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Economic review

Profitability increased substantially, driven by higher revenues.


Revenues were well up (+11%) compared to 2014 with strong growth in Catalysis and Energy & Surface Technologies more than offsetting the impact of lower metal prices on the recycling activities.

The revenue growth, which was in part driven by the ramp-up of growth investments, was the main factor behind the REBIT growth of 21%. Returns on capital employed reached 13.7%.

Compared with 2010 Umicore generated revenue growth in its high growth activities of 7% compared to the stated potential of 10%. The revenue growth of the businesses with a global GDP growth profile was 2% compared to global GDP growth during that period of 3%*. The overall revenue growth was hampered by the decline in metal prices since 2012 and this produced an even more significant headwind for REBIT growth in particular in 2015 at a time when many of the most significant growth investments were starting to bear fruit. Average return on capital employed for the five year period was 15% and therefore within the stated target range of 15-20%.

Segment commentary


Revenues and earnings for Catalysis were up 19% and 50% respectively, reflecting strong growth in Automotive Catalysts and -to a lesser extent- growth in the smaller Precious Metals Chemistry business unit.

Revenues and earnings for Automotive Catalysts were up substantially year on year, reflecting strong demand and a more favourable product mix in light duty applications. The ramp up of heavy duty diesel catalyst sales in Europe and Asia further contributed to the positive evolution.

The global light duty vehicle market showed a moderate growth of 1%. The recovery in Europe and the continued growth in North America and China were largely offset by a decline in the Japanese and South American car markets. Umicore’s sales volumes and revenues were well ahead of the car market, globally and in all regions.

In Europe, Umicore’s volumes and revenues were significantly up, growing faster than car production, which was up 3.3%. The share of diesel catalyst in the sales mix increased following the introduction of Euro 6b compliant platforms. Sales volumes of gasoline catalysts were also higher due to the success of the platforms introduced in early 2015. Production at Umicore’s new plant in Poland started up in the third quarter of 2015 – ahead of the original schedule – and is ramping up.

In North America Umicore’s growth was well ahead of the car market, which was up 2.7%, due to a favourable platform and customer mix. In South America, where car production levels saw a further dramatic decline, Umicore managed to grow its revenues as a result of the successful launch of new platforms.

Umicore outpaced the Chinese car market benefitting from a good platform mix and strong exposure to international car manufacturers. Car production in China grew 3%, picking up in the fourth quarter following the government’s decision to cut the sales tax for vehicles with smaller engines. Umicore’s revenues benefitted from a favourable product mix in South Korea, where the market showed a slight recovery. Construction of the technology development centre in Incheon City was completed and commissioning of the new facility has started. Umicore further increased its presence with Japanese OEMs globally. In India the car market grew strongly and Umicore is ramping-up production of light duty vehicle catalysts at its new production plant near Pune. Construction of the new catalyst plant in Thailand is progressing; commissioning is on schedule for the third quarter of 2016.

Revenues for Precious Metals Chemistry were well up year on year. This was mainly due to higher demand from the automotive industry for precursors used in catalytic applications, particularly in Europe. Sales of APIs (Active Pharmaceutical Ingredients) continued to grow as a result of new business in the North American, European and Asia-Pacific markets. Order levels for organic compounds were also up and were driven primarily by growth in sales of materials for use in life science applications.

Energy & Surface Technologies

Revenues and earnings for Energy & Surface Technologies increased by 20% and 30% respectively, mainly as a result of strong volume growth in Rechargeable Battery Materials and higher revenues in Cobalt & Specialty Materials. The impact of higher revenues on earnings was partly offset by the negative impact of lower nickel and cobalt prices in Cobalt & Specialty Materials. The segment results include costs related to the ITC litigation (see here).

The Li-Ion battery market continued to grow strongly and Umicore’s sales volumes and revenues for Rechargeable Battery Materials were up substantially year on year.

Global shipments of high-end portable devices remained solid in 2015 Umicore successfully maintained its strong position in this market segment due to its broad customer base and proprietary High Energy LCO (lithium cobaltite) product offering.

Demand for Li-Ion cathode materials used in the transportation segment was boosted by the increasing number of electrified vehicle models. This was particularly the case in China, where sales of electrified vehicles were supported by government incentives. Umicore, with its diversified customer base, continued to benefit from these trends in the transportation segment and recorded strong growth in demand for its wide range of NMC (nickel manganese cobalt) cathode materials. Significant efforts continued to go into product qualification schemes resulting in successful qualification for new platforms to be launched in the coming years and covering all degrees of electrification (EV, pHEV and HEV).

Capacity expansions in South Korea and China were completed in late 2015 and early 2016. In November Umicore sold its stake in lithium iron phosphate (LFP) joint venture beLife to Prayon. This signalled that Umicore’s focus is in further strengthening its efforts in NMC (nickel manganese cobalt) and high energy LCO (lithium cobaltite) cathode materials which are proving to be the materials of choice in the fast growing automotive segment and portable electronic segment respectively.

Revenues for Cobalt & Specialty Materials were up year on year reflecting the contribution of the activities acquired in 2014 and increased sales volumes in several product groups. Earnings, however, were negatively impacted by lower nickel and cobalt prices as well as competitive price pressure in certain end markets.

Revenue growth in products for ceramics and chemical applications reflected the contribution of the European distribution activities which were acquired at the end of 2014. Strong demand for metal carboxylates used in various catalytic applications and higher order levels for nickel sulphate used as precursors for cathodes further added to the growth.

The revenue contribution from cobalt and nickel refining was also up. A key factor in this growth was the acquisition of CP Chemicals in the third quarter of 2014, which increased refining volumes of cobalt and nickel. Higher refining levels were recorded at the plant in Olen, Belgium. Revenues and sales volumes in materials for tooling applications remained fairly stable in what is a highly competitive market.

Revenues for Electroplating were up year on year mainly due to the growing demand for rhodium, silver and gold products used in decorative and anti-tarnish applications. This was the case both in Asia and Europe. Sales of materials used in wear protection applications also increased. Sales of materials for use in the electronics industry were lower due to reduced demand from customers in Asia, although certain sub-segments such as materials for reflective coatings in LEDs performed well.

Revenues for Electro-Optic Materials were up significantly reflecting a higher contribution from recycling and refining activities and increased sales volumes across product groups. Sales of substrates used in space photovoltaic (PV) applications were well up and the business unit successfully enhanced its position through a broadened product offering. Revenues in the infrared optics business benefited from the fast-growing demand for finished optics. Higher sales volumes of high purity chemicals for use in fibre optics further added to the positive revenue evolution.

Thin Film Products recorded higher revenues year on year, driven mainly by growing demand for Umicore’s indium tin oxide rotary targets used in the display segment, particularly in China. Revenues from products sold to the microelectronics industry were also up reflecting higher demand in Europe and Asia. The construction of the facility in China for the production and recycling of ITO targets is on track to be commissioned in the first half of 2016.


Revenues and earnings for Recycling were down 2% and 5% respectively, reflecting the impact of lower metal prices and lower demand in certain end-markets of the Platinum Engineered Materials and Technical Materials business units.

Revenues for Precious Metals Refining were stable year on year, despite declining metal prices. An improved supply mix both for industrial by-products and end-of-life materials helped offset the impact of the lower metal prices on revenues. As anticipated, the processed volumes were in line with those of the previous year. A higher throughput was achieved in the fourth quarter following the expansion investments which allowed the Hoboken plant to make up for the lost volumes caused by the two extended shutdowns during which the investment work was carried out.

The supply of materials was solid across segments, both in terms of volumes and quality. Supplies of end-of-life materials tended to be of a higher grade while in industrial by-products more PGM-rich material and complex residues were received from the non-ferrous metal mining and smelting industries.

The metal price environment was unsupportive with declining prices for most metals in the second half of the year and extremely low demand for certain specialty metals. Umicore mitigated the impact of lower spot prices for precious metals through previously secured pricing. Prices for specialty metals however cannot be hedged and had a significant impact on earnings especially in the second half of the year.

The Hoboken capacity expansion programme made significant progress during 2015. Two major investment waves were successfully carried out during the year resulting in an increased throughput rate.

Revenues for Jewellery & Industrial Metals were down due to a lower contribution from the recycling activity. While the refining volumes benefitted from a better availability of silver-containing residues, this was more than offset by the impact of lower metal prices. Revenues from the product businesses were up due to higher demand for investment products and particularly strong demand for silver coins from European and North American mint producers.

Revenues for Platinum Engineered Materials were down compared to the previous year. Order levels for platinum equipment used in glass manufacturing remained subdued as producers tend to use their platinum equipment longer, particularly in the display segment. Sales volumes for platinum gauzes used in the fertilizer industry were also lower. The business unit further reduced its cost base in 2015.

Precious Metals Management recorded higher demand for deliveries of physical metal. Demand for PGMs increased on the back of higher order levels from the automotive industry. Sales volumes for gold bars were somewhat higher as investor demand picked up in the second half of the year. The contribution from the trading activity was stable.

Revenues for Technical Materials were down year on year reflecting lower sales volumes across the different product groups. In Europe the pressure from substitution and miniaturization persisted and demand in Brazil was significantly impacted by customer inventory adjustments in the fourth quarter.

Discontinued operations

In early 2015 Umicore announced its intention to divest its two zinc-related business units, Zinc Chemicals and Building products. These units were subsequently reported as ‘discontinued operations’.

Revenues and earnings for Building Products were down year on year. The European construction market remained sluggish, particularly in France which is the largest market for the business unit. In the markets outside of Europe the launch of several projects increased revenues without fully offsetting the lower sales volumes in Europe. The implementation of significant cost reduction and productivity improvement programmes partially offset the impact of lower revenues on earnings.

Revenues and earnings for Zinc Chemicals were significantly higher year on year, with all product groups achieving higher sales volumes. The business unit benefited from a higher intake of zinc-containing residues from the galvanizing industry compared to 2014. The improved input mix more than offset the effect of the declining zinc price in the second half of the year resulting in higher recycling margins.

Corporate items

Overall corporate costs remained roughly at the same level as in 2014.

Revenues and earnings for Element Six Abrasives declined substantially year on year reflecting challenging trading conditions, particularly in the oil and gas drilling industry and, to a lesser extent, lower demand for materials used in the mining sector. The impact of lower revenues on earnings was partly offset by cost reductions and restructuring programmes throughout the organization.

Non-recurring items

Non–recurring items had a negative impact of € 75 million on EBIT. The main item consisted of impairments of permanently tied-up metal inventories across several business units due to lower metal prices and totalled € 26 million. Restructuring charges accounted for € 23 million, covering cost reduction measures and production footprint adjustments in specific business units such as Technical Materials as well as in the Element Six Abrasives joint venture. Environmental provisions of € 11 million were booked for the remediation of historical pollution. Other non-recurring expenses were amongst other linked to an impairment of Umicore’s shareholding in Nyrstar. The book value of this holding was adjusted in line with IFRS toward Nyrstar’s closing price on 31 December 2015 (€ 1.60). The impact of non-recurring charges on the net result (Group share) amounted to € 63 million.


*  based on IMF and World Bank data