February 7, 2020 / 7:13 AM / 2 months ago

UPDATE 2-Umicore key division miss overshadows 2019 profit beat

(Updates with share price, division miss)

By Milla Nissi

Feb 7 (Reuters) - Shares in Belgian materials and recycling group Umicore fell as much as 4.7% on Friday after an earnings miss at one of its key divisions overshadowed a better-than-expected overall operating profit for 2019.

One of the world’s largest cobalt refiners cited strong performance of its catalytic converter and recycling units as it reported recurring earnings before interest and tax (REBIT) of 509 million euros ($558.83 million) in 2019, ahead of a company-provided consensus of 485.5 million euros.

However, a 29% drop in REBIT for its energy and surface technologies division, which among others supplies cathode materials for electric vehicles, fell short of analysts’ expectations, setting the shares on track for their worst day in seven months.

JP Morgan said second-half operating profit for the group’s key growth division missed its expectations by 26% while ING had pencilled in a 17% drop.

Umicore blamed the division’s weak performance after a record 2018 on a temporary market slowdown, lower metal prices and higher depreciation charges and costs of new investments.

Umicore did not provide specific 2020 targets, but said it expected to grow its revenues and earnings this year. It added this outlook “assumes that the recent coronavirus outbreak will not result in a protracted or material effect on the economy in 2020”.

“I am proud of our performance in 2019 and pleased to confirm the growth outlook for 2020 despite the adverse market trends that developed in the course of 2019,” chief executive Marc Grynberg said in a statement.

Umicore reported higher revenues and recurring REBIT in its catalyst unit saying market share gains in Europe and China helped offset the global recession in the automotive market. The group also reported growth in its recycling unit, citing higher metal prices and “favourable supply environment”.

Umicore added that despite the expectation of subdued electric vehicle (EV) sales in China, it saw benefits from higher sales of cathode materials for EVs for the energy and surface materials division this year, with growth expected to be driven primarily by new capacity. ($1 = 0.9108 euros) (Reporting by Milla Nissi in Gdansk Editing by Tomasz Janowski and Nick Macfie)

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