Slow Electric Vehicle growth impacts 2024 financial outlook for Umicore’s Battery Materials activities
London, June 12, 2024 , (Oilandgaspress) – A sharp slowdown in the growth of demand for EVs impacting the entire supply chain, customers’ demand projections for Umicore’s battery materials have steeply declined in recent weeks. Consequently 2024 volumes for its battery materials could be equal or slightly lower than last year. In this context, Umicore lowers its full year 2024 guidance for the Battery Materials Business Group and now expects adjusted EBITDA for this business to be around break-even, including a positive one-off c. € 50 million. This compares to the initially expected adjusted EBITDA for the Business Group in the order of €135 million.
The overall 2024 performance of Umicore’s foundation businesses (Catalysis, Recycling and Specialty Materials) continues to be robust and overall in line with market expectations, confirming their capability to generate strong earnings and free cash flows and industry-leading returns.
Umicore now expects Group adjusted EBITDA for the full year 2024 to be in a range of € 760 million to € 800 million.
The updated guidance reflects a reduction in cathode materials sales which is driven by:
Volumes from legacy contracts coming to an end faster than anticipated;
A delay in the anticipated volume ramp-up of new contracts in Europe as customers are scaling back their electrification ramp-up plans. The take-or-pay mechanisms of these contracts come in gradually during ramp-up;
The volumes for a Chinese battery OEM not materializing in 2024.
Adjusted EBITDA for Battery Materials (previously reported under the former Energy & Surface Technologies Business Group) amounted to €149 million in 2023, which included as reported earlier, substantial one offs related to a non-recurring lithium effect and valuation of battery production scraps.
Umicore has started a process of re-assessing growth projections post 2024 in response to the slowdown and ongoing reviews of the investments plans by EV manufacturers. Umicore is working closely with its customers to create clarity in the coming months. The outcome of this assessment will result in phasing Umicore’s capex plans to closely match the future growth pace of its customer base. In the meantime, capex for 2024 is expected to not exceed € 650 million. Given the slower ramp-up, Umicore is also assessing ways to adjust its cost structure.
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