Umicore 2020 FY presentation

Umicore FY 2020 performance

11 February 2021

Highlights 2020

2021 outlook

Maintaining strategic course while responding effectively to COVID-19

crisis

2020 business review

2020 financial review

Wrap-up

Q&A

Overview

Umicore FY 2020 performance 2

Highlights 2020

Umicore FY 2020 performance 3

Record performance with a

nearly doubling of adj. EBIT

YoY, reflecting strong growth

across all business units

Exceptional metal price

environment

High activity levels despite

COVID-19 crisis and favorable

trading conditions

Impact of pandemic on several

end-markets

Excluding impact of excess

inventories, Umicore’s EV

cathode materials volumes grew

broadly in line with EV battery

demand

Adj. EBIT reflecting underutilized

capacity and pricing pressure in

China, as well as costs related to

recent and ongoing expansions

Significant impact of pandemic

on automotive market in H1

Umicore disproportionately

exposed to market recovery in

H2 due to strong position in

gasoline for LDV

Strict cost management and

operational excellence

initiatives

3

CATALYSIS

ENERGY & SURFACE

TECHNOLOGIES RECYCLING

Record earnings in unprecedented conditions

2021 outlook

5

2021 outlook

Umicore expects to achieve substantial growth in earnings in 2021,

with growth in all business Groups

Given the current limited visibility, this outlook statement is made under the assumption that the ongoing COVID-19

outbreak would not result in additional material or protracted disruptions to the economy or Umicore’s operations


CATALYSIS RECYCLINGENERGY & SURFACE

TECHNOLOGIES

Further benefit from leading edge

technology offering in gasoline

applications for LDV in China and

Europe

Initial impact of China VI legislation

for HDD applications

Savings from footprint adjustments

and cost improvements carried out

in 2020

Favorable metal prices

Supportive supply mix and

moderate volume growth in

Precious Metals Refining

If current elevated metal price

levels were to prevail throughout

the year, Adj. EBIT would increase

very significantly vs 2020

Substantial growth in sales volumes of

cathode materials for EVs

Persisting Chinese overcapacity and

pricing pressure

Some € 50m increase in fixed costs in

Rechargeable Battery Materials

Volume growth to result in meaningful

Adj. EBIT growth, in line with current

market consensus1

1 Umicore has engaged Vara Research GmbH to survey brokerage analysts to provide analysts' consensus estimates to the market. The most recent consensus is

available on https://vara-services.com/umicore/

Maintaining the strategic course while

responding effectively to the COVID-19 crisis

Maintaining the strategic course…

7Umicore FY 2020 performance

Strong regulatory drivers underpin Umicore’s growth

strategy

Umicore committed to strategic investments in clean mobility

and recycling

EU ambition : zero-emission mobility

China :

NEV subsidy plan extended (2022)

Higher NEV penetration rate (20% by

2025, 50% by 2035)

Green recovery measures and stimuli for

cleaner mobility

Stricter emission norms for ICE (China VI

regulation for HDD in July 2021)

Increased need for a more circular

economy

Greenfield cathode materials plant in Poland :

Commissioning by end of H1 2021

1st industrial-scale plant in Europe

Fuel cell catalyst production ramp-up in Korea

Catalyst production capacity expansion in China

for LDV and HDV

Multi-year investment program to improve safety

and environmental performance of Hoboken

recycling plant

… while responding effectively to the COVID-19

crisis

8

Health & safety Strong capital

and liquidity

management


Remain top priority

Strict hygiene and

other precautionary

measures

Dedicated task force

monitoring global

operations

Strict cost

management

Optimization of

working capital

Postponement of

certain investments

Further strengthening

of liquidity

Production

footprint

reassessment

Consolidation of

North American

Automotive Catalysts

production

Streamlining of

Cobalt & Specialty

Materials activities

Impairment of certain

assets

2020 business review

Free Operating Cash Flow

€ 167 m (- € 39 m in 2019)

Net debt at € 1,414 m

Net debt / LTM Adj. EBITDA 1.76x

Key figures FY 2020

1010

Record earnings in unprecedented conditions

€ 3.2 bn

-4% YoY

REVENUES

Adjusted EPS € 1.34

Proposed gross annual dividend of

€ 0.75 per share

Adjusted NET PROFIT

(Group share) € 322 m

ROCE 12.1%

€ 536 m

+5% YoY

Adjusted EBIT

€ 403 mCAPEX€ 804 m

+7% YoY

Adjusted EBITDA


Note: All references to revenues in this document refer to revenues excluding metals (all revenue elements – value of purchased metals)

-7%-5%

-39%

-93%

-64%

-22%

-10%

-18%

3%

-4%

1% 3%

Ja

n

Feb

Mar

Apr

May

Ju

n

Ju

l

Aug

Sep

Oct

No

v

De

c

COVID-19 outbreak: significant impact on

auto-industry

FY 2020 YoY evolution of passenger car production across all powertrains (source: IHS & Umicore - 31/12/2020)

China Europe North America Global market


-12%

-21%

-34%

-62%

-51%

-16%

-5%-8%

5% 3%

-2%

1%

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

-27%

-88%

-47%

-1%

16%21%

20%

6%

12%9%

3%

-2%

Ja

n

Feb

Mar

Apr

May

Ju

n

Ju

l

Aug

Sep

Oct

No

v

De

c-2%

3%

-31%

-99%

-84%

-20%

6%

-6%

3% 3%

-9%

5%

Ja

n

Feb

Mar

Apr

May

Ju

n

Ju

l

Aug

Sep

Oct

No

v

De

c

-18% YoY-5% YoY -22% YoY -20% YoY

H1: shut down of car OEM’s assembly lines and dealerships in key regions as a result of government imposed lock-downs

H2: pick-up in global car demand, albeit with discrepancies between regions in terms of timing, speed and intensity of the recovery

11

Automotive Catalysts

Revenue decline much lower than global car market

contraction

Disproportionate benefit from market recovery in H2

Outperformed LDV market in China and Europe

Higher sales of catalysts for HDD applications

Cost savings (footprint adjustments + operational

excellence initiatives)

Precious Metals ChemistryRevenues down due to COVID-19 impact on

automotive industry

Continued strong demand for fuel cell catalysts

Catalysis FY 2020 performance

12

Revenues -7% and Adj. EBIT -17%; reflecting severe impact from the pandemic in H1


REVENUES

H1

H2

598 633 709 717571

565 620652 743

794

1,1631,253

1,360 1,460 1,364

0

300

600

900

1,200

1,500

2016

2017

2018

2019

2020

78 81 86 87

21

75 85 82 99

132

152166 168

185

154

0

50

100

150

200

201

6

201

7

201

8

201

9

202

0

Adjusted EBIT

million €

Evolution global EV LDV battery demand (GWh)


Source: EV Volumes, Umicore

EV battery demand evolution

13

Global market

137

60%

79%

100%

23%

17%

0%

20%

40%

60%

80%

100%

120%

0

20

40

60

80

100

120

140

2015 2016 2017 2018 2019 2020

Global (LDV in Gwh)

Global YoY LDV GWh growth (%)

Global EV battery market up 17% to 137

GWh, driven by Europe

Regional differences in demand patterns:

Little year-on-year growth in China, well

below industry anticipations

More than doubling of demand in

Europe driven by CO2 Directive

Contrasting evolution in China with demand

dropping in H1 and some recovery starting at

year-end

14

Revenues -15%; Adj. EBIT -59%; severe COVID-19 impact and significant negative

operating leverage


Rechargeable Battery Materials

Lower cathode materials revenues: higher NMC volumes for

EVs; lower LCO and ESS volumes

Pricing pressure, underutilized capacity in China

Higher fixed costs related to expansions

Cobalt & Specialty Materials

Lower revenues reflecting impact of COVID-19

Lower contribution from refining & recycling activities; reduced

demand for cobalt and nickel chemicals

Electroplating recorded slightly higher revenues; revenues

in Electro-Optic Materials decreased

H1

H2

REVENUES

million €

E&ST FY 2020 performance

288 398650 607 557

322

495

639 618488610

894

1,289 1,225

1,045

0

250

500

750

1,000

1,250

1,500

2016

2017

2018

2019

2020

37 61121 102

5445

79

136

81

21

82

141

257

183

75

0

50

100

150

200

250

300

20

16

20

17

20

18

20

19

20

20

Adjusted EBIT

Recycling FY 2020 performance


An exceptional metal price environment, in particular for rhodium

Historically high and volatile

precious and PGM price levels in

2020, in particular for rhodium.

Rhodium price surged in H2 20 in a

context of tight supply and high

demand from the car industry as a

result of increasingly stringent

emission norms.

Current prices for precious and

PGM metals already well above the

average received prices in 2020.0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

2018 2019 2020

Palladium (EUR/kg)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

2018 2019 2020

Rhodium (EUR/kg)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

Ja

n

Ap

r

Ju

l

Oct

2018 2019 2020

Gold (EUR/kg)

Source: Umicore

*Comparison of average metal rates December 2019 vs December 2020

+148% Dec. 2019/2020*

+12% Dec. 2019/2020*

+33% Dec. 2019/2020*

62 73 79 76

19163 55 56112

171

125 128 135

188

362

0

100

200

300

400

20

16

20

17

20

18

20

19

20

20

H1

H2

Recycling FY 2020 performance

16

Revenues +23%; Adj. EBIT +92%; higher metal prices and to a lesser extent

favorable trading conditions and supply mix


Precious Metals Recycling

Higher metal prices, particularly for PGMs

Supportive supply environment

Supportive trading conditions

Higher processed volumes (vs. extended maintenance

in ‘19)

Increased Jewelry & Industrial Metals revenues

Substantial increase in earnings contribution from

Precious Metals Management

REVENUES

323 339 327 313440

318 311 300 368

396641 650 626

681

836

0

250

500

750

1,000

2016

2017

2018

2019

2020

Adjusted EBIT

million €

2020 financial review

18

Adj. EBIT & Adj. EBIT margin

Group, excluding discontinued activities, million € Umicore FY 2020 performance

Record Adj. EBIT(DA) and margins driven by

Recycling

Record adj. EBIT (€ 536 m) and record adj. EBIT

margin

Stellar adj. EBIT growth in Recycling more than offset

decreases in Catalysis and E&ST.

Includes € 24 m higher D&A charges year on year from

recent investments and acquisition.

Strong rebound in Catalysis with 2H adj. EBIT, up 34 %

year on year.

Record adj. EBIT margin driven by higher metal margin

in Recycling.

Record adj. EBITDA (€ 804 m) and record adj.

EBITDA margin

Strong operating cash flow with highest adjusted EBITDA

contribution in history.

Adj. EBITDA up 7 % year on year vs + 5 % for adj. EBIT.

Adj EBITDA margins more resilient across business

groups than adj. EBIT.

Adj. EBITDA & Adj. EBITDA margin

155 195 261 240 243

165203

252 269 293320

398

513509

53612.6%

13.2%

15.5% 14.8%16.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

200

400

600

800

2016

2017

2018

2019

2020

238 288 364 357 376

258299

356 396 429

19.9% 20.0%21.9% 22.1%

24.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1000

1200

2016 2017 2018 2019 2020

496587

720805

753

Pronounced operating leverage effects1H 2020

2H 2020

FY 2020


Group (YoY delta in %)

1H 2020 2H 2020 FY 2020

Revenues -4% -3% -4%

Adj. EBITDA +5% +8% +7%

Adj. EBIT +1% +9% +5%

Full P&L

20

FY 2019

508.9

(83.2)

(102.5)

323.1

(11.4)

311.7

1.30

(23.9)

287.8

Adjusted EBIT

- Net finance cost

- Adjusted Tax

Adjusted net result

- Minorities

Adjusted net result Group share

Adjusted EPS

Adjustments to net result Group

share

Net result Group share


FY 2020Million €

Slight increase in Adj. net Group

result and Adj. EPS

Higher interest charges mainly

due to higher financial debt

Stable adjusted tax charge and

stable effective adjusted group

tax rate (24.2%)

Substantial adjustments in

response to COVID-19

536.4

(104.2)

(102.7)

329.4

(7.0)

322.4

1.34

(191.9)

130.5

Substantial adjustments to EBIT


Million €

1H 2020

(31)

(31)

(1)

(9)

(72)

14

(1)

(58)

Restructuring-related

Selected asset-impairments

Environmental

Other

Total EBIT adjustments

Adjusted tax result

Adjusted minority result

Net adjustments (Group Share)

Million €

(97)

(14)

(55)

1

(165)

30

3

(134)

(128)

(45)

(56)

(8)

(237)

44

2

(192)

2H 2020 FY 2020 - € 237 m EBIT adjustments :

• 1H : concentrated in Catalysis

• 2H : concentrated in E&ST and

Recycling

• >50% restructuring-related

• Hoboken green zone provision of

€ 50 m

• - € 147 m non-cash charges vs - €

90 m (future) cash out

• Net result impact : - € 192 m

• Full year adjustments to EBIT per business group :

• Catalysis : - € 57 m

• E&ST : - € 112 m

• Recycling : - € 51 m

• Corporate : - € 17 m

(of which Element 6 : - € 14 m)

22Umicore FY 2020 performance*Free cashflow from operations = cashflow generated from operations – capex & capitalized development expenses

Cash flow from operations before changes in

working capital up 13 % at € 707 m

Increase in cash working capital of € 104 m

mostly driven by higher PGM prices

Cash working capital increase mostly in Catalysis

(Recycling to a lesser extent); decrease in E&ST

Cash flow from operations after working capital

up 10 % at € 603 m

Free cash flow from operations up from - € 39

m in 2019 to € 168 m

Highest amount in recent years

Selective capex spending in view of market

context (€ 403 m vs € 553 m in 2019)

Increase in free operating cash flows million €, continued operations only

million €, continued operations only

323

444

213

92

549

603

-113

13

-276

-708

-78 -104

436

431

489

800627

707

-1000

-500

0

500

1000

FY15 FY16 FY17 FY18 FY19 FY20

Cashflow generated from operations after net working capital cash flowNet working capital cash flowsCashflow from operations before net working capital cash flow

323444

21392

549 603

-225 -288-377

-498 -588

-435

98156

-164

-406 -39

168

-800

-600

-400

-200

0

200

400

600

800

FY15 FY16 FY17 FY18 FY19 FY20

Cashflow generated from operations after net working capital cash flowCapex + capitalized development expensesFree cashflow from operations

603

2956 12

-50

0

50

100

150

200

250

300

350

400

450

500

550

600

650


Net cash flow bridge

million €

Conversion

right of

convertible

bond

recognized

in equity

Cashflow

from

operations

Capex &

capitalized

development

expenses

Free

Operating

Cashflow

Net interest

paid

Other (FX,

own shares,

lease

liability…)

Decrease in

reported net

financial debt

Free operating cashflow of

€ 168 million resulting in a

€ 29 million decrease in

reported net debt

€ 44 million portion of

convertible bond accounted for

as equity

Dividend cash out of € 60 m

limited to interim dividend

payout in H2 20

Dividends

paid to

Umicore

shareholders

435

168

79

60 44

296

840 861

1443 14140.56

1.40

1.19

1.921.76

-0.6

-0.1

0.4

0.9

1.4

1.9

0100200300400500600700800900

100011001200130014001500

2016

2017

2018

2019

2020

24

Further strengthening and diversification of funding base

0

100

200

300

400

500

2023 2024 2025 2026 2027 2028 2029 2030 2031

Long-Term Fixed Rate Debt Maturity Profilemillion €


Stable net financial debt of € 1,414 m,

slightly below the level of end 2019

Corresponds to robust credit ratios :

• Net debt / Adjusted EBITDA ratio of

1.76x

• Net gearing ratio of 35%

Further diversification of LT funding

base :

• € 125 m 8-year EIB loan

• € 500 m 5-year convertible bond

Consolidated net

financial debt, end of

period

Gearing

ratio

Net debt

/ Adj. EBITDA

13.8%

31.1%

24.4%

35.2% 35.0%Harmonize million to m

Wrap-up

Wrap-up


Success of Horizon 2020

strategy, building on

complementarity of activities

Strongest financial

performance ever despite

unprecedented conditions

Long-term strategic drivers

stronger than ever; further

progress in execution of

growth strategy in 2021

Maintaining strategic course and commitment to growth

investments in clean mobility and recycling while

responding effectively to the COVID-19 crisis

Umicore’s priority remains

to keep its employees

healthy and safe

`


Financial calendar

26 March 2021

29 April 2021

3 May 2021

4 May 2021

5 May 2021

30 July 2020

Publication of 2020 annual report

Annual General Meeting of Shareholders

Ex-dividend date

Record date for the dividend

Dividend payment date

Half Year Results 2021

Link to all documents related to Umicore’s 2020 FY results

For a glossary of used financial and technical terms please refer to https://www.umicore.com/en/investors/glossary/

https://umicore.com/fyr20_results

https://www.umicore.com/en/investors/glossary/

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Umicore 2020 FY presentation

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