Energy & Surface Technology

Revenues in Energy & Surface Technologies increased substantially (+44%), with Rechargeable Battery Materials continuing to outgrow the xEV market. The business group also benefited from strong demand and a supportive price environment in the refining and distribution activities of Cobalt & Specialty Materials in the first half of the year.

The increase in recurring EBIT was even greater (+82%), reflecting scale effects following the rampup of new capacity in Korea and China as part of the € 460 million investment program, which was launched in 2016. The program consisted of a combination of a brownfield expansion in China and a greenfield site in Korea and was completed in 2018 on an accelerated schedule.

ROCE for Energy & Surface Technologies was well up despite a 50% increase in capital employed year-on-year.

Revenues of Energy & Surface Technologies should increase further in 2019 on the back of continued growth in Rechargeable Battery Materials. This growth is expected to be more pronounced in the second half of the year when the first production lines will come on stream in the new plant in China.

Revenues and volumes for Rechargeable Battery Materials increased significantly, driven primarily by strong demand for Umicore’s proprietary Cellcore® NMC (nickel manganese cobalt) cathode materials used in lithium-ion batteries for transportation applications. This growth was supported by the fast ramp-up of new production capacity both in China and Korea.

In addition, shipments of High Energy LCO (lithium cobaltite) cathode materials for batteries used in high-end portable electronics and shipments of NMC cathode materials for energy storage applications were also higher year on year.

Sales of full electric and plug-in hybrid vehicles grew by more than 60% year-on-year globally and reached 2 million vehicles in 2018.

The majority of automotive OEMs have started to expand their offering of electrified car models in anticipation of tighter CO2 regulations coming into force in several regions.

Umicore’s broad portfolio of cathode material technologies offers automotive OEMs around the world state-of-the-art solutions to achieve longer driving ranges, faster charge and low battery degradation in combination with cost optimisation. Umicore has captured a significant share of the segment growth.

Our products are present on more than 20 platforms with OEMs globally and in qualification for several large new platforms.

Umicore also has the ability to scale up production rapidly and its proprietary production lines are capable of producing the full range of NMC materials, all certified for the most stringent automotive requirements.

In order to meet the growing demand from its customers, Umicore is expanding cathode materials production capacity in Korea and China and will soon start construction of a first production facility in Europe. The swift ramp-up of the new lines in Korea and China supported rapid volume gowth over the course of the year and generated scale benefits.

The construction of the greenfield site in China is progressing according to plan, with commissioning expected around mid-2019. In Nysa, Poland, the engineering work is ongoing and construction of the new cathode materials production plant is expected to start in the spring of 2019 with commissioning planned for mid-2020.

Revenues for Cobalt & Specialty Materials were up year-on-year. The refining, recycling and distribution activities generated a strong performance in the first half of the year due to high volume growth and favorable prices.

Market conditions became more challenging in the second half of the year, with the cobalt price in particular declining sharply after the peak levels reached in June. The product businesses recorded solid demand for nickel compounds used in the battery, plating and catalyst industries as well as carboxylates used in catalytic applications. Revenues in the tool materials activity were slightly below the strong levels of 2017.

The Energy & Surface Technologies business group includes the battery recycling activity, consistent with Umicore’s closed loop approach. Umicore recorded higher activity levels at its battery recycling pilot plant and secured new contracts for the recycling of spent automotive and portable electronics batteries.

With the worldwide penetration of electrified vehicles set to increase sharply in the coming years, industrial-scale battery recycling will be vital for sustainable electric mobility.

Umicore has developed unrivalled competences and industrial capabilities to recover critical raw materials from spent batteries and battery production scrap, in a sustainable manner.

The growing scarcity of metals and increasing societal pressures to source raw materials in an ethical and environmentally sustainable manner has resulted in a growing need for increased traceability in supply chains. An increasing number of automotive OEMs are therefore looking for a closed loop approach as offered by Umicore.

The technology and research alliances, which Umicore entered with BMW and Audi in 2018, underscore the merits of Umicore’s closed loop approach.

Revenues for Electroplating were stable. Higher revenues for decorative applications and platinised compounds used in electrocatalytic materials offset the impact of competitive pressure on precious metal-based electrolytes used in portable electronics.

Revenues for Electro-Optic Materials were slightly lower compared to the previous year mainly due to a smaller contribution from the substrate activities, which were impacted by subdued demand from the space photovoltaics and LED segments. Demand for germanium tetrachloride and infrared finished optics remained stable.

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