Slowdown in EV Growth Significantly Impacts 2024 Outlook for Umicore’s Battery Materials Activities

Umicore, a global materials technology and recycling group, has revised its 2024 outlook for its Battery Materials Business Group amid a sharp slowdown in electric vehicle (EV) demand. Recent weeks have seen a significant drop in customer demand projections, resulting in expectations that 2024 volumes for Umicore’s battery materials will be equal to or slightly lower than last year.

In light of these developments, Umicore has lowered its full-year 2024 guidance for the Battery Materials Business Group. Now, it projects adjusted EBITDA to hover around break-even, including a one-off positive impact of approximately €50 million. This starkly contrasts the initially anticipated adjusted EBITDA of around €135 million.

Factors Behind the Reduced Guidance

Several key factors have contributed to this adjustment:

  1. End of Legacy Contracts: The termination of older contracts has occurred more swiftly than anticipated.
  2. Delayed Ramp-Up of New Contracts: There has been a delay in the expected volume ramp-up of new contracts in Europe, as customers scale back their electrification plans. The take-or-pay clauses in these contracts will gradually take effect during the ramp-up period.
  3. Chinese OEM Demand Shortfall: Expected volumes for a Chinese battery OEM will not materialise in 2024.

In 2023, the Battery Materials Business Group, previously reported under the former Energy & Surface Technologies Business Group, achieved an adjusted EBITDA of €149 million. This figure included significant one-off benefits from a non-recurring lithium effect and the valuation of battery production scraps.


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Strategic Reassessment and Cost Management

Umicore has initiated a comprehensive reassessment of its growth projections beyond 2024. This review is in response to the slowdown in EV growth and ongoing evaluations of investment plans by EV manufacturers. The company aims to align its capital expenditures (capex) with the revised growth pace of its customer base, keeping the 2024 capex below €650 million. Additionally, Umicore is exploring ways to adjust its cost structure to accommodate the slower ramp-up.

Despite the setbacks in the Battery Materials segment, Umicore’s other foundation businesses—Catalysis, Recycling, and Specialty Materials—continue to perform robustly. These segments are on track to meet market expectations, demonstrating strong earnings, free cash flows, and industry-leading returns.

Overall Group Outlook

For the full year 2024, Umicore now expects Group adjusted EBITDA to range between €760 million and €800 million. This reflects the challenges in the Battery Materials segment but underscores the strength of its other business areas.

CEO’s Perspective

Bart Sap, CEO of Umicore, commented on the revised outlook:

“Our short-term outlook in Battery Materials is clearly disappointing. At the same time, the electro-mobility trajectory is and will not be linear, like in any other significant industry transformation. This is why we are re-assessing our own growth path with agility and determination, while we maintain a strong belief in the long-term prospects of electrification. We are convinced that Umicore has the right to play across all drive-trains through our broad technology portfolio, lasting customer relationships, and relevant footprint. We are adapting our pace to this new reality and are taking the necessary actions to navigate the immediate challenges. We continue to build on the firm fundamentals of our complementary foundation businesses which are global leaders in their respective markets. They are a bedrock of strong cash flow and returns, as well as a repository of our vast knowledge and experience. This underpins our ambition to replicate this success for our battery materials business.”

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