Umicore’s ‘all in’ bet on battery materials knocks shares

By Olivier Sorgho

(Reuters) -Belgium’s Umicore plans to invest around 5 billion euros ($5.25 billion) by 2026 to capitalise on the shift towards electric vehicles, the maker of chemicals and battery materials said on Wednesday, jolting investors and sending shares tumbling 15%.

The investments will be mostly used to boost Umicore’s battery recycling and rechargeable battery materials units, the group said.

“This is an ‘all in’ approach to battery materials,” said Berenberg analyst Sebastian Bray, adding the market was likely surprised by the magnitude of the investments.

“They have higher investments in the 2022-26 part, which we assumed more balanced until 2030,” Massimo Bonisoli from Equita SIM added.

Umicore is ramping up its production capacities for cathode materials used in rechargeable batteries, but faces tough competition from China and South Korea, which has already pushed Britain’s Johnson Matthey out of the race.

The company has bet on its battery business to make up for an expected decline in supplying catalytic converters used to control car emissions, as automakers shift toward electric vehicles.

“The shift to cleaner mobility is expected to grow threefold by 2030,” Umicore said in a statement ahead of its capital markets day.

Umicore in April announced a partnership with ACC – a Stellantis, Mercedes-Benz and TotalEnergies joint company – to supply electric vehicle cathode materials.

Similarly, Volkswagen in December announced a joint venture with Umicore for precursor and cathode materials in Europe, aiming to produce enough to power 2.2 million electric vehicles by the end of the decade.

Umicore also said it saw potential to more than double its revenues by 2030 and attain adjusted core profit (EBITDA) margins of more than 20% throughout the period.

($1 = 0.9527 euros)

(Reporting by Olivier Sorgho in Gdansk; editing by Milla Nissi and Jason Neely)