Umicore Sa Ord New

Hello and welcome. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the Unicorps 2026 Q1 update and outlook call. Please note that this call is being recorded. After the introduction by management, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Please be advised that we allow one question per participant. Thank you. I would now like to hand the call over to Bart Schaaf, Unicor CEL, and Juanes Paterin, Unicor CFO. You may now go ahead, please.

Yes, thank you. So welcome, and welcome all, and thank you for being here on this Thursday evening. So first of all, before I go to the Q1 update and the outlook, of course, I would like to give some more context to the leadership changes that we have announced this morning. So first of all, we welcome our new CFO as of August 1st. She has a strong record at public companies. She has worked in the chemical industry, manufacturing, engineering industry. At this point, she's the CFO of Sintemer, before that at Sentra, XR. and speech detection, but she's also a non-exec director and member of the audit committee at PCC-PLC. So, I believe she's a strong asset for Unicor to also continue on the great path that I set forward together with on focus on operational excellence and capital discipline. Now, next to that, we are also establishing a role, which is this chief digital and transformation officer within the EOT. you know that we have started the transformation journey, that we will be more process-oriented, and that we also would like to establish a stronger performance culture. And now we want to drive that focus across the group even more. We want more alignment throughout the group. And, of course, next to that operational excellence for which Martin Ziris, which we welcome, will be focusing on, he will also be focusing on the digitalization information systems, and of course, also further working on the artificial and augmented intelligence throughout the group. So, Martin Zevis has a strong experience in transforming organizations. I've worked sometimes side by side with him. I know he's driven for excellence. He's widely recognized in the industry for transformational projects, so we are very happy and also looking forward to welcome Martin next to Lili. It also means, of course, that if a CFO joins the current CFO, he will be closing the chapter here at Umicore after more than 20 years. Juanos has been the CEO for the company for four years by now. I really would like to thank him for his dedicated service, his strong leadership, especially in quite, let's say, particular times in the recent history for Umicore. So his commitment to the core strategy, capital discipline, operation excellence, really has set the group now again on a strong footing, and I would say that he was definitely part of that success that we can share today. So Juanes will be handing over to Lili on August 1st, but he will stay on until February, end of February 2027 to do the further handover and continue to work on some projects that we have. But maybe, Juanes, you would also like to give some perspective.

Yes. Thank you, Bart. I mean, as you rightfully say, after 20 years with Umicore, I will be closing an important chapter in my career. I'm grateful for the great opportunities and the trust that has been put into me over the past two decades. In 22, I stepped into the role of CFO at the time when the company was entering probably one of its most demanding periods in its history. Over the past years, we navigated through an extraordinary combination of challenges, initially financing projects, an ambitious growth agenda, then quickly facing unprecedented inflation and market volatility, adapting to a sudden slowdown in electrification, leadership transitions, including yourself, Bart, and a strategic reset with our core strategy. Now, what I'm proud of is that with our focus on cost and capital, we have been able to rebuild the company's financial health and the credibility in the capital market. I was also very pleased that throughout these challenges, the leadership acted as one team with resilience, discipline, creativity, and a firm commitment to the long term. At this point in my career, I realize that I've built quite a bit of depth over the past 20 years within the same organization, and it is where I also realize I still have many years, but also curiosity ahead of me. So this feels like the right moment to pause, to reflect, and to explore new horizons. I also want to thank my colleagues and my teams for their unconditional support and commitment throughout these demanding and challenging times. I'm proud of the progress we achieved together, strengthening processes and systems, increasing the agility and consistently finding solutions under pressure. Now, in my final months, I remain fully committed to the execution of our strategy and to a smooth transition to my successor in August. And this will ensure the continuity and value creation for our investors. And finally, I want to thank the investors for the interest in me.

Yeah, well, thank you very much, Juan, and of course, we have been working for a very long period together in different stages of our careers, so I can say that you will be missed at the company. We wish you a lot of success, but in the next four months, I intend still to work very closely with you, so looking forward to that as well. So this brings us actually to the Q1 update and then later on the outlook. So I think it's fair to say that we had a very strong start of the year. Our sustained commitment to operational efficiency, capital allocation, and that value orientation is definitely paying off now that while there's also a supportive metal price environment. So we are in a very good position to perform solidly or even strongly in 2026. And we're very happy with where we stand at this point in time. If I look at catalysis, here also strong start of the year. Outperformance of the light duty vehicle market as we see it today. We see also a strong demand in the EU, China, India, but also HDD in EU and China is also stronger than the year before. In fuel cells and stationary catalyst, it's actually a story of two tales. I think the fuel cell market is soft also in China at this point in time in Asia, while the stationary catalyst market with the strong data boom and need for data centers actually is gaining momentum and further growing and actually is contributing very substantially. Now, also, precious metals chemistry had a strong start. Of course, it's linked to the strong business in automotive catalysts. the good PGM environment, but also the overall business is performing stronger. If you go to recycling, then I have to say a very strong performance. The plant maintenance shutdown was successfully completed. Our GIN business units, Jewelry and Industrial Materials, really enjoyed from a strong recycling market for Julie, basically, so we really enjoy that market. But we also see across their portfolio strong end market demands. Precious metals management, we have seen significant volatility, of course, in PGM prices. That is a good environment also for precious metals management to optimize and further leverage those market circumstances. When I go to specialty materials, I then would say it's an outstanding performance for that business group. We have definitely a noteworthy profitability for cobalt and specialty materials. There's a strong momentum in the cobalt market, especially running from 25 into 2026, and maybe we'll come back to that later during the Q&A. In electric optic materials and MDS, the growth track is also there, and also we continue to grow on the solid foundations of these businesses. Battery material solutions, our focus is still and will remain on value recovery. We have a slight improvement in CAM material sales funds, but as earlier indicated, the weight of the take-or-pay elements in the overall EBITDA contribution for 2026 is growing, probably at the higher level than we initially would have wanted for the year. Anyway, we have these contracts exactly for these circumstances, so they are also part of our EBITDA. BRS is moving according to plan. And as you have also noticed, our annual joint venture with Houston is also now completed. Now, if I now go to the outlook, I think we have a strong start in 2026. We now expect a group EBITDA to approach 1 billion for the year. Of course, this assumes that the metal prices will stay around the levels of Q1 2026. We know the world is volatile, no needless to say, but right now I think the things that move the world at this point in time, our direct exposure is limited. We have a very limited exposure to the Middle East in terms of sales and purchases or supply of materials. We're well hedged on the energy side. So, yes, that gives us confidence looking forward. If I then go to the business groups, catalysis, Anticipated to further benefit from the strong market position in light-duty gasoline. We see a decline, of course, global internal combustion engine production, but still our volumes remain very solid. We continue to focus on quality and resilience of earnings as we have done over the past years. And recycling, assuming, of course, that this continued state of metal price environment stays and also the activity level. There we see that we see a performance which will then more than offset the setback that we were foreseeing in the lower average hedge trade from 25 into 2026, as well as the shutdown. So there we now see further progression beyond those two negatives that we were foreseeing earlier. Now, so we are convinced that our performance will materially exceed the current market. If you go to specialty materials, this business is projected to slightly exceed present market expectations, so there's a positive, there's a positive, I have to rephrase, I made a mistake. So it's projected to significantly exceed present market expectations or significantly. The positive momentum in cobalt market is anticipated mostly in H1. H2, we will see a more normalized performance there. And the top line growth, of course, is sustained with the strong amounts for germanium and, of course, the other end markets. That's the material solutions for the year. The volume is somewhat expected in line with previous years. As earlier said, the anticipated ramp-up certain customer platforms is not coming as we would have wanted it during our CMV update. Again, the improved performance for the year is reflecting our take-or-pay commitments that we have. So we continue to execute our standalone midterm plan, and we continue to reduce our cost base, and, of course, we continuously closely manage our capital expenditure for this business. For CAPEX, we see a slight increase versus 2025, mainly because of selective high-quality growth investment that we're starting in our foundation business. We're also investing already in the engineering for the OREON flow sheet, so basically the expansion of the flow sheet of our precious metals refinery in Hoboken, Belgium, in which we still think to take the decision, the final investment decision for the expansion in the later half of this year. Now on the leverage, there we can confirm that assuming current price environment of course stays, we would see leverage below two, basically significantly below the anticipated 2.5 as we communicated earlier. So in a summary, we had a strong start in 2026. We see a good momentum. We see high activity levels in our business. We benefit from current supportive metal prices linked to the geopolitical situation and new end applications which are emerging, of course. But our expertise, but also our value orientation and efficiency focus allows us to benefit to the best extent possible from these evolutions. So I would say it's very energizing and good to see how the Umicore teams are taking the next step, courageously going forward. They take their accountability, they collaborate, and this way we make progress on our core and are putting the foundation for good results going forward. With this, maybe I would like to suggest to open the Q&A.

Thank you. We are now opening the floor for a question and answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to resolve your question, please press star one again. As we enter Q&A, The answer is to please limit yourself to one question. If you would like to ask an additional question, you're welcome to re-enter the queue. We will pause just for a brief moment to wait for the questions to come in. Your first question comes from the line of . Please go ahead.

Yes. Hi. Good afternoon, both, and congrats on a great start to the year. Two questions from me, please. On the recycling business more particularly, you mentioned strong industrial metal and jewelry businesses in Q1. So, I was wondering if some of that might be linked to the situation in the Middle East. So, i.e., have you seen any pre-buying or inventory build that has helped the performance? And a quick follow-up on this, can you maybe elaborate on what makes you so confident in the division for the rest of the year?

Yes. So, thank you, Thea. On Jim, no, it's not actually a pre-buy. We had already strong momentum in 2025 and at the second half of the year. That really continues into the first quarter. And, of course, as it's over-the-counter business, you cannot just extrapolate us to the full year. So we have to see. But the gold price remains supportive. We still see very good collection at this point in time. So, so far, so good, I would say. So, indeed, that's one of the main drivers in the gym. Now, if you then step from that strong Q1 to the full year, we also see that in precious metals refining, actually, we see a very good performance going forward at current metal prices throughout the full metal baskets. And remember that in, of course, the first quarter we had a standstill. So, that means in the other months we are good to process volumes.

Great. Thank you.

Thank you. Your next question comes from the line of Shaitan Udeshi of JP Morgan. Please go ahead.

Yeah, hi. Thanks for taking my questions. I have a few. First one was, yeah, I'm just curious. You have a note in your release at the very bottom on the take or pay accruals. So, you know, you are essentially saying the way it works is you are accruing the stake or pay contribution to your EBITDA. And then at the end of the year, it will be basically the difference between the committed volumes and the shortfall will be invoiced. I mean, I'm just curious because, you know, historically, we've had this discussion in the past. I mean, we've struggled to see you know, customers uphold the take or pay volumes and, you know, you may go getting paid for it. So my, I guess the risk is, you know, you are accruing this and maybe the customer just doesn't pay. I mean, have you seen that? How do we get comfortable that that may not be the scenario that eventually plays out here? I know the numbers are small, but they are getting bigger as the volume shortfall perhaps is getting more substantial. The second question was, you know, within your specialty materials, and you alluded a little bit to this in terms of your germanium business, I'm just curious how much of the upside in germanium is driven by pricing versus product. And what I'm trying to get to is pricing. How much of that upside is actually structural? And if you can talk about how you fit into the germanium value chain from a product perspective, because I saw in your press release or media release, you know, recently you talked about exposure to, of course, you know, space satellites and stuff, but also silicon photonics and whatnot. I'm just curious how real these businesses are? Are they still, you know, sort of pie in the sky in terms of jam tomorrow? And the last question, you know, it's a very natural, sort of, it's natural for people to think, okay, a billion of EBITDA for Umico, essentially that's, you know, as good as it gets. I mean, why would that not be the case? Like, what we should be looking up to beyond a billion? Thank you.

I like your ambition, Chetan. I like your ambition. Maybe you want to take the first one, and then I'll take the two seconds.

Yes, sure. So, Chetan, looking at the take-off date, I mean, in part, we have different contracts in place. We can have some of the legacy contracts. So looking at this current contract, this is a particular contract where the contract is that the accrual, I mean that the shortfall is being monitored throughout the year and accrue for the shortfall. And then at the very end of the day, once we have the full view on the effective volumes shipped versus contractually agreed, that's where we then issue the invoice for the shortfall. So again, here what we want to do through that note is also bringing that transparency, that some of the fundamental support to the is also coming from some of those pay-for-pay accruals.

Yeah, exactly. So on specialty materials and specifically more specifically germanium, well, as you probably are all aware, today there's not... one kilogram of germanium leaving china for no matter what application especially because of course germanium is critical for technology advancement but of course it's also a metal that is typically going into the defense sector what we have seen both in customers across europe both at the governmental but also at the general customer level as well as in the us we really see a heightened demand and a structural longer-term demand where customers are really also committed. So, yes, there is, of course, a tailwind of the Germanic price because, I mean, it's significantly higher, right? At the same time, also on the product side and on the pricing side of the end products, we also see good progress. We also have some initiatives in the U.S. to further expand our capacity as well as in Europe. So this is one of the selective high-quality growth initiatives I typically refer to. So we are excited that this business will continue to grow in the next years with what we see today. Clearly, the limitation of the export of China, of course, triggers through in the metal price and availability. That's an important driver going forward, but the momentum is now, and we will definitely do everything to seize that momentum. Well, beyond the one billion mark, I mean, I'm happy that you say that, of course, the one billion is... well, in your terms, as good as it gets. I mean, let's see what really is good in the end. Of course, it's not today a CMD that we're doing on the future for Unicor beyond what we have today. But as I said before, given the geopolitical situation, the particularities around the ice and the CO2, basically the CO2 tolerance in the U.S., the longer momentum for ice in Europe, right, And also, the way that China is limiting today exports of key materials, I think these are all positive undercurrents for our business, and we will continue to explore options, how we can further capitalize on that.

Thank you.

Thank you, Tim.

Your next question comes from the line of Sebastian Bay of . Please go ahead.

Hello, good afternoon and thank you for taking the question. I have one just on the ion wage AV which is not mentioned in the press release but conceptually the single largest use of capital at Unicor over the last two or three years has been the business which is performing the least well. People don't seem to muster the same enthusiasm internally when talking about the battery opportunity as is the case with market share gains and catalysis and recycling. Is this JV really going ahead as conceived? I mean, you have a new CFO who has spent a lot of time restructuring the two previous companies. Is the full JV likely to proceed as conceived? And my second one is a quick one, but the local press in Korea, I think, picked up that Umicore is going to receive 120 million for its silicon anode contribution JV, which I assume will have an 80% stake in. Does this mean that the H1 results for the incremental 120 million euro inflow? Thank you.

Well, maybe I take one and you take two, one of us. Well, no, I think, as we said before, I mean, we have the IronRage on venture together with PowerCore, so a daughter of Volkswagen. Both parties continue to contribute capital, and we continue to finish off this site, so there's no updates to be given there. It is true that, of course, Lilly has been instrumental in some of the restrictions and, of course, putting the companies back on track at different, well, at different companies right now. So it shows that she can focus really also on the finance operation excellence and capital allocation, but it's nothing to do, there's no really cross at all with the IronWay joint venture.

Yeah. And looking at the joint venture that we concluded with Hewson around the silicon anodes, so this is where Unicor contributed the assets and the IP, and where Hewson contributed capital in order to support further scaling. So looking at the next phase in that scaling, being the industrialization, this is where Hewson will contribute further capital to the joint venture, that where Unicor gets diluted through that capital contribution by Hewson. So it's not something you will necessarily see one-on-one in our balance sheet. Thank you.

Thank you, Sebastian.

Once again, ladies and gentlemen, to ask a question, please press R1 on your telephone keypad. And your next question comes from the line of John Campbell of Bank of America. Please go ahead.

Yeah. Hi. Good evening. Thanks for taking my question. I want to come back on the topic of your battery material business and maybe if you could reassure us related to the contracts that you have. There's no risks that you see, for example, that nothing could be negotiated, such as any of the ramp-up phasing, ramp-up scale, et cetera, just to kind of get comfort on the take-or-pay clauses. None of it could be kind of watered down, even if they proceed and go ahead. Thank you.

Yeah, no, and I think our stance hasn't changed. I mean, we have very strong contractual clauses. We will continue to enforce and leverage basically these contractual clauses, nothing can change to our stance in this respect, and nothing to be mentioned at this point in time related to the question that you pose.

Perfect. Thank you. The next question comes from the line of Shaitan Deshan of JP Morgan. Please go ahead.

Sorry, one last follow-up. You know, you're saying capex would be slightly above last year. So are you able to quantify maybe it's what, 350, maybe less than 350? And I'm asking this because, you know, you are taking this FID on your new brownfield expansion in Hoboken. And I'm just curious whether that will come on top of the of that number, or is that capex maybe next year or the year after, so won't impact the capex for this year? Thank you.

Yeah, so a very good guess in it, I would say. So, indeed, we target a report of magnitude of 350 million, and this includes the engineering that is ongoing for the expansion in recycling.

So, yes, the majority of the capex will come in, indeed, 27, 28, 29, as we previously during the CMD, so we have that perfectly according to plan. Thank you. Thank you.

There are no further questions at this time. With that, I will now turn the call back over to Bart Schaaf. Please go ahead.

Yes, so thank you, everyone, for attending the call. Once again, I think we're off to a great start for 2026. We are set for a solid performance for the overall year. Once more, I would like to thank Juanes for all his contribution and resilience during these particularly interesting four years at Simicorp with ups and significant downs. I continue to look forward to work together with the teams, also the new team members joining to further build on the foundations of the group and to continue to be ready then when opportunities come that we actually can strike those. So I wish you all a wonderful evening. Thank you for attending and talk to you soon.

This concludes today's call. Thank you for attending today's call. We hope to see you soon. Have a wonderful day and stay safe.