, uh, 200 plus people directly impacted. Now if we, that was, of course, a very painful, uh, situation.
Now, at the same time, we are still very diligent in our Workforce Development and uh year-over-year. Uh, I think we're now uh 6% uh down. And on top, we had a significant reduction in contingent work force which all we also, I would say, estimating here a bit between 1 and 2% of the workforce equivalent. So yes, we have been very disciplined and we will continue to do. So, of course with the ramp up of battery materials as follows start to grow, you will see of course more uh hands coming in to deliver those volumes.
Great. Thank you both. Thank you.
We will take our next question from Certain Udeshi at JP Morgan. Your line is open. Please go ahead.
Yeah, hi, thanks. Morning all. Um, the first question I had was, I was just looking at the presentation slide on Catalyst business and.
I mean, you are saying revenue and earnings in Catalyst Automotive are flat.
It seems all of the growth is coming from the other two, uh, smaller divisions, and especially, uh, Precious Metal Chemistry. Can you remind us what's going on in that business and how much?
Sticky that growth in Precious Metals, chemistry business might be, um,
Question was.
Earnings, if I understood that correctly, in H2 versus H1.
And is that based on an assumed price decline for some of the, uh, unhatched metals from current levels or is this, uh, assuming that you have another, uh, like down from...
From hedging activity, sort of, you know, reducing your effective prices for The Meadows that you hedge.
And the last question, um, is.
you know, you talked about
the um,
The Strategic importance of, um, course, Recycling business. Uh, in the, in the context of geopolitics, I was just curious, you know, you do use, uh, rare Earths in your Automotive Catalyst. Uh, I think, you know, they are part of the, the part of the, uh, wash codes.
So looking at catalysis, uh, I mean your conclusion is right. I mean, looking at the automotive Catalyst, this is where the underlying Market has been shrinking year over year, uh, where we have been able to keep our revenues and volumes flat, slight increase to Flat. Uh, so the growth is indeed coming from fuel cells, stationary, Catalyst and DMC. If you look at fuel cells, this is where the sales and particularly in Korea for fuel cells that have picked up in the first half. If you look at stationary Catalyst, this is part mentioned, uh, Catalyst that are used in also Power Solutions, uh, power grid Solutions, uh, and that also resulted in um in an increase. And then PMC also there in some of those end markets. Uh, we had a solid activity, we had increased uh in volumes. Now looking at the recycling and the profile of recycling. Um,
So, looking at H2, this is where, uh, we will have a continued role of those favorable hedges. And it also comes into play, as we can call it a type of seasonality. Uh, if you look at the profile of H2,
And maybe for rare earths. But yeah, yeah, yeah, absolutely. So indeed, that's right. Chetan and Deep, it's rare earth and ore, wash cold solution, more rare earth oxide solutions that we, of course, introduced there. And indeed, China has put up some restrictions on the export of some of these elements. At the same time, I would like to highlight that the catalytic applications are not under that ban.
Now, this being said, we have seen of course that the cues and and and Customs have been longer. Now, we're not only sourcing from, uh, from China. We have a diverse, uh, supply chain. And so far, we have not had, uh, uh, any issue. Let's say in, in in getting uh, material through our active management on stocks and or Diversified uh, Diversified supply chain on top. If customers would desire, we even have Solutions uh not including some of these uh from China. So so far uh things look to be okay.
but you don't, so
For the rails yourself, right? You are buying the oxides from Solve or some of the other suppliers, so I guess you are less.
Directly involved, uh, from that point of view, I suppose.
We do source, indeed aware of oxides. That's right.
Okay, got it. Thank you.
We will take our next question from Sebastian. Bry Baron, your line is open. Please go ahead. Good morning and thank you for taking my question.
Referral to please. The first is on the balance of price downs or pricing changes in hedges for recycling and current metal spot prices. If I were to take the Umicore book for 2026, which is largely hedged, and current metal spot prices, would the group-wide impact be either neutral or negative? If things continue as they are, my second question is on the ACC contract.
Uh, with Stellantis, there was some chatter last year about Stellantis stepping away from NMC as a technology and increasing the role of LFP in its portfolio. Do you have any indications if the customer is going to drop to the minimum ends of volumes under these contracts? Thank you.
Okay. Honestly, go for the first, yep. So good morning, Sebastian. So looking at the evolution of the um, prices for the hedged metals. Uh, going into 26. This is basically where indeed that supportive.
Uh, of that support roles off. And where we would say that the effect versus today's network prices is more neutral.
Yeah, and and on the ACC stand is, uh, question. Um, indeed, I think stand has made some statements on, uh, uh, on lfp. Uh, initially, um, SSD was going to build 3 plans, ultimately, they so far, they only Built 2 blocks, uh, of capacity. Um,
Uh, in, uh, in France, right? So these, uh, and installations are actually progressing, well, according to the customer, I mean, that's happening. These are pure, nmc, uh, blocks, but it's true. That let's say the nmc potential of ACC as a whole for the time being a somewhat lower. Now, uh, as you well know, um, we have the take of a Provisions in these contracts at the same time. We continue also to work on customer diversification, as per mentioning in our Capital markets today in March. So I would say, the situation has not changed versus, uh,
The latest comments we had in March, um yeah. Therefore, there's no reason for us to change our outlook into 2028 as presented.
Effect is current spot prices plus hedges, or it's just no changes in hedging prices from 26 compared to 25.
Yeah. So if you look at 26, I mean a a significant portion of the exposure is hedged. If you look at those prices uh on average I would say versus today's metal prices. Uh, there is a, a neutral effect. So, on the 1 hand, uh, there's some prices where that are elevated, first of today's prices, on the other hand, there's elements Metals, where the prices are below today's prices. If you think about silver and gold, this is where prices have come up substantially, and this is where the Hedge rate or some of the global. On the other hand, we have pgms where the Hedge rates are still higher than today's rates. So overall, this is where we see a more neutral effect versus the average price levels. I would say in 26, thank you for taking my questions.
Thank you. We will take our next question from Georgina Fraser, Goldman Sachs. Your line is open. Please go ahead.
Hi, good morning. Thanks, Bart. And thanks, Venice. Um, I've got 2 questions. The first one is, um, just on your guidance.
Given that you now have these hedging policies in place and precious metals, as well as take or pay contracts. Can you talk about how much visibility that you have, um, on your earnings trajectory in the second half and where you're currently tracking um, versus the full year guidance? You've given
And the second 1 is on geopolitical, risks. And there's so many changes all the time from the US Administration that I, I might have misunderstood something. Um, but I was thinking about the case of aluminium at the moment where there are tariffs on the base metal. Um, but not on aluminium scrap, meaning that there's an incentive for scrap to go to the US, to be smelted and and use that is how, how does Umi core think about those types of risks? Are you seeing anything in in the metals that are important to you and can you remind us what the competitive landscape looks like? Does the US have capabilities to recycle Metals the same way that you make or does thank you? Yeah, yep. So, good morning Georgina. Maybe I can take the first question. Sure. Um so indeed we're operating in a volatile environment. Uh at the same time having uh some of those uh I mean substantial partial the exposure locked in having those take or pay mechanisms that
Gives us also, uh, solid confidence looking at the range that we have that. We have put out as a guidance and maybe on the geopolitical. Yeah. Yeah, yes. For sure. Now. Um, well, it's fair to say, Georgina and Z. That's quite, uh, a roller coaster of announcements these days in the markets. And let me also remind that the direct impact, uh, of terrorists for yumak course, as we see today, uh, is really, uh, not Material. It could always be an indirect impact in the overall economy evolution, of course. Uh, but that's more difficult, uh, to estimate now to your specific question and the impact on on, on PMR, I would like to say that. First of all, the US is not a big market for us to where we source for materials. And also not the market to actually, we see a big inflow of some of the materials that we uh refine uh, in Europe. So as we see the situation uh today we don't expect a major competitive uh change in landscape uh by the measures taken by the US, what is what?
China is doing, at this moment in time, is, uh, is more relevant, especially for the Specialty Metals, uh, that have this more positive, and the current, I would say, okay, thank you very much.
Thank you.
We will take our next question from Joe Hair. UBS, your line is open. Please go ahead.
Yeah, hello. I was wondering if you could, um, I can ask some questions around, um, metal pricing. Um, first of all, in terms of the outlook that you've got for the second half, are you assuming that the benefit of the higher metal prices in the trading business within recycling will continue into the second half?
And then, secondly, I was wondering on the metal head split of minus $1 million, which ran off after about. Could you actually split out what the benefit was from hedges versus movements in spot prices? I think that would be really helpful. I'm just trying to understand that movement, and I may completely have misunderstood what hedging is about, but given PG platinum prices have moved up significantly in the last sort of couple of months.
Coming into your, um, into your business. Um, is that? Is that right? Or am I completely wrong? Okay, uh,
Good morning. Josh, just in case you have the the different questions and where to start. So, uh, looking at the Outlook, um, looking at the Outlook, uh, this is where indeed, we expect some volatility, uh, in the market in. And, and hence also in metal trading, this is also what we anticipate, uh, in the guidance that we give. Um, if you look at the year-over-year comparison where we want to highlight what are now, the key drivers of the up list in ebida. This is where we illustrate that the metal price environment by itself, has not necessarily resulted in an uplift year over year, but if you decompose it and you look at on the 1 hand, we have exposure that has been hedged in fast where the metal price levels had been fixed. Uh, this is very new over here uh, the average level of metal price on the exposure comes down. So there's less support on those Hedges from price level. On the other hand we have exposure that has not been hedged which we call open exposure. And this is where you benefit from the spot price movements and this off
That's basically what we lose because of those average heads price levels being lowered year over year. So this is where we see that offsetting effect and on top of that also looking at some of the special and minor metals. Also here we see the price uplift in the overall environment um and and also here we benefit so that's that's um an element that offsets.
Uh, that role of those favorable hedges.
Now, coming back to your question, where you say PDM prices are again getting a not list. When will we see that effect? That effect is, as I explained earlier today, to the open exposure and where we sell that exposure at spot prices, but also to an extent if we continue to hedge.
Forward the future strategic exposure. That's where we can also start benefiting, but again, between 25 and 28, we are already decently hedged. So we're not necessarily increasing much, but for 29, for instance, this is where we see opportunities to lock in that exposure at today's price levels.
I hope that is helpful. Sure! Thank you. We will take our next question. From Tristan Lemo, Dutch Bank. Your line is open; please go ahead.
Hi, thanks for taking my questions. Um, the first is:
Maybe coming back to Press Metals. Um, there's a good bridge you provided in the slides. Um,
Which shows that your EBIT stands up, $40 million or 10% versus the prior year, and you're saying metal prices are neutral. Efficiency savings are offset by inflation.
Um, so I'm just wondering if you could maybe talk through what has changed to drive that large increase.
Year on year and in particular and recycling, recycling is up 40 million year on year. Um, so maybe you can outline how much of that is is pmm um, or or what else has changed to, to lead to that significant increase. I, I'll stop there and then continue with the other questions.
Uh, Christian. Good morning. I'm just reflecting on your statement where you say recycling at 40 million. I don't know where, uh,
In any betta.
No. It's, uh, both. And I'm just trying to see what you refer to.
So anyway, maybe you can explain the underlying drivers of the recycling business, one of us, and the different business units. Because that's a... yeah, I guess.
Yeah, the key question is, um, cost efficiencies are offset by inflation, and the metal prices are neutral, but you have an increase here year on year. So what? What's the underlying driver? Exactly.
So, so basically recycling what we have is, um, last year in the Precious Metals refining activity, this is where we, uh, had the maintenance shut down which we don't have in 25. So, that is driving up the volumes that we process, uh, impresses Metals refining at the same time as Bart explains there was some less favorable mix. Um, and, and that is uh, is 1 of setting that volume increase, at the same time, in the recycling. What is also positive is a strong support, is looking at Duality and Industrial Metals where we have the current High gold prices.
Also contribute strongly got it. Thanks, that's helpful. And then maybe um, second I'm just wondering about your FX exposure. Um, some of your peers give a sensitivity to changes to 1 cents in the USD Euro rate. So could you maybe, um, give us some kind of indication there on on how that works for you and how, um, hedging impacts there as well. Thanks. Yeah. So, so looking at the magnitude of the Forex impact. I mean, we we highlighted, there is a headwind of more than 50 million, uh, over a half majority of that comes from inflation, but there's an element related to Forex now a very concrete for 25. This is where we had hedged quite a bit of the exposure, uh, against the dollar, but also other currencies. So we are less impacted by, uh, the, um, by the the volatility by the fluctuations in Forex. At the same time, we have subsidiaries that are, uh, recorded in in, in, in different currencies that Euro and where the results get translated into.
A result upon consolidation, and this is primarily the impact that we are seeing in the Forex effect. Great, thanks very much.
Welcome.
We will take our final question from Steam Dymista. Your line is open. Please go ahead.
Yes, yes, good morning. Thanks, and thanks for taking my questions. Also, too, if I may, can you comment on the size, duration, and the nature of the newly disclosed contracted SK? It seems to be a driver for sequentially higher cathode volumes in the second half. Yet it doesn't alter the guidance. Does this suggest that the ramp-up of your take-or-pay contracts is slower than previously assumed?
Secondly, maybe related to a recent press article, Volkswagen brand CEO Thomas Schaefer suggested leaning more on LFD for its entire lineup, starting with the ID.2 up until the ID.7 in a bid to lower costs. How should we interpret this announcement? Does it in some way alter your roadmap with the IRA?
Yeah, thank you for those questions. Uh, I want to stay very clear. Uh, so first of all, uh, on the SK contract, you should not see it on top, uh, of the trajectory that we have given, uh, in the CMD. The CMD really focused, let's say, on that 2028 roadmap, but that was included, let's say, uh, in those numbers. This being said, uh, in 2025, we see that ramp-up of inway as well as ACC, and our numbers, uh, as well; volumes are still more modest, but that's what the ramp-up also significantly means. Now there's a good uh probability that uh the SK contract will also flow over in 2026.
And, uh, to your question on, uh, Volkswagen in general. As you, as you might remember, we have included two waves out of the 1,604 gigabytes, or 70 gigawatt equivalent, in our mid-term plan. These waves are still confirmed and are underpinned, uh, by solid contracts. So that's not changing anything in the equation, uh, versus what we communicated in March.
I understood. Is it the size of a contract with SK?
Well, I mean, it's one of the drivers of the 2025 volumes. And if you look at the volumes that we have, indeed, this is with the current following that we have. It's a significant contract. Yes.
Okay, thank you. Thank you.
Now. All right I think that yeah sorry so sorry I got I got your queue so as this was the last question, yeah, maybe a small wrap-up, so everybody wants more. Thank you for being there. I know it's a busy season, some of you will see back, I believe, uh, uh, next week on Monday and the days after. So we're looking forward to our exchange and uh, in the meantime wishing you all a wonderful uh, rest of the day and weekends talk to you soon. Thank you. Bye, bye, bye.
Thank you for joining today's call. You may now disconnect.