CEO and Chairman's review


The pandemic outbreak in 2020 brought sudden challenges to our living and working environment. Our priority was immediately the wellbeing of our employees and the communities in which we operate. We would like to thank Umicore employees for their spirit, solidarity and strength during the pandemic.
We would also like to express our gratitude to all the Umicore medical staff and employees who worked hard under difficult circumstances to make sure we could be safe, first and foremost, and keep our operations up and running. The challenge has been tremendous and the effort to get through these times has been very demanding.

Despite the severe disruption brought on by the COVID-19 pandemic, Umicore posted its strongest financial performance ever in 2020. This reflects the merits of our strategy as well as a stellar performance in Recycling, which was boosted by an exceptional price environment in platinum group metals, and the resilience of our business operations overall. It also reflects the agility and engagement of our teams to adapt to challenging conditions and keep serving our customers with diligence.

Revenues for the full year were down 4% at 3.2 billion while adjusted EBITDA increased 7% to 804 million, with adjusted EBIT up 5% at 536 million, thereby exceeding the Horizon 2020 goal of doubling earnings in five years’ time. Return on Capital Employed was 12.1%, well above our cost of capital despite continued growth investments.

Umicore generated a solid performance in the first half of 2020, with a strong result in Recycling offsetting the impact of the automotive industry downturn on the results of Catalysis and Energy & Surface Technologies. The second half of the year was marked by a strong sequential improvement in the Group’s revenues and earnings driven by a sharp recovery in Catalysis as well as continued robust operational performance and buoyant metal prices in Recycling. Umicore’s response to the COVID-19 pandemic included some temporary plant closures in the spring and certain projects, development or qualification programs incurred delays due to government-imposed lockdown measures or travel restrictions. The vast majority of operations, however, were kept on stream throughout the year. While we pursue ambitious growth programs, we further streamlined our operations by closing plants in the USA at Tulsa (Automotive Catalysts) and Wickliffe (Cobalt & Specialty Materials). This is largely reflected in the 2.7% total headcount decrease to 10,859 at the end of 2020.

In Catalysis revenues decreased, albeit less than the global car market, thanks to Umicore’s strong market position in gasoline technologies for light-duty vehicles, particularly in China and Europe, as well as higher sales of heavy-duty diesel and fuel cells catalysts. Revenues in Energy & Surface Technologies reflected the impact of the pandemic as well as lower sales of cathode materials for high-end portable electronics and energy storage applications. Sales of cathode materials for EV batteries grew broadly in line with EV battery demand. Recycling had a stellar performance due to high metal prices, high activity levels despite the COVID-19 crisis and favorable trading conditions.

Investments in strategic growth projects continued in 2020 with capital expenditure totalling 403 million, compared with 553 million in 2019. This reduction reflects the decision taken shortly after the start of the COVID-19 outbreak to postpone selected investment projects pending more clarity on market outlook, except for those related to safety, health and environment and strategic growth programs. Considering the continued investment in Rechargeable Battery Materials’ greenfield plant in Poland, Energy & Surface Technologies accounted for close to two thirds of the Group’s capital expenditure.

Our operations generated cashflows of 603 million, up from 549 million in 2019, enabling Umicore to continue funding its ambitious growth programs. Our balance sheet is strong with net financial debt of 1,414 million at 31 December 2020, corresponding to 1.76 times adjusted EBITDA, below the ratio of 1.92 at the end of 2019. In the first half of the year, we further diversified our sources of funding by completing a 500 million convertible bond offering due in 2025 and by concluding a 125 million 8-year loan with the European Investment Bank.

One of the ambitions defined in our Horizon 2020 strategy was to turn sustainability into a greater competitive edge. In 2020 Umicore achieved a Platinum EcoVadis rating, placing us among the top 1% of our industry peers in the EcoVadis global network of over 65,000 rated companies.

Our safety performance made encouraging improvements in 2020 compared to previous years. The pandemic has led us to pay closer attention to detail and we are convinced this has had a positive impact on safety. However, in December, a fatal accident occurred at Umicore’s Cobalt & Specialty Materials site in Subic, the Philippines. This tragic event shows that the journey to make Umicore a zero-accident workplace is far from completion, even in sites with an outstanding safety record: Subic had operated more than 13 years without LTA. Overall, the group recorded 49 lost time accidents in 2020 compared with 90 in 2019.

Our efforts in 2020 to make Umicore a great place to work focused on our response to the COVID-19 pandemic, with the protection of employees’ health remaining our top priority. We introduced strict hygiene and other precautionary measures starting with our facilities in Asia, which were the first to be affected. Measures were quickly tightened at all Umicore sites worldwide, with the aim of reducing the transmission risk within the organization, keeping our employees healthy and offering them a safe workplace. Umicore delivered surgical masks for private use to the homes of all employees worldwide at a time when they were unavailable on the open market.

We have seen a gradual increase in women in management and non-management positions although we have not met our Horizon 2020 diversity goals. Our commitment to increase gender diversity at all management levels is intact and we have adapted our recruitment programs accordingly. In 2020, the share of women recruited into management positions increased to 30%.

In terms of the environmental profile of our operations, our focus continues to be on minimizing the impact of our production activities. For several decades, the blood levels of children living close to the Umicore recycling plant in Hoboken, Belgium, have been monitored twice a year by the authorities. The sudden rise in the lead in blood readings of the children living close to the plant in July 2020 came unexpectedly. A combination of external factors, including exceptional weather conditions and the children’s increased exposure from spending several months at home due to the COVID-19 lockdown measures, contributed to the elevated readings. In addition to taking the necessary measures to return to the positive trend of recent years, and although the root cause investigation showed no major source of lead emissions in our plant, Umicore is working on creating a green zone, to increase the distance from the residential area, by buying the houses closest to the plant. In doing so, Umicore aims at a structural and sustainable solution to this historical issue. A 50 million provision was booked to cover the estimated costs of establishing the green zone.

Our eco-efficiency is measured against our Horizon 2020 goal of performing equally well or better than in 2015, with values adjusted for activity levels. The impact of our operations was substantially reduced, with ­metal emissions to water and air down by 59% and 67%, respectively, compared with 2015 levels. Energy consumption was slightly higher than in 2019 in absolute value, but adjusted to 2015 activity levels, energy consumption was down 17% as a result of significant efficiency improvements.

The growing added value of our sustainable business is demonstrated by over 60% of secondary and end-of-life materials in our input mix. Future sourcing for catalysts, fuel cells and batteries alike, will only be possible by closing the loop and recovering the scarce metals used in these products when they reach end of life. Umicore’s unwavering pursuit of ethical raw materials supply is the driver of our sustainable sourcing. Umicore remains the first cathode material producer to offer certified materials from a clean and ethical origin to its customers.

Our work with the Global Battery Alliance, of which Umicore was a founding member in 2017, continues. In addition to the battery passport initiative to share reliable information and data to consumers about the level of sustainability of a battery, the Alliance is developing a standard for responsible artisanal mining in the Cobalt Action Partnership to address the socio-economic risks linked to cobalt mining activities in the Democratic Republic of Congo (DRC) and to eradicate child labor. In 2020, the Alliance created a collaborative fund for the Prevention of Child Labor in Mining Communities, seeking to strengthen cobalt mining communities in the DRC and tackle the root causes of child labor. The Fund, administered and programmed by UNICEF, works in cooperation with local government entities and civil society organizations in the DRC. Umicore is proud to be the first contributor to the Fund.

Many of the sources of turbulence in 2020, including the impact of COVID-19 and its impact on industry, particularly in the automobile sector, remain unresolved and limit visibility. Umicore adjusted with agility to the challenges caused by the pandemic. We implemented measures to protect employee health, cashflows and strengthen liquidity, and we reassessed our production footprint and the carrying value of certain assets. We are convinced that these steps strengthened our position in an uncertain environment and we will continue to remain agile in the face of evolving market dynamics.

The push towards clean mobility is stronger than ever, with various governments including green recovery measures and stimuli for cleaner mobility in their crisis recovery packages, in particular in Europe and China. In this context, we chose to move forward with our ambitious growth strategy in cathode materials for electrified vehicles and made significant progress with the construction of our greenfield plant in Nysa, Poland, which on commissioning by the end of the first half of 2021, will be the first industrial-scale cathode materials plant in Europe.

In addition, we are moving ahead with our growth plans in fuel cell catalysts for automotive applications and with the expansion of light-duty and heavy-duty catalyst production in China, to cater to the growing demand for our technologies as emission norms continue to tighten. In terms of addressing resource scarcity, Umicore continues to invest to improve the environmental and safety performance of the Hoboken recycling plant.

Technology innovation remains vital to our success and R&D expenditure increased by 6% in 2020 to 223 million, equivalent to 7% of our revenues. The majority of this increase came from higher R&D spend on new product and process technologies in Rechargeable Battery Materials.

We are proud of our performance and results in 2020 and confident that our long-term growth strategy will continue to deliver value.

The global economy is showing signs of recovery from the severe downturn caused by the COVID-19 pandemic. However, a high degree of uncertainty remains with respect to the evolution of the pandemic and the pace and speed of the recovery in different regions. Against this backdrop and under the assumption that COVID-19 will not result in additional material or protracted disruptions to the economy or Umicore’s operations, Umicore expects to achieve substantial growth in earnings in 2021, with growth in all Business Groups.

We have successfully completed our Horizon 2020 strategy and have reached new heights.

Everything is in place for Umicore to keep thriving – talented teams, a promising innovation pipeline, highly supportive megatrends and the financial means to fund our ambition. With all this in place, we feel that it is an auspicious moment to think about the next chapter of Umicore’s success story and start preparation for the CEO succession. The Supervisory Board will take the time to identify a successor who will build on these strong fundamentals and bring Umicore to its next stage of development and Marc will assist the Board with a smooth transition in due course.

This year’s annual report provides additional clarity on the value Umicore brings to society, as we prepare to move into a new strategic phase as of 2021 and marks our first report in our transition to “digital first” communications.

We would again like to express our thanks to all the stakeholders for their contribution to our performance in the face of the unprecedented conditions in 2020, most especially to all Umicore employees for their spirit and their prompt, determined and effective response to the COVID-19 threat.