Umicore 2013 full year results

2013 resultsProduction of catalysts for the fine

chemicals industry (Picture: Hanau, PMC)

Highlights

Revenues down by 2%

Profitability impacted by lower metal prices, less favourable product/regional mix and start-up costs:

• Recurring EBIT € 304 million (down 18%)

• Recurring EBITDA € 463 million (down 12%)

Cost reduction measures start to have a positive impact

Vision 2015 growth investments on track

Strong free cashflows and high cash return to shareholders

Stable dividend proposed at € 1.00/share

2

Revenues

Revenues down 2% as a result of lower metal prices in Recycling more than offsetting higher volumes in product businesses

883

861

844 96

5

1,11

5

860 98

7 1,14

7

1,24

1

1,23

3

810

864

841

945 98

5

863 1,

013

1,17

7

1,18

7

1,15

7

1,69

3

1,72

5

1,68

5 1,91

0 2,10

0

1,72

3 2,00

0

2,32

3

2,42

7

2,39

0

0

500

1,000

1,500

2,000

2,500

3,000

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

H1 H2

Revenues (excluding metal)(in million €)

Restated for discontinued operations in 2004, 2006 and 2008

Revenues restated in 2011 for reviewed application of revenue definition

3

Profitability

Recurring EBITDA down 12%

• Lower metal prices

• Changes in product and regional mix

• Start-up and qualification costs in Catalysis,particularly in H2

Recurring EBIT down 18%

• Higher depreciation charges

ROCE at 13.6%

H1 H2

Restated in 2004, 2006 and 2008 for discontinued operations in following year

218

188 22

4 255

269

107

247 28

1

266

240

208

184 21

0 216

198

156

222 27

2

258

222

426

372 43

4 471

467

263

469 55

3

524

463

0

100

200

300

400

500

600

700

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Recurring EBITDA(in million €)

155

122 17

0 199

215

50

186 21

5

192

163

126

111

159 16

0

140

97

156

202

181

141

280

233

329 35

9

355

146

343

416

372

304

0

100

200

300

400

500

Recurring EBIT

4

Growth investments on track

Capex of € 280 million:

• Catalysis: new production and testinginfrastructure

• Energy Materials: production capacity inrechargeable battery materials

• Performance Materials: selective growthinvestments

• Recycling: debottlecking in Hoboken, Ag capacityexpansions in Germany and Thailand

R&D spend of € 141 million (corresponds to 6 % of revenues), with some projects moving to commercialisation

H1 H2

R&D and Capex restated in 2004, 2006 and 2008 for discontinued operations in following yearR&D restated for scope adjustment in 2010

R&D and Capex restated in 2012 for reviewed application of definition

62 73 69

68

68 76 74 71

53 51

96

67 71

87

75 69

103

111

115

125

165

136

139 16

3

149

141

0

50

100

150

200

250

R&D expenditure

51 54 50

69

91 103

76

98 86 112

94 91

58

84

125

88

96

115 15

0

168

146

145

108

153

216

190

172 21

3 236

280

0

50

100

150

200

250

300

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Capital expenditure(in million €)

5

Employees

Total number of employees decreased by 381

• Production footprint adjustments mainly in EnergyMaterials and Performance Materials

• Decrease in associated companies primarily due torestructuring in Element Six Abrasives

9,89

5

9,82

8

9,05

3

9,82

6

10,0

79

9,31

5

9,55

8

10,1

64

10,3

96

10,1

90

4,13

1

4,31

4

4,87

9

5,01

8

5,33

4

4,40

5

4,82

8

4,40

8

4,04

2

3,86

7

14,0

26

14,1

42

13,9

32

14,8

44

15,4

13

13,7

20

14,3

86

14,5

72

14,4

38

14,0

57

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Fully consolidated Associates

People


6

Safety

Safety performance further improved in 2013

• Accident frequency rate : 2.08

• 79% of sites accident-free

7.10

6.30 7.

20

5.30

5.32

3.12 3.54

3.61

2.86

2.08

2.00

4.00

6.00

8.00

10.00

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Accident frequency rate

7

Businessreview

2013ECOS ND15 is an example of developing new solutions

to meet the environmental challenges of customers (Picture: Bruges, CSM)

Catalysis

Revenues of Automotive Catalysts were up, with volume growth and the effect of Umicore Shokubai consolidation more than offsetting lower pass-through costs

Volumes in line with regional markets, but margins impacted by:

• product & regional mix

• product development, investment start-up anddepreciation costs

Unfavourable product and regional mix in Precious MetalsChemistry

H1 H2

399

275 33

9

391 45

3

466

314

311 35

9 424

413

42771

2

586 69

9 814

866

894

0

200

400

600

800

1,000

1,200

2

008

2

009

2

010

2

011

2

012

2

013


57

-14

39

46 49 44

7

17

39

44 42

29

64

31

78

89 91

73

-20

0

20

40

60

80

100

120

Recurring EBIT

10

Catalysis

Bad-Säckingen: 2H 2013

Capacity expansions Euro 6 LDD

Onsan: H1 2014

New production capabilities

Nagoya: H2 2013

New technology development centre

Suzhou

1. New production capabilities H1 20142. SCR line for HDD H1 2014

Tulsa: H1 2014

New plant

Florange: 2013 - 2014

Three SCR lines for HDD

Americana: H2 2013

New technology development centre

Precious Metals Chemistry

Automotive Catalysts

Pune: H2 2014

New plant

11

Energy Materials

Significant revenue growth in Rechargeable Battery Materials

• mainly driven by demand for high-end portable electronics

• higher demand for NMC cathodes for automotive applications

Strong volume growth in Cobalt & Specialty Materials slightly offset by lower premiums due to competitive pressure

Revenues in Electro-Optic Materials impacted by weak end markets, germanium optics in particular

Revenues from Thin Film Products up, driven by the display market

Overall profitability of the business group benefited from footprint adjustments and cost reduction measures

H1 H2

205

154

173

180

184

200

190

151 17

4

178

183 20

3

395

305 34

8

358

366 40

3

0

100

200

300

400

500

2

008

2

009

2

010

2

011

2

012

2

013


36

7

24 21

14 12

21

17

20 20

4 13

57

24

44 41

18

25

0

20

40

60

80

Recurring EBIT

12

Energy Materials

Cheonan: H1 2014

Greenfield for precursorsFirst production trials

Cheonan and Jiangmen

1. Capacity expansion H2 20132. Debottlenecking and additional capacity investments 2014

Nashville: H2 2013

Acquisition of Palm Commodities International

Rechargeable Battery Materials

Cobalt & Specialty Materials

Olen

1. Ni refining H2 20132. Co fine powders 2015

13

Performance Materials

Revenues are largely stable

Benefits start to accrue from footprint adjustments and cost reduction measures in Building products, Technical Materials and Platinum Engineered Materials

Continued pressure on recycling and refining margins in Zinc Chemicals

Higher volumes in Electroplating compensating for pressure on premiums

Lower contribution from Element Six Abrasives, affected by weaker end markets

H1 H2

257

208

219 27

1

267

263

226

196 22

7 253

256

247

483

404 44

6 524

523

510

0

100

200

300

400

500

600

700

2

008

2

009

2

010

2

011

2

012

2

013


52

16

47

39

31 29

36

21

29

28

24 26

88

37

75

67

55 55

0

20

40

60

80

100

120

Recurring EBIT

14


Pasir Gudang: H1 2014

Capacity expansion to serve Asia Pacific

Changsha: H1 2015

New plant for Zn powders

Oxford: H2 2013

Synthetic diamond innovation centre

Viviez: H1 2014

New plant for surface-treated products

Element Six Abrasives

Zinc Chemicals

Building Products

Suzhou: H2 2013

Production discontinuation

Melbourne: H2 2013

Production discontinuation

15

16

Recycling

While lower metal prices impacted revenues and profitability, ROCE remained strong at 58%

In Precious Metals Refining:

• Lower metal prices impacted earnings, partially mitigated bylonger term pricing contracts

• Higher intake of residues from non-ferrous metal industries,more than offsetting lower intake of end-of-life products

Lower contribution from the recycling activities in Jewellery & Industrial Metals

Revenues in Precious Metals Management down due to unfavourable price volatility and lower metal prices

H1 H2

95

66

102 13

3

122

103

106

52

93

134

137

97

202

118

195

267

259

200

0

50

100

150

200

250

300

350

Recurring EBIT

253

222

254 31

0

342

307

255

204 25

2 327 339

283

508

427 50

6 637 681

590

0

200

400

600

800

1,000

2

008

2

009

2

010

2

011

2

012

2

013


16

Recycling

Pforzheim: H2 2014

Expansion of Ag recycling

Hoboken

1. 2nd phase of sampling facility expansion H1 20142. Commissioning of biological water treatment H1 20143. New gas cleaning equipment H2 20134. Intention to expand treatment capacity 2014 - 2016

Bangkok: 2013 - 2014

Expansion of Ag recyclingPrecious Metals Refining

Jewellery & Industrial Metals

17

2013 financials

In 2013 Umicore’s recycling operations in Hoboken and Pforzheim were certified conflict-free

by the London Bullion Market Association and Responsible Jewelry Council respectively

Non-recurring elements

Non-recurring EBIT of € -43.4 million

Total negative impact on net result of€ 39 million

Non-recurring items(in million €) 2013

Restructuring charges & provisions (30.6) Environmental charges & provisions (7.7) Impairments on metal inventory (1.6) Other (3.5)

Non-recurring EBIT (43.4)

Non-recurring tax result 4.7 Non-recurring minority result 0.2

Net non-recurring result (38.9)

Net IAS 39 effect (0.1)

Total impact on net result (39.0)

19

Strong free cashflows

Cashflow generated from operations up 8.7 % to € 523 million

• Includes significant release of working capital

Tax paid back to more normalised level

Significant investments

• Capex of € 280m

• Acquisition of Palm Commodities

Nonetheless, increase in net cashflow before financing

195

258

-68

309

150 18

6

-100

0

100

200

300

400

Net cashflow before financing

430

451

143

530

481 52

30

100

200

300

400

500

600

2

008

2

009

2

010

2

011

2

012

2

013

Cashflow generated from operations(in million €)

20

Shareholder returns

Stable dividend proposed at € 1.00 per share

Corresponds to 51 % payout ratio based on recurring EPS of € 1.96 per share

Implied gross dividend yield exceeds 3.0 %

Purchased 2.4 million treasury shares in 2013, amounting to € 84.7 million.

Total cash returned to shareholders (dividend + buybacks) of € 196 million or 38 % of cashflowgenerated by operations

Remaining headroom under existing buyback authorisation of 1.8 million shares

1.41

1.21

1.73 1.

80 1.93

1.24

1.40

2.69

2.47

1.96

0.33

0.37

0.42

0.65

0.65

0.65 0.

80

1.00

1.00

1.00

23%

31%

24%

36%34%

52%57%

37%41%

51%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.50

1.00

1.50

2.00

2.50

3.00

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Recurring EPS Dividend Payout ratio

Data per share(in € / share)

Restated for discontinued operations in 2004, 2006 and 2008* Dividend proposed for 2013

21

Further reduction of net financial debt

Net debt31/122012

Operatingcashflow

Workingcapital

changes

CapexCap dev

Taxes Netinterest

Dividends

Sharebuybacks

Other

Net debt31/122013

-222

441

97 -280

-14-38

-3 -115

-85

3

-215

-250

-200

-150

-100

-50

0

50

100

150

200

250

300

350(in million €)

Net financial debt evolution

* Operating cashflow = cashflow generated from operations less change in working capital requirement plusdividend and grants received

22

Strong capital structure maintained

585

515

813

140

333

177

360

267

222

215

31% 34

%

45%

10%

20%

11% 19

%

13%

11%

11%

1.6

1.3

1.7

1.1

0.8

1.0

0.5 0.

6

0.5

0.4

0

250

500

750

1,000

1,250

1,500

2

004

2

005

2

006

2

007

2

008

2

009

2

010

2

011

2

012

2

013

Net financial debt Gearing ratio (debt / debt+equity)

Average net debt / recurring EBITDA

Net financial debt


(in million €)

Net financial debt € 215 million

Corresponds to :

• 0.4 x Average net debt to recurring EBITDA ratio

• 11 % net gearing ratio

Average weighted net interest rate down to 1.61 % (vs 1.92 %)

Increased committed credit lines in 2013 with new syndicated loan

23

Outlook

Outlook

• Revenues set to increase. Mainimpact of Euro 6/VI business in H2

• Continued growth in China and NorthAmerica

• Lower revenues and margins in theabsence of any recovery in preciousand specialty metals prices

• Supportive supply environment set toremain

• Trends unchanged in most endmarkets

• Margin improvement as a result ofcost reduction measures

• Further sales growth in RechargeableBattery Materials

• Recovery underway in some otherend markets


CatalysisRecycling

Energy Materials

25

Outlook

While we expect a definite improvement in the performance of our product businesses, this may not be sufficient to fully offset the impact of lower metal prices on the profitability of the Recycling business group. If current metal prices persist, full year recurring EBIT could end up slightly below the level of 2013.

26

Financial calendar

29/04/2014 2014 Q1 trading update & Annual General Meeting

02/05/2014 Ex dividend trading date

06/05/2014 Dividend record date

07/05/2014 Dividend payment date

31/07/2014 2014 H1 results publication

23/10/2014 2014 Q3 trading update

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.

28

Investor Relations

Evelien Goovaerts [email protected] +32-2-227 78 38