Umicore profit slumps on weak EV demand, takes 1.6 billion euro writedown
EBITDA 393 mln euros vs consensus 398.5 mln
Launches review of its business
Shelves investment in battery recycling plant
Slower EV demand impacts sales
Adds Canada finance minister's comment in paragraph 4
By Mathias de Rozario and Olivier Sorgho
July 26 (Reuters) -Metals recycling group Umicore UMI.BR reported on Friday a 24% fall in half-year core profit and booked a 1.6 billion euro impairment for its battery materials division in the face of weak demand for electric vehicles.
The maker ofcatalytic converters and battery materials for carmakers has decided to postpone a "large scale" investment in an unspecified battery recycling plant in Europe due to EV market weakness.
It will also delay a battery materials plant investment in Canada as it launches a strategic review of its business.
Asked about the battery plant delay on a call with reporters, Canada Finance Minister Chrystia Freeland said, "These kinds of major transformations are never a straight line. There are always bumps along the way."
Umicore's shares were down 2.6% at 0943 GMT.
"The market context is challenging and we have seen a slowdown in the growth of EV sales in the short and mid term," CEO Bart Sap told analysts.
It now expects production at the European battery recycling plant to start in 2032 at the earliest.
"The low visibility on underlying market trends and technology choices has dented investor confidence, but the current valuation seems attractive," said KBC analysts in a note.
Umicore's adjusted core profit (EBITDA) fell 24% to 393 million euros ($426.68 million), missing the 398.5 million expected by analysts in a company-provided consensus.
Profits at the battery materials division fell 99% to 1 million euros. The group said the 1.6 billion impairment would reflect lower values of some of its plants and equipment.
Umicore last month lowered its 2024 profit forecast, citing weak demand projections for battery materials due to the EV slowdown.
The company on Friday confirmed its full-year guidance for core profit at group level, but forecast that the battery materials division would have an operating profit below break-even in 2025 and 2026.
The company specialises in nickel, manganese and cobalt battery materials, and faces additional pressures as some car-makers switch to cheaper lithium-ion phosphate components.
CEO Bart Sap told analysts the two types of batteries can coexist on the market.
In June, Umicore announced job cuts at its German business producing automotive catalysts, which helps reduce emissions in gasoline and diesel engines.
($1=0.9211 euros)
Reporting by Olivier Sorgho and Mathias de Rozario; Additional reporting by David Ljunggren in Ottawa; Editing by Clarence Fernandez, Jason Neely and Jane Merriman and Richard Chang
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