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2010 Report to Shareholders & Society
2
Overview
•
Economic report
•
Environmental report
•
Social report
•
Governance report
•
Vision 2015
Economic
report
4
Highlights
•
Results rebounded to pre-downturn levels driven by recovering demand
•
Strong balance sheet maintained
•
EPS reached record level
•
Full year dividend proposed of ¤
0.80 / share
•
Shareprice reflecting recovery
•
Continued investment in growth projects
5
Recovering economy drove revenue growth…
•
Revenues up 16 % at ¤
2 billion
•
Recovery seen in all business segments
•
Global car production up 25 %
•
High levels of supply for recycling in all areas
•
Stronger demand in consumer electronics
•
Improved demand from most other sectors eg
tooling, jewellery, electric….
Revenues
510 529
883 861 844965
860987526
829
810 864 841
945
985
863
1013
1115
1358
16931725 1685
1910
2100
1723
2000
1036
0
500
1000
1500
2000
2500
2002
2003
2004
2005
2006
2007
2008
2009
2010
(in million €)
H1 H2
Restated for discontinued operations in 2004, 2006 and 2008
66
…and profitability
•
Recurring EBIT close to pre-downturn levels driven primarily by growing revenues
•
ROCE of 17.5 % reflects recovering EBIT
and disciplined capital management
Recurring EBIT
48 48
155122
160199 215
50
186
49
98
126
111
169160 140
97
156
98
233
329359 355 343
280
146 146
15.3%
19.6%
17.5%
7.7%7.4%
14.0%
18.9%
8.1%
17.8%
0
100
200
300
400
500
600
2002
2003
2004
2005
2006
2007
2008
2009
2010
(in million €)
H1 H2 ROCE
Restated for discontinued operations in 2004, 2006 and 2008
7
The balance sheet remains strong
Net financial debt
767 725616 639
178
333
177
360340
643585
515
360
204
15.8%
35.0%
31.3%33.7%
45.1%
10.4%
20.0%
11.4%
18.6%
0
250
500
750
1000
1250
1500
1750
2002
2003
2004
2005
2006
2007
2008
2009
2010
(in million €)
SecuritisationNet debt, continued
Gearing ratio (debt / (debt+equity), continued
Restated for discontinued operations in 2004
•
At year end net debt stood at ¤
360 million
(¤
177 million at year end 2009)
•
The increase reflects the growing working capital needs which were largely driven by rising precious metal prices
•
The capital structure remains strong with a gearing ratio at year end of 18.6 %
8
EPS at record level dividend increase proposed
•
Recurring EPS at a record level of ¤
2.33 per share (up 219 %)
•
Proposed dividend of ¤
0.80 per share
•
Taking into account the interim dividend of ¤
0.325 per share paid out in October 2010, a gross amount of ¤
0.475 per share will be paid out on 4 May 2011
Recurring EPS
0.28 0.33
0.84
0.62
0.95 0.96
1.17 1.24
0.31
0.48
0.570.59
0.78 0.830.74
0.55
1.09
0.18
0.600.80
1.801.93
0.73
2.33
1.411.21
1.73
0.00
0.50
1.00
1.50
2.00
2.50
3.00
2002
2003
2004
2005
2006
2007
2008
2009
2010
(in € / share)
H1 H2
Restated for discontinued operations in 2004, 2006 and 2008
9
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0 €
5 €
10 €
15 €
20 €
25 €
30 €
35 €
40 €
45 €
Umicore yearly / monthly average daily trading volume (year-to-date in 2011)
Umicore share price
Bel 20 index (indexed)
Dow Jones Specialty Chemicals index (indexed)
Shareprice reflecting recovery
+66 % over 2010
10
Continued investment in growth projects
•
R&D spend of ¤
135 million
•
Represents 6 % of revenues
•
R&D efforts expected to remain at high levels in 2011
•
Capex
reached ¤
172 million
•
Continued capacity and capability investments in Automotive Catalyst and Cobalt & Specialty Materials
•
New battery recycling plant in Hoboken
•
Capex
expected to increase in 2011
R&D
66 72 73 68 66
5463
95
67 67
3148 44
111126 132
167
136 135
0
50
100
150
200
2002
2003
2004
2005
2006
2007
2008
2009
2010(in €
million)
Capex
78 64 51 54 5069
91 10376
74 78 94 91
58
84
12588
96
151 142 146 145
108
153
216190
172
0
50
100
150
200
250
11
•
Preparing for the (H)EV market
•
Intensive qualification on-going with battery manufacturers and OEMs
•
Capacity & capability expansion in Japan, Korea and China well on track
•
Strengthening of technology and IP portfolio
•
Preparing for the HDD market
•
Awards for future HDD business secured in 2010; further positioning on-going
•
Expansion of production capacity & facilities for testing and development in China and France
•
By 2012 Umicore will be able to offer HDD production and development services worldwide
•
Battery recycling with UHT technology•
Successful positioning of Umicore with contracts being agreed with HEV and battery producers
•
Industrial-scale UHT plant in Hoboken on schedule for commissioning mid 2011
•
Pre-processing and dismantling facility established in Germany for HEV batteries
Continued investment in growth projects
2011 Q1 Trading update
13
Highlights
•
Strong start of the year continuing the trend seen in 2010 and in line with longer-term growth ambitions
•
Umicore’s revenues up 13 % year on year, with strong growth in all business groups
•
Strong operational cashflows
•
Net financial debt below ¤
300 million
•
Full year recurring EBIT expected in a range of ¤
400 to 425 million
14
Impact of Japan earthquake and tsunami
•
No Umicore employees hurt
•
Operational impact on Umicore very limited
•
Automotive catalyst plant in Himeji and battery materials plant in under construction in Kobe undamaged
•
Light damage to Tsukuba plant, smaller plant serving Electroplating and Precious Metals Chemistry businesses
•
Operations all running normally today
•
Economic impact on Umicore limited as direct exposure to Japan is limited
•
Automotive market severely disrupted, but Umicore exposure to the country relatively smaller
•
Battery market partially disrupted
•
Reduced demand in Q2 might be compensated for in second part of the year
•
Board of Directors visited Japan in April
15
Business overview
•
Revenues up 13 %
•
Automotive Catalysts
revenues outperformed the global car production growth of 5%
•
In line with market in Europe, with increased sales volumes of DPFs
•
Strong outperformance in North America,
due to specific customer exposure and introduction of new technology
•
Overall better than the market in Asia
•
Strong start of the year for Precious Metals Chemistry
•
Revenues up 12 %
•
Cobalt & Specialty Materials revenues well up
•
Recovery of volumes for rechargeable battery materials, but price pressure remains
•
Further improvement for compounds used in ceramic and chemical applications
•
Growth in recycling activities driven by increased supply availability
•
Increase in Electro-Optic Materials
revenues, mainly due to increase in substrates sales
•
Revenues well up for Thin Film Products
in line with electronics end markets
Catalysis Energy Materials
16
Business overview
•
Revenues up 10 %
•
Technical Materials
and Element Six Abrasives revenues well up in line with activity levels in tooling and electrical industry
•
Gradual improvement in Building Products, partially due to better weather conditions
•
Continued recovery in Zinc Chemicals
for most zinc and zinc oxide powder businesses
•
Stable revenues in
Electroplating
•
Platinum Engineered Materials somewhat down despite growing end-market, due to project-nature of the business
•
Revenues up 16 %
•
Precious Metals Refining
revenues well up
•
Buoyant supply conditions improve input mix, both for industrial residues and e-scrap
•
Higher received metal price for precious and specialty metals
•
Jewellery & Industrial Metals benefited from strong product demand and increased recycling volumes
•
Higher contribution from
Precious Metals Management
•
Battery Recycling pilot plant tests start in May
Performance Materials Recycling
17
Outlook
Based on Q1 performance and assuming current market conditions continue to prevail,
Umicore expects full year recurring EBIT
to be in the range of ¤
400
million
to ¤
425
million
Reflects year-on-year growth pattern observed in Catalysis, buoyant supply conditions in Recycling, stable performance
in Energy Materials and Performance Materials
Environmental
report
19
Metal emissions/revenues
2008 2009 2010
to water to air
Environmental performance overview
•
Small increase in environ-
mental impact mainly due to higher production levels
•
Environmental emissions were lower compared to pre-
downturn levels, with similar production levels and revenues for most indicators
•
Higher compliance excess rate mainly due to higher number of non compliant readings in the segment Performance Materials
CO2 emissions/revenues
2008 2009 2010
Water & energy consumption / revenues
2008 2009 2010
water energy
Produced waste/revenues
2008 2009 2010
hazardous non hazardous
20
Environmental objectives 2006-2010
Social
report
22
Social performance overview
•
Umicore recovered from the downturn
•
Phasing out of temporary measures
•
Increase of workforce
end 2009: 13,720 →
end 2010: 14,386
•
New greenfields
and expansions on-going
•
Average number of training hours stable at 44.3h per employee
•
Health & Safety
•
Complete dataset of occupational health indicators for all the business units and sites finalised
•
Safety performance slightly below that of 2009
•
Group safety initiative strengthened further in the quest for a zero accident work environment
Accident frequency rate
02
46
810
1214
2002
2003
2004
2005
2006
2007
2008
2009
2010
Accident severity rate
0.0
0.1
0.2
0.3
0.4
0.5
23
People survey 2010
•
High participation rate of 86 %
•
Overall results shows consistent progress in most categories
•
In most countries where Umicore has a presence, it scores better than the national benchmark
•
There is still room for progress: with the Vision 2015 objectives and specific action plans following the 2010 survey, Umicore aims to further improve its scores
Difference with 2007
+3
+1
+1
-1
+5
+3
+1
+2
+4
+1
+3
+2
0
Performance evaluation, recognition & rewards
Learning & development
Well-being
Sustainable engagement index
Information & communication
Customer focus & quality
Leadership
Involvement & empowerment
Direct supervision
Operational efficiency
Engagement
Social & environmental responsibility
Safety
24
Social objectives 2006-2010
Governance
report
26
Corporate governance
•
Main subjects of Board discussion
•
Financial performance and EHS performance
•
Budget, operational and investment plans
•
Strategic headlines and development projects (including Vision 2015 and potential acquisitions)
•
Succession planning
•
7 full Board meetings in 2010 with excellent attendance record
•
97 % for full Board meetings
•
95 % for all committees
•
The Chairman will conduct a review of the performance of the Board and its Committees in the course of 2011
27
Board remuneration changes
•
Board recommends to add an annual grant of restricted stock to the current fee structure,
amounting to 300 shares per Board member, except the CEO
•
Based on conducted remuneration benchmarking surveys early 2011,
on companies with market cap of ¤
4–6 billion
•
Concludes that Umicore Board fees are low in comparison to benchmark
•
Board approved the following changes to Committee fees
•
Chairman of the Audit Committee:
Introduction of annual fixed fee of ¤
10,000 + attendance fee reduced from ¤
6,000 to ¤
5,000
•
Other members of Audit Committee:
Introduction of annual fixed fee of ¤
5,000 + attendance fee reduced from ¤
4,000 to ¤
3,000
•
Chairman of the Nomination & Remuneration Committee:
Attendance fee increased from ¤
4,000 to ¤
5,000
28
Executive remuneration
•
Shares & options held by ExCom
at end 2010
•
Outstanding options: 713,625
(strike price range of ¤
14.44-
32.57)
•
Total number of shares held by Executive Committee members at end 2010 : 211,550
•
Belgian legislation adopted by Umicore one year before becoming mandatory, i.e. 2010
•
Deferred pay-out of CEO & ExCom’s
cash bonus:
•
50 % paid undeferred
•
25 % paid after 2 years
•
25 % paid after 3 years
•
ExCom
remuneration cost in 2010 includes pension settlement of retiring EVP
2009 2010
CEOfixed 500,000 500,000variable 250,000 240,000pension 234,672 225,783other 26,275 28,196shares granted1 66,054 113,898options (B&S value at grant) 230,895 462,600Total 1,307,896 1,570,477
ExCom2
fixed 2,055,398 1,918,990variable 395,083 572,500pension 531,700 1,312,775other 454,153 420,832shares granted1 396,591 624,303options (B&S value at grant) 492,576 771,000Total 4,325,501 5,620,400
1 For services rendered in previous year; lock-up of 3 years
2 Excluding CEO
Vision 2015
30
Vision 2015 –
an overview
•
New Vision 2015 strategy introduced in 2010
•
Key growth areas identified, responding to global megatrends:
•
Expand Automotive Catalysts into new segments
•
Materials for (H)EV batteries
•
Expand Recycling especially through UHT technology
•
Grow Umicore’s presence in materials for PV
•
Based on existing competences and technology
31
Key megatrends for Umicore
More stringent emission controlResource scarcity
Renewable energy Electrification of the automobile
32
Umicore well positioned & growth opportunities well aligned with key megatrends
Market position
Umicore is a leading producer of key materials for rechargeable batteries for portable electronics
Market position
Umicore provides catalysts for 1 out of 3 cars in the world as well as for trucks & non-road vehicles
Market position
Umicore supplies key innovative materials for high-efficiency solar cells and other photovoltaic applications
Growth opportunity
Expand autocat
activity into new segments
Growth opportunity
Develop Umicore’s presence in PV materials
Growth opportunity
Expand battery materials activity into (H)EVs
Market position
Umicore is the largest recycler of precious metals, able to recycle more than 20 different metals
Growth opportunity
Expand recycling through UHT technology
Resource scarcity
Renewable energy Electrification of the automobile
More stringent emission control
33
New sustainability objectives
•
Previous set of 10 environmental & social objectives ran from 2006-2010
•
Designed to raise the level of awareness and preparedness through the Group
•
Qualitative in nature
•
Stakeholder engagement process launched in 2009
•
New set of 10 ambitious and largely quantitative objectives set for 2011-2015
and will equip Umicore to demonstrate excellence in:
•
Creating growth and returns
•
Promoting a safe and healthy workplace
•
Talent attraction and retention
•
Environmental responsibility and risk management
•
Product responsibility
34
Vision
2015: New set of objectives
Great place to work
Eco-
efficiency
Stakeholder engagement
Economic performance
Zero lost time accidents
Occupational exposure reduction
People development
Preferred employer
We aim to have ZERO lost time accidents
We will reduce the body concentrations of specific metals to which our employees have an exposure
All employees will receive an annual appraisal to discuss individual development
We will target our actions based on the results of the 2010 People Survey
Growth and returns
Reduce carbon footprint
Emission reduction
Product sustainability
We aim to reduce our CO2
emissions by 20 % vs
2006 levels and based on 2006 industrial scope
We aim to reduce by 20 % the impact of metal emissions to water and air vs
2009 levels
We will invest in tools to better understand and measure the life cycles and impacts of our products
Sustainable procurement
Local community
We will implement the new Sustainable Procurement Charter throughout our business
All our sites will be expected to make further steps in identifying key stakeholders and engaging with the local community
We aim to achieve double digit revenue growth and our goal is to
generate an average return on capital employed of more than 15%
35
Forward-looking statements
This presentation contains forward-looking information that involves risks and uncertainties, including statements about Umicore’s plans, objectives, expectations and intentions.
Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Umicore.
Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected.
As a result, neither Umicore nor any other person assumes any responsibility for the accuracy of these forward-looking statements.
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