Umicore's Profit Decline Linked to Weak EV Demand
By Tristan Veyet
(Reuters) - Metals recycling and battery materials group Umicore reported a bigger than expected drop in its annual profit on Friday, hit by declining metal prices and muted growth in demand for electric vehicles.
Shares of the company, which supplies catalytic converters and battery materials for automakers, fell 11% by 0956 GMT, on track for their biggest daily decline since March 2020.
The European auto industry is undergoing a complicated transition amid slower than expected EV sales growth, as carmakers oppose measures aimed at phasing out vehicles that use fossil fuels, such as the European Union's tightened CO2 emission rules that came into force this year.
The EU also raised tariffs on China-made EVs in October, its latest move in trying to shield local manufacturers from cheaper Chinese competitors that has prompted retaliation from Beijing.
"Classically, Umicore has grown with Western OEMs in the Chinese markets. But in the last two, three years, we also heavily focused on gaining market share with the local OEMs," CEO Bart Sap said in a conference call, in reference to the catalysis division. "We're quite successful with this. But despite that, we still lost some market share in China."
The company reported an adjusted net profit of 255 million euros ($267 million) for 2024, down 43% from a year earlier and below analysts' estimate of 266 million euros.
"Umicore hasn’t convincingly demonstrated its right to win in this business thus far and hence some significant structural actions might be needed to reassure the market that more value destruction is not in the offing," J.P.Morgan analysts said about battery materials.
Umicore last year postponed a "large scale" investment in an unspecified battery recycling plant in Europe and paused construction of a battery materials plant in Canada, as it launched a review of the business most affected by weak EV demand.
For 2025, it sees adjusted earnings before interest, taxes, depreciation and amortization of 720 million to 780 million euros, compared with 763 million last year.
($1 = 0.9565 euros)
(Reporting by Tristan Veyet in Gdansk, editing by Milla Nissi)
