Full Year Results 2022
Resilient business performance in a volatile market
Umicore posted a strong performance in 2022 in a context of severe market disruptions, cost inflation and a volatile precious metal price environment. Group revenues[1] for the full year amounted to € 4.2 billion, up 10% compared to the previous year, driven by a strong operational performance, higher volumes and prices. Adjusted EBITDA amounted to € 1,151 million, a decrease of 8% compared to the record level achieved in 2021, reflecting increased spending for innovation and growth preparation, cost inflation[2] and less favorable precious metal price levels[3]. Operational free cash flow remained strong at € 344 million, despite higher working capital requirements mainly driven by a record level lithium price, as well as higher capital expenditures. Net financial debt slightly increased to € 1.1 billion, resulting in a leverage ratio of 0.96x LTM adjusted EBITDA.
Revenues and earnings in Catalysis reached record levels. Automotive Catalysts outperformed the global car market, driven by a favorable platform and customer mix in light-duty applications as well as market share gains. Operational excellence and the ability to pass-through cost inflation resulted in record adjusted EBITDA of € 419 million.
Revenues and earnings in Energy & Surface Technologies increased substantially, achieving adjusted EBITDA of € 290 million. Cobalt & Specialty Materials benefited from an exceptionally strong demand and a supportive cobalt and nickel price environment in the first half of the year, before an expected normalization in the second half. The increased performance of Rechargeable Battery Materials included a favorable exposure to the increase of the lithium price. As anticipated and previously announced, sales volumes of cathode active materials remained subdued.
Recycling delivered another excellent operational performance with revenues in line with the level achieved in 2021. The Precious Metals Refining business unit benefited from solid volumes and an overall supportive supply environment. A slightly lower contribution of the trading activity in Precious Metals Management was offset by higher revenues in the Jewelry & Industrial Metals business unit. Adjusted EBITDA amounted to € 532 million, below the level of 2021 due to cost inflation and less favorable precious metal price levels compared to 2021.
Key figures
Revenues[1] of € 4.2 billion (+10%)
Adjusted EBITDA of € 1,151 million (-8%) and adjusted EBITDA margin of 27.3% (compared to 32.5% in 2021)
Adjusted EBIT of € 865 million (-11%)
EBIT adjustments of - € 32 million
ROCE of 19.2%
(compared to 22.2% in 2021)
Adjusted net profit (Group share) of € 593 million and adjusted EPS of € 2.47
Cashflow from operations of € 835 million
(vs € 1,405 million in 2021); free cashflow from operations of € 344 million (vs € 989 million in 2021)
Capital expenditures amounted to € 470 million
(vs € 389 million in 2021)
Net debt at € 1,104 million, compared to € 960 million at the end of 2021. This corresponds to a net debt/ LTM adj. EBITDA ratio of 0.96.
Proposed gross annual dividend for 2022 of € 0.80 of which € 0.55 to be paid in May 2023, with an interim dividend of € 0.25 already paid out in August 2022.
2022 also marks the introduction of Umicore’s “2030 RISE” strategy, designed to deliver significant, value creative growth. The Rechargeable Battery Materials business unit made significant progress by closing multiple long-term value creative customer contracts and supplier partnerships, as well as by achieving major milestones in executing its value chain presence in Europe and North America. The Catalysis and Recycling business groups again demonstrated their resilience, operational excellence and ability to generate strong free cash flows in a very challenging market context. These achievements reconfirm the ability of Umicore to balance growth, returns and cash flows over the time-frame of its 2030 RISE strategy and are proof points of its execution. The Group also diversified and extended its funding base at attractive conditions with newly issued sustainability linked debt instruments for a total amount of € 1,091 million. In addition, the Science Based Target initiative (SBTi) has validated Umicore’s intermediate greenhouse gas reduction targets for 2030, an important milestone in its Let’s go for Zero ambitions to achieve net zero greenhouse gases by 2035, an integral part of the 2030 RISE growth strategy.
“The year 2022 marks a successful start for our “2030 RISE” strategy, which is designed to accelerate value creative growth. We have delivered a strong business performance in a context of significant macroeconomic headwinds and have already demonstrated very tangible progress against key strategic and financial objectives.
I am tremendously proud of the Umicore team that have made this performance possible and I remain very confident that we are best positioned to capture the significant growth opportunities provided by the accelerating mobility transformation.”
Mathias Miedreich, CEO of Umicore
2023 Outlook
Automotive Catalysts is expected to benefit from its strong market position in gasoline catalyst applications, a supply chain recovery and an anticipated rebound of the Chinese heavy-duty diesel market. Therefore, adjusted EBITDA of the Catalysis business group is expected to show a further good uplift in 2023 versus 2022.
In Energy & Surface Technologies, it is expected that the earnings of the Rechargeable Battery Materials business unit will be in line with the 2022 level. Considering that in 2023 the Cobalt & Specialty Materials business unit will no longer benefit from the exceptional profitability that occurred in the first half of 2022, adjusted EBITDA of the Energy & Surface Technologies business group in 2023 is anticipated to be somewhat below the level of 2022.
In Recycling, the Precious Metals Refining business unit is expected to continue to benefit from an overall supportive supply environment. Assuming current precious metal prices are to prevail throughout the year, adjusted EBITDA in the Recycling business group in 2023 is expected to be below the level of 2022 due to full year effect of cost inflation.
Overall, adjusted EBIT and EBITDA for the Group are expected to be below the levels of 2022, in line with current market expectations.
Adapted revenue definition for Energy & Surface Technologies to enhance comparability
As lithium and manganese are increasingly valuable and volatile components in rechargeable battery materials, it was decided to no longer treat them as consumables but as hedged metals in order to make the accounting approach consistent with the revenue[4] performance indicator used in Umicore’s other business units. This will allow neutralizing distortions in revenues resulting from the volatility in the value of the purchased metals and enhance comparability of the underlying performance of the Rechargeable Battery Material business unit. Henceforth the pass-through value of the purchased lithium and manganese will therefore be excluded from the revenue calculation, as is currently already the case for cobalt and nickel. The Energy & Surface Technologies 2021 and 2022 revenues have been restated accordingly.
Rechargeable Battery Materials activities to be grouped within one legal entity
The business unit Rechargeable Battery Materials is at the core of Umicore’s 2030 RISE strategy. As a next step in the execution of its strategy, Umicore intends to group the Rechargeable Battery Materials activities within one legal entity. This set-up will provide the best foundation for the business unit to scale within Umicore and maximize its financing options, while delivering on its ambitious 2030 RISE objectives.
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[1] All references to revenues in this document refer to revenues excluding metals (i.e. all revenue elements less the value of the following purchased metals: Au, Ag, Pt, Pd, Rh, Co, Ni, Pb, Cu, Ge, Li, Mn). Regarding the exclusion of lithium and manganese; please refer to page 3 (in the press release) and the Energy & Surface Technologies section for more information.
[2] The cost inflation headwind amounted to € 184 million over 2022.
[3] In 2022, the impact from precious metal prices was € 70 million below the 2021 levels.
[4] Please refer to the glossary for the revenue definition.
