Umicore Sa Ord New

Ladies and gentlemen, welcome to the Umicore full year results 2025 conference call. Your speaker for this call will be Bart Satt, CEO, and Vanes Pfefferon, CFO. For the first part of the conference, the participants will be in listen-only mode. During the question and answer session, the analysts joining the call are able to ask questions by clicking on the raise your hand button on the player. I will now hand the conference over to the speakers. Please go ahead.

Good morning, everyone, and welcome to the full year results 2025 of Umicore. And as you can see here, of course, we have taken this picture, a beautiful gold nugget, and I think for the ones following us will understand why we have put that picture forward. And of course, I'll be coming back on that later when I look back on 2025. Now, if you read our set of numbers, I would like to highlight again that we have adjusted during the CMD a new reporting structure, a different segmentation in our business group. So please do have another good look at this slide because we will be reporting and commenting the numbers in the new structure. So Juan is sitting here on the left with me and he will also comment of course on the finance and some of the business trends as well as usual. And let's have a short look at the agenda. Nothing particular here. First of all, we go on the core strategy, the key numbers. We go over the outlook ultimately for 2026 and then hopefully have an engaging Q&A at the end of the session. Yes, our core strategy. Now, we launched our core strategy in March 2025 where we Indeed had a different approach and not just chasing growth at any cost, much more towards that value recovery and battery materials, but also more value extraction in our foundation businesses. And roughly around the time that we were announcing our CMV, our new strategy, the world started to move violently, I would say. And the geopolitical landscape has been changing fundamentally. and therefore also the markets as well as supply chains have been reshaped and continue to be influenced by new policies coming out. So the world is structurally different versus roughly a year ago. Volatility is for the time being the new normal and we will continue to navigate and of course react and adjust according to the volatility that we see. Now if I zoom out and see what's happening in the world, it's clear that we have a much more fragmented world, and that the world is waking up that if you want to be a technology leader, if you want to have a strong economy going forward, you need these critical raw materials. You need to have your own supply chains, and that's where Umicore's circular business model, which is multi-metal, on the one hand on the recycling, refining side, but also on the materials that activate the world downstream, the applications downstream, is more relevant than ever. So having a secure, and sustainable supply chain in different parts of the world becomes a key element for society. And this is right up the alley of our strategy, and it pets our business model with four key pillars. Capital, performance, people and culture, and partnerships. And let me now highlight some of the achievements that we had in these different segments over the years and some of the actions that we took. First of all, on the capital, and that was the first picture of the presentation. Obviously, we sold and had a subsequent lease in of our permanent gold inventories. It has unlocked significant value. This also has helped further to deleverage the company, but also it transitions the price list, the long-term price list of these inventories outside of Unicor. Now, we also said at that time that lease rates for gold are typically stable, it's an alternative versus cash or pure money in the end. And even in that volatility and that frenzy, let's say, around PGMs at this point in time, also lease rates have, for gold, have remained stable at 0.5 to the 1% mark, well below typical financing rates that you would expect for normal debt. Now, next to the gold, we also have been very disciplined on our CapEx. Remember, we guided at the start of the year more to 400 million euro. In the end, we came in at 310 million euro by making deliberate choices, but also being very strict on the execution of the projects that we are having. If I go to the performance pillar, there the full year results is in line with our latest upgraded guidance. So, we set between 790 and 840 during December. slightly above that 840, so we're very satisfied with this set of numbers, a strong performance, I would say, and it was really, really also supported by the efficiencies, targets, and the mindset that we are cultivating more and more within Unicor, and we promised 100 million, we achieved that target, and Juanos will explain later on, of course, that this helped to offset the inflation, but also some FX headwinds that we had in 2025. So I mentioned it already, we're driving the company much more to a performance culture where we take our accountability. We really focus on what is the essence. We do what we need to do in a very disciplined way, and this is showing results, and we will continue to push forward in that direction. On the partnerships, we also not have been sitting still, I would say. We had quite some action there as well. And we closed the partnership around our silicon anode materials with a Korean company, HS Hewson Advanced Materials. And together with them, we will industrialize this really interesting and exciting technology. And we found a way actually to bring that technology to the market without having to allocate excessive cash or very sizable amounts of cash for Umicore. Next to that, critical raw materials. We have been working on that trend, of course, already for quite a while. and we announced our partnership with STL, Societe de Tereo de Lumumbashi. So basically, we have shared technology, have upgraded installations in the DRC in order to recover germanium from old mining tailings. And this was really a support for the business going in 25 and beyond. Now, let me go to the key figures. One of them will go in more detail, so I'll stay pretty high level here. I would say we really had a strong performance in our foundation business. It was supported by group-wide operational excellent efforts and a favorable metal price environment. EBITDA up 11% to 847, 24% EBITDA margin, a good free cash flow supported by the gold inventory sales of 524, 524 million and leverage of 1.6. I think we can all agree this is a very solid set of numbers in the current environment that we live in, so happy with that. Let me now go to the different business groups. Let's start off with battery material solutions. So for your reference, battery material solutions now represents on the one hand battery cathode materials and the battery recycling business. And before I go in the details of the different business units, I would like to have another glance at the battery cathode materials and EV markets markets out there at this point in time. So at the CMD in March 2025, we said that this market is still taking shape and has inherent volatility. Well, that's what we have seen in 2025, and also what we continue to see in 2026. EV penetration around the globe is progressing, but at quite different speeds. China leading decisively. Europe is falling, more moderate, and U.S., well, that actually we are quite behind. And, of course, the policy change of the new US administration is not helping in that. The CO2 tolerance is much higher than in previous administrations. That is clear. And that's why the policy is shifting and pivoting away, I even would have to say, from EVs to internal combustion engines, right? This clearly has an impact, and you have seen announcements that even battery makers in the US are now focusing more on energy storage than pure EVs, and of course quite a number of OEMs have had to make difficult announcements. If I go to Europe and China, that's really a, and it's depicted here as well with an arrow, that's really an area where there's an interdependency. Today we see that China still has overcapacity, that a lot of OEMs are relying on China to import their batteries into Europe, Also for cathode material, we still see cathode material flowing into Europe at this point in time, so competition is fierce. I think that is fair to say. Now, at the same time, we also see that there's a heightened risk of trade tensions, of potential restrictions of exports of certain technologies by the Chinese government on the one hand, but also in Europe, a much stronger talk about these local resilient supply chains and local content requirements, so the next days The EU is expected to come out with some policies. These will be important to monitor those and could really make a substantial difference in the European landscape. So, in general, summarizing, the recent industry announcements are emphasizing that the growth in Europe is somewhat challenging, but it also highlights the increased importance of our take-or-pay contracts, and I'll get back to that. Going to the numbers, so if we look at 2025 for battery cathode materials, we did see a revenue growth, a revenue growth of roughly 11% versus 2024. Volumes, actual deliveries were up versus last year. We did collect take or pay compensations for contractual volume shortfall. And there was a partial offset by low refining income because of a weaker, more challenging cobalt environment on the pure refining side. And also, of course, the nickel price environment was not necessarily beneficial. Now, the adjusted EBITDA as per our expectation came in around break-even, which is a clear improvement versus last year, where the break-even result was still containing a substantial one-off, a positive one-off in 2024. Now, if you look at battery recycling solutions, during the CMD, we said we would be roughly at minus 25. We came in at minus 21. Really also here, we continue to focus on optimizing our process and recycling technology. At the same time, we're also very diligent here on the execution and cost management. Overall, you can see a clear also improvement on the EBITDA level, 24 versus 25, despite that we did not have that one-off in there. All right, let's go to the next business group, and that's catalysis. In good tradition, we also always start with an overview of the internal combustion passenger car production numbers. And here we see that 25 is slightly lower than 24. It's not a substantial drop, actually. It's minus 0.7%. Europe was more down. At the same time, South America and China, these regions even further progressed. If I then look at the HDD segment, Europe, a slight decline, but a positive evolution in China of 7.1% growth. Of course, starting from a relatively low base at the previous quarters, or actually the last quarters in 2024 were not strong. Now, looking at the numbers, a solid set of numbers. We see a sustained demand for our products throughout the business group in a volatile market, I would say, and so in an overall challenging economic backdrop. At the same time, we also continue to focus on our operational excellence as we have been doing for the last years, and we're getting increasingly better at this year after year. Now, if I look at the AutoCADs, our volumes in AutoCADs were strong. We outperformed the ICE so the internal combustion engine light duty vehicle market, which reflects our strong position, but also the focus as I mentioned of operation excellence and efficiency is really part of the DNA. We continue further footprint consolidation amongst others in Asia, where we have taken decisions around our Japanese operations. Precious metals chemistry that follows to a certain degree of course automotive catalyst with the inorganic chemicals. They're the supplier of the inorganic solutions to the automotive catalyst business. So also a strong performance there. A good set, of course, PGM price support helping this business also forward. Now our homogeneous catalyst business, which is selling typically in the broader chemical industry, we saw some softness in line with the overall chemical industry pain that we're all going through. Fuel cells and stationary catalysts. The earnings clearly improved. We had higher deliveries for our fuel cell catalyst solutions. We also are on track with our proton exchange membrane fuel cell plant in China, expected to start production in the course of 2026. On the stationary catalyst side of things, we do see a strong demand for backup power solutions and exhaust for these backup power solutions. specifically for data centers in the context of the high demands of the AI company, the AI application. So, catalysis, EBITDA margin, 27%. Recycling. Well, you cannot talk about recycling unless you talk about the metal prices, and here you can of course see that metal prices in 2025 are significantly higher than 2024. You know that Umicore, that we decided to hedge quite an amount of our exposure forward. Why? It creates visibility, it stabilizes earning profile, and it also protects against downside risk. That means if the price environment rallies beyond the average hedge price, indeed you have some opportunity loss, but still today we're very happy with these hedges. Now on the remaining open exposure, of course, there's a positive upside of stronger PGM prices to the overall earnings of the business group segment. Now, if we look at the overall set of numbers for the business group, we see an advancement in the revenues. At the same time, a stable EBITDA performance with a 39% EBITDA margin. So in precious metals refining, our revenues were in line with previous years. The metal price environment was supportive. We had good volumes. There were, of course, we had some average hedge rates decreasing year on year, which was a backdrop or actually a drag, let's say, on the results as such. The overall mix was somewhat less favorable. Still a very strong set of numbers for precious metals refining. We had some slight temporary process inefficiencies, which will no longer be there in 2026. But we were able to offset these by solid contributions from our operational excellence and cost-saving efforts also in this business unit. Jewelry and industrial metals. I mean, the central theme here is gold, gold recycling, gold processing. I mean, really a very strong market, strong revenue growth, and also a good margin expansion. So this business also doing really well on basically also the gold market. evolution and the gold focus which is there in the market precious metals management well we've talked about already volatility in precious metals prices is an excellent market environments to trade and make trading gains so this business unit also performed really strong next business group would be specialty materials and specialty materials is maybe a business group which is sometimes a bit Yeah, underrepresented or underappreciated maybe by the markets and maybe we should also further strengthen our communication on this business group because it has a couple of beautiful gems in there. If I look at the business group here, 16% EBITDA growth in 2025, EBITDA margin approaching 20%. Cobalt and specialty materials, there was a support of a cobalt trend where we saw a better momentum for cobalt premium products, right? And also here again, efficiency. We've understood by now that efficiency is really part of our overall performance and that's why we continue to stress it. If I look at electric optic materials, there we have seen that China has taken a stronger stance on exports and not a lot of germanium has left China in the course of 2025. We have this joint venture with, for instance Societe, STL basically, which I highlighted earlier. And this allowed us also to continue to supply our customers in a very strong germanium price market. added by our closed loop refining and recycling services that we have. So electrical materials sees strong top line growth at the end of the year and we expect to continue to see that growth also in 2026, so one to watch going forward. Metal deposition solutions, I would say overall a good stable performance with a different mix between the business groups, but yeah, also pretty good there. I think this is where I would like to leave it at this point in time and hand the words to Hannes.

Thank you Bart and good morning everyone. Today I will start with EBITDA before moving on to cash flow, net debts, the P&L and balance sheet. Adjusted EBITDA was up 11%, reaching 847 million, driven by volume growth across all businesses and efficiency savings. This broad-based growth resulted in 125 million of EBITDA contribution. We also delivered 100 million of efficiency benefits, which more than offset inflation of 68 million. Metal results declined by 17 million due to favorable hedges rolling off. This was partially offset by increased prices for precious and platinum group metals, as well as minor metals for the remaining open or unhedged position. There was a headwind from foreign exchange of around 45 million, largely due to translational effects as the Euro strengthened. Adjusted EBITDA margin improved from 22 to 24% in line with our capital market today target of more than 23%. Now zooming in on our efficiency program. We delivered 100 million of efficiency benefits in line with our target. 25% came from top line growth. 20% was due to a reduction in cost of goods sold, and 55% came from a reduction in SG&A and research and development, in particular in battery material solutions, catalysis, and corporate. Headcount in the group reduced 3%. Turning to cash flow. Cash flow from operations before changes in working capital amounted to 1.1 billion euros. This was supported by cash proceeds of 525 million from the sale and subsequent leasing of the permanent gold inventory in recycling. We finalized this transaction in October last year. It enabled us to unlock significant value, strengthen our balance sheet, and reduce finance costs. Net working capital increased by 298 million mainly as a result of higher activity and to some extent increased metal prices. The significant reduction in CAPEX down to 310 million demonstrates our capital discipline. This reduction is most prominent in battery cathode materials, where we are leveraging footprint flexibility and phasing our spending. Free cash flow from operations was 524 million. moving to the net cash flow bridge and net debt. The free operating cash flow largely covered the 250 million equity injection into our joint venture IronWay in January 25, as well as taxes, interest, and dividends paid. In January this year, after the year end, Umicore and PowerCore each contributed an additional 175 million to the IronWay joint venture. Net debt reduced slightly to 1.4 billion, resulting in a leverage of 1.6 times adjusted EBITDA, down from 1.9 times at the end of 2024. This is well below the anticipated peak of 2.5 times as we focus on capital discipline and maintaining a solid balance sheet. Looking at the consolidated P&L, adjusted EBIT improved by 21%, to 579 million. Adjusted net finance costs of 173 million were up 65 million, mostly due to lower interest income on cash as rates came down and a negative impact from foreign exchange. Adjusted tax charges were in line with the prior year. Pre-tax income was slightly up, but the adjusted effective tax rate came down from 29 to 26%. Adjusted net income of 288 million was up 33 million. And adjusted earnings per share were up 13% at 1.2 euros. We are proposing a dividend of 50 cents per share in line with last year and with our policy of a stable or rising dividend. And this represents a payout ratio of 42%. Adjustments to EBITDA amounted to $365 million. As I said earlier, we optimized our business model in recycling by selling the permanent gold inventory and replacing it by revolving leases. This generates a pre-tax gain of $486 million. This was partly offset by an impairment of our joint venture participation in Element 6 and provisions related to specific restructuring programs. Adjustments to net result include a derecognition of a previously recognized deferred tax asset and the tax impact of the gold inventory sale. Net income was 385 million compared to minus 1.5 billion in the prior year when there was an impairment charge for battery cattle kilos. There was a big improvement in return on cattle employed from 12.3 to 15.7%. Now, turning to the consolidated balance sheet, our liquidity remains robust with cash of 1.6 billion after repaying 500 million convertible bonds in June. And as I said earlier, net debt was stable at 1.4 billion, and the leverage ratio came down from 1.9 to 1.6 by the end of the year. Group equity improved to 2.3 billion, corresponding to a net year-end ratio of 37%. We have hedged a substantial portion of our metal exposure for 26, 27, and 28, and we continue to look for opportunities to hedge further in particular for 29 and 2030, taking into account market interest and forward rates. So to sum up, we delivered a strong performance in 25 as a result of volume growth across the board and 100 million of efficiency benefits. Adjusted EBITDA improved in every business except recycling, where it was stable, and CapEx was well below the prior year. Selling the permanent gold inventory has given us additional headroom while reducing future finance costs. And we continue to focus on driving cost efficiencies, controlling working capital, and disciplined capital allocation in 26. I will now hand it back to Bart. Thank you.