Umicore's core profit beat and efficiency drive fails to lift shares

By Dimitri Rhodes

Belgian metal recycling group Umicore UMI reported second-quarter core profit above market expectations on Friday, citing sustained demand, a supportive metal price environment and efficiency improvements.

Umicore had said in March it would cut its capital expenditure by 1.4 billion euros ($1.6 billion) between 2025 and 2028 to 1.6 billion euros. That included an 800 million euro reduction in its battery cathode materials unit amid weaker than expected demand for electric vehicles.

"We are putting a strong focus on those things that we can control: costs, cash, and capital," CEO Bart Sap said in a call with analysts.

Shares in Umicore were down 5.5% to 13.18 euros at 1116 GMT, paring losses after falling as much as 7.7%.

ABN AMRO Oddo analyst Martijn den Drijver told Reuters this drop was from "the relatively poor quality" of the group's core profit, free cash flow and net debt, as well as lower sales volumes at its battery materials unit.

Umicore makes catalytic converters and supplies battery materials such as nickel, manganese and cobalt to automakers and other companies that make batteries for EV manufacturers.

The group's adjusted earnings before interest, taxes, depreciation and amortization was 433 million euros in the second quarter, beating analysts' forecast of 421 million euros in a Vara consensus.

Umicore said its battery recycling unit will focus in the next two years on optimising its recycling processes and technologies at its battery recycling pilot plant in Belgium.

"The timing for the lithium-ion battery recycling opportunity is primarily driven by the end-of-life volume of batteries from EVs, which is projected to increase sharply starting in the mid-2030s," it said in a statement

It also said that it was implementing a new structure that would group businesses related to the electric vehicle market into a single unit called Battery Materials Solutions. The new unit will include its businesses producing battery cathode materials and offering solutions for battery recycling.

Umicore confirmed its 2025 outlook, which it had raised in June on the back of a stronger performance from its catalysis business unit.

($1 = 0.8749 euros)