Chairman and CEO's review
Thomas Leysen and Marc Grynberg look back on 2016 and take stock of the elements that are in place to ensure future success.
In 2015 we launched our strategic plan Horizon 2020 which aims at making Umicore a clear leader in clean mobility materials and recycling, doubling the earnings of the company while rebalancing the contribution from the three segments and turning our leadership in sustainability into a greater competitive edge. This report outlines the clear progress that we made in 2016 towards these goals.
In spite of lower metal prices, we were able to grow recurring EBIT by 6% to € 351 million. This positive economic performance reflected good volume and margin growth in most product businesses and was only tempered by the continued impact of anaemic metal prices on recycling and refining activities. The return on capital employed for Umicore in 2016 was 14.6%. This represents a good progression from the level of 2015 and is just shy of the 15% threshold that we have set ourselves for value creation over the long term.
We continued to invest substantially in the strategic growth areas related to clean mobility and recycling. This was reflected in the 2016 capital expenditure levels that were well up on the levels of 2015. The increase was most pronounced in the Rechargeable Battery Materials business unit as a result of its project to triple capacity by the end of 2018 and the acquisition of an important intellectual property portfolio that will support the business unit’s growth in the coming years.
In 2016 we brought added focus to our portfolio of activities. The most important step in this regard was the sale of the Zinc Chemicals activities to OpenGate Capital in November. In many ways the finalization of the sale was an emotional moment as it represented the exit from Umicore of a business that had roots going right back to the origins of our company over 200 years ago.
When we launched the Horizon 2020 strategy in 2015, we outlined our continued pursuit of non-negotiable sustainability goals such as zero accidents in the workplace. We also stated our desire to build on the achievements of prior years and derive a greater competitive edge from our efforts on the social and environmental front. In 2016 the progress has been mixed.
The past year has shown clear evidence that the three megatrends that drive the growth of our business are becoming more pronounced. The need for cleaner air has never been greater, the adoption of electrified transportation has started to accelerate and resource scarcity continues to be a pressing concern, particularly for those metals that are essential for cleaner mobility and new communications technologies. The evolution of these trends and the demand patterns that we are seeing from our customers give us confidence that 2017 will see a further acceleration of our key growth initiatives.
We would like to take this opportunity to extend our thanks and appreciation to all our stakeholders for their contribution to our success over the course of 2016. We are looking forward to making further progress in 2017. We firmly believe that all the elements are in place to ensure shared success for customers, employees, shareholders, suppliers and other business partners alike.