Umicore Sa Ord New

Hello and welcome. My name is Gail and I will be your conference operator today. At this time, I would like to welcome everyone to the Unicore 2026 Half-Year Results Call. Please note that this call is being recorded. After the introduction by management, there will be a question and answer session. Thank you. I would now like to hand over the call to Bart Sap, Unicore's CEO, and Wannes Peferoen, Unicore's CFO. You may now go ahead please.

Okay, now it's my turn. Good morning to all and welcome to our H1 2026 earnings call. Let's open this presentation with a personal note for our CFO Wannes Peferoen, for whom this is the last set of numbers. Wannes, on behalf of Umicore, I'd like to express my sincere thanks for all your investment and dedication over many years at Umicore. We've worked together in different moments throughout our career. I've always valued our collaboration. I wish you the very best in what is to come. And first of all, some well-deserved with your close ones. Thank you, Bart. As also announced in April, Lilly Liu will succeed Wannes as of August 1st. Lilly is leaving this call in Wannes' capable hands. She's of course following this very closely, and those who participate in our roadshow next week will get to meet her. So once again, also a very warm welcome to you, Lilly. Now let's have a look at our H1 performance and where we stand today. I'm really pleased with the broad-based earnings uplift that we delivered in H1 2026, primarily driven by strong business execution and efficiency. Underlying earnings were up strongly in the double digits. Earnings growth also benefited from a metal price tailwind, particularly pronounced in Q1 2026. This tailwind came from a broad basket of metals. In addition to that, our drive for efficiency had an even greater impact on earnings growth. This is something we are really proud of as a management team. So thank you to our teams for their remarkable efforts. These results provide us with confidence to upgrade our full year 2026 adjusted EBITDA guidance to slightly more than 1 billion euros, while previous guidance provided in April was to approach 1 billion euros. Let me also draw your attention to our midterm strategic framework highlighted at the bottom of this slide. Our trajectory today shows indeed that we are well on track with our core midterm plan. We delivered increased margins, stronger returns, Improved cash generation and a robust balance sheet. RH1 2026 performance and numbers now on the next slide. We have revenues growing 7% to 1.9 billion euros. Earnings growth outpaced revenue growth as adjusted EBITDA increased 33% year on year. We delivered remarkable adjusted EBITDA margin accretion of about 600 basis points. to 30.2% in H1 2026. The Rothschild follow suits with a 660 basis point increase year on year to 23%. Cash conversion of earnings increased sharply as well with a free operating cash flow of 295 million euro versus an outflow in H1 2025. Strong adjusted EBITDA growth allowed to achieve a significantly lower leverage ratio year-on-year to 1.52, well within targets. In short, these numbers reflect strong momentum, greater underlying business activity, and sustained efficiency, further supported by a favorable metal price environment. Let's now go through business group performance, and we start this time with catalysis. A quick overview of market dynamics first. Overall, and as anticipated, global internal combustion engine production in H1 2026 was 1.5 million lower year on year. The global decline was driven by the light duty vehicle markets, so the passenger cars. Production dropped 4% year on year. You will notice mixed regional trends. The slowdown in China and Europe was only partially offset by stable to growing production in North America and South America. Looking at HD production, Europe was flat and China increased slightly. India and Thailand, on the other hand, delivered combined a 16% increase in production. Sorry. Now on to performance in catalysis on the next slide. Very solid set of numbers, largely driven by sustained operational excellence. Automotive catalysts, earnings up on broadly stable revenues year on year. Umicore did outperform the light duty vehicle market as well as the HD market with strong volumes. Precious metals chemistry delivered materially high revenues and earnings. Sustained demand levels across inorganic chemicals and homogeneous catalysts were further supported by favorable PGM price environments. Fuel cells and stationary catalysts The segment was weaker year on year overall, yet we saw different trends between the fuel cell catalyst and the stationary catalyst divisions. So on fuel cell catalysts, a lower adjusted EBITDA due to lower hydrogen technology adoption in China, we see some delay there, yet at the same time and on a positive note, we start production at our new proton exchange membrane catalyst plant in Changshu, China. This brings, of course, some startup costs. Then on stationary catalysts, volumes remain strong as demand for backup power solutions for data centers continues to grow. As you know, we are very well positioned to further capture the growth in this market segment. To take a step back on catalysis, and I do want to highlight the long-term trajectory of the segment which you see in the chart at the bottom right. Steadily growing revenues over the long term with improving adjusted EBITDA margins. Adjusted EBITDA margins reached a remarkable 28.3% in H1 2026. Operational excellence remains our core focus, and catalysis is a great example for that. Recycling now, with another outstanding performance. Metal prices overall continue to increase in H1 2026 versus 2025. This was most prominent in Q1. We saw continued high volatility overall in 2026, and Umicore benefited from a broad basket of metals, so not only PGM and precious metals, but also minor and specialty metals. The recycling segment performance was stellar. Our revenues increased, yet most remarkably, we had significant adjusted EBITDA margin accretion to 52%. And also here, you can see an attractive return profile of the recycling segment over time. First, precious metals refining. Revenues were broadly in line with H1 2026. We successfully managed to anticipate a maintenance shutdown of the Hoboken plant. And as a reminder, 2025 was a year without a shutdown. Adjusted EBITDA was higher. The favorable metal prices and mix did offset lower volumes and lower average hedging prices versus 2025. Then, jewelry and industrial metals. Very high volumes on the back of high gold and silver prices, the over-the-counter business successfully captured the momentum even longer than what we had anticipated before. The amount for gold and silver bars was strong, mostly in the first quarter, combined with robust demand in the luxury end market. This resulted in sharply higher revenues and adjusted EBITDA. On precious metals management, sustained volatility and high prices offered ideal market conditions for trading and Precious Metals Management captured that momentum. Before diving into the specialty materials results, I would like to come back to a statement made by Veerle Slenders on EVP specialty materials during our Capital Markets Day in London last year. She described specialty materials as the hidden gem of Umicore. Over the past year, we have worked to increase the visibility of these activities, and we will continue to do so. In the first half of 2026, Specialty Materials delivered an excellent performance benefiting from favorable market dynamics while leveraging its strong position in structurally growing, technology-driven end markets. These businesses are creating tangible value in increasingly connected and geopolitically complex worlds supported by a unique metals expertise and closed-loop business model. So more to come here. Now back to the numbers. In H1 2026, revenues and adjusted EBITDA were up strongly year-on-year in the double digits, with significant margin accretion. In cobalt and specialty materials, we delivered a material increase in revenues and earnings year-on-year on the back of strong cobalt momentum. Efficiency benefits also contributed to the earnings growth. The business is looking at tungsten as part of our closed-loop business model, another example of a metal affected by the geopolitical situation. In electric optic materials, the amount for substrates and high purity chemicals for space applications and data communications was again strong. The combination of high germanium demand and export controls as well as a broader market conditions remained supportive for our closed loop refining and recycling services. Here again, operational excellence also contributed to the material increase in adjusted EBITDA. Looking ahead, We will keep diversifying our customer base in these growing end markets. In metals deposition solutions, revenues increased year on year on the back of solid demand for semiconductors and industrial applications. Growth was only partially offset by softer demand in the decorative applications. Battery materials solutions now. In battery cathode materials, revenues increased, yet volumes remained in line with last year. As a result, the year-on-year increase mainly relates to take-or-pay compensations related to contractual volumes. In H1 2026, adjusted EBITDA reached 19 million euros compared to minus 15 last year. Going forward, we will keep our disciplined approach for this business. Battery recycling solutions. As we said before, the lithium-ion recycling opportunity is expected to materialize from the middle of the next decades. In the meantime, We continue to optimize our processes and technologies. In this context, Ernie's contribution was negative as anticipated. We remain very diligent here on execution and cost management. I'll now hand over the floor to Wannes for the financial review.

Thank you, Bart, and good morning, everyone. As you heard from Bart, we delivered a strong first half with a significant improvement in EBITDA, margin, cash generation, and returns. I will start with the overall performance of the group. Adjusted EBITDA increased 33% to $577 million as a result of three key drivers. First, broad-based growth in volumes and activity. Second, ongoing top-line and efficiency measures. And third, favorable prices for precious metals and minor metals like cobalt. All three drivers made an equal contribution and they more than offset inflation. The EBITDA margin increased from 24% to 30%. We also delivered strong cash generation. Cash flow from operations was 565 million compared to 260 million last year. Working capital represented a cash outflow of 132 million, mainly reflecting higher activity levels and higher metal prices, in particular in catalysis. CapEx was 130 million, up from 109 million last year. This is mainly due to the plant maintenance shutdown in precious metals refining, as well as some selective growth investments. After CAPEX and capitalized development costs, free operating cash flow amounted to 295 million compared to a cash outflow of 54 million last year. Free operating cash flow was largely absorbed by taxes, net interest, dividend payments and equity injection into IronWay and other associates. In January this year, Umicore contributed 175 million in equity to IronWay. Net debt increased 151 million to 1.5 billion. The leverage ratio improved slightly from 1.6 to 1.5 times. Now looking at the consolidated P&L. I already covered EBITDA, so jumping to EBIT. Adjusted EBIT increased 47% to 442 million as a result of strong operational performance and continued efficiency measures. Adjusted net finance charges were 80 million, down from 102 million last year. This was mainly due to lower foreign exchange losses, partly upset by the impact of interest rate changes. The adjusted tax charge was 78 million, up from 64 million last year, reflecting higher profit before tax. The adjusted effective tax rate decreased from 31.7 to 21.3%. Adjusted net result group share was 273 million, up from 135 million last year. And adjusted earnings per share doubled to 1.14 euros. Adjustments had a negative impact of 34 million, largely related to restructuring programs and environmental provisions. Net result group share was 240 million compared to 137 million last year. Finally, return on capital employed improved significantly from 16.4 to 23%, supported by strong EBIT in the first half and continued capital discipline. Now turning to the balance sheet, our liquidity remains strong with a cash position of 1.8 billion and continued access to 1.1 billion euros of undrawn credit facilities and commercial paper. Gross debt was 3.2 billion, and the cost of debt increased to 3.5%. Group equity amounted to 2.45 billion, corresponding to a net gearing ratio of 38.1%. Now we continue to hedge precious metals in order to reduce volatility, increase visibility on future cash flows, and protect future earnings. At the end of June, we had forward contracts in place, covering part of our expected exposure for precious metals up to 2030. This includes meaningful coverage for gold, platinum, silver, palladium and rhodium up to and including 29. There was limited additional hedging this half due to minimal counterparty interest and a strong backwardation. We also maintain energy hedges for a significant portion of our European electricity and natural gas, so we are also reasonably well protected from rising energy prices. So to conclude, we had an excellent first half. We delivered broad-based earnings growth with adjusted EBITDA up 33%, a margin of 30%, strong cash conversion, and a robust balance sheet. The foundation business performed well, and we continued to exercise discipline on costs, capital, and cash. Now, Bart, before handing it over for the outlook, today is my last earnings call for Umicore, and I would like to thank you for your trust Your engagement and your constructive dialogue over the past four years, and you being the investors and the analysts next to you, Bart. It has been a privilege to interact with you and to be the CFO of Umicore. I leave the company in good hands with Bart and Lilly, and I wish them, the team at Umicore, every success going forward.