Umicore (UMI) Trading Update summary

2024 guidance update and business outlook

• Battery materials volumes for 2024 are expected to be flat or slightly lower than 2023 due to a sharp slowdown in EV demand and customer contract delays, leading to a revised adjusted EBITDA guidance for the segment to around break-even, including a €50 million one-off, down from the previous €135 million expectation.

• Main drivers for the downgrade are faster-than-expected end of legacy contracts, delayed ramp-up of new European contracts, and non-materialization of Chinese OEM volumes in 2024.

• Group-adjusted EBITDA for 2024 is now expected in the range of €760–800 million, revised down from the initial €900–950 million.

• CapEx for 2024 will not exceed €650 million, a significant reduction from earlier plans, with further CapEx phasing to match slower industry growth.

• Foundation businesses (Catalysis, Recycling, Specialty Materials) remain robust and in line with market expectations, generating strong earnings and cash flows.

Contract structure and market dynamics

• European battery materials contracts have take-or-pay provisions at lower thresholds during ramp-up years, limiting protection in 2024; Chinese contracts lack such guardrails, increasing exposure to volume fluctuations.

• The slowdown is attributed to cyclical market factors, including weaker EV demand in Europe, supply chain stock build-up, and technology shifts (e.g., LFP dominance in China vs. NMC in Europe/North America).

• Management is reassessing growth projections and customer portfolio, with ongoing strategic review of footprint and CapEx.

• Commitment to enforce strong contractual clauses remains, but the focus is on long-term customer relationships and not just collecting take-or-pay fees.

• The company is adapting its growth and investment pace to match the evolving EV market and customer plans.

Strategic direction and long-term positioning

• Management remains committed to the battery materials business, viewing it as a long-term growth area despite current setbacks.

• The company is open to partnerships and adjusting its business model, including footprint and cost structure, to enhance agility and value creation.

• Technology leadership in NMC chemistries is seen as a competitive advantage for Western markets, while LFP is recognized as dominant in China.

• Foundation businesses provide stability and underpin confidence in replicating success in battery materials.

• Further updates, including a comprehensive business review, are expected around year-end.