Financial Review

Non-recurring items

Non-recurring items had a negative impact of € 14 million on EBIT for the full period. Restructuring charges accounted for € 14 million and were mainly related to the plan to end industrial activities in Guarulhos, Brazil and transfer them to the existing site in Americana. Impairments on permanently tied-up metal inventories accounted for a € 6 million charge and are largely linked to a lower cobalt price at the end of the period. These charges were partly offset by non-recurring income including the gain on the sale of the European operations of Technical Materials. The negative impact of the non-recurring items on the net result (Group share) amounted to € 9 million.

Umicore has adopted IFRS 9 Financial Instruments as of 1 January 2018 which replaces the provisions of IAS 39 on accounting and classification of financial assets and liabilities, financial instruments and hedging. Therefore, Umicore no longer applies IAS 39 and no longer reports an IAS 39 effect.

Financial result and taxation

Net recurring financial charges totaled € 69 million, up compared to the previous year. Net interest charges increased as the € 690 million medium- and long-term debt was drawn down for the entire period. The accelerating growth in Asia also resulted in higher funding in local currency and higher forex costs.

The recurring tax charge for the period amounted to € 107 million, increasing in line with the higher underlying operating result and corresponding to a somewhat lower recurring effective tax rate of 24.4% vs 25.7% in 2017. The total tax paid in cash over the period amounted to € 127 million.


Cashflows

Cashflow from operations before changes in working capital increased to a record level of € 800 million. Most of this cash flow was used to fund a € 707 million increase in working capital.

This increase resulted from the business expansion and higher prices for certain metals, in particular in the Energy & Surface Technologies business group that accounted for more than two thirds of Umicore’s working capital increase.

Capital expenditures totaled € 478 million, up from € 362 million (excluding Discontinued Operations) in 2017, with the Energy & Surface Technologies business group accounting for two thirds of this amount. The capex spending in 2019 is expected to be higher than in 2018, driven by the greenfield expansions underway in Rechargeable Battery Materials, the capacity expansions in Catalysis and the investments to be carried out during the extended shutdown in Hoboken. Acquisitions and divestments accounted for a net cash outflow of € 95 million. This includes the increase in Umicore’s stake in its Chinese cathode material production entity to 90% and the acquisition of Materia’s metathesis catalysts business partly offset by the proceeds from the sale of the European operations of Technical Materials, all of which took place in the first half of the year.

Dividends paid to Umicore shareholders over the period amounted to € 175 million and the net cash outflow related to the purchase of treasury shares to cover stock options and share grants was € 79 million.


Financial debt

Net financial debt at 31 December 2018 stood at € 861 million, up from € 840 million at the start of the year. This reflects the € 881 million net proceeds from the February capital increase and the net free cash flow from the period. The majority of the outstanding financial debt is composed of the € 690 million longterm private debt placements in Europe and the United States.

Net financial debt at the end of the period corresponded to 1.2x recurring EBITDA which leaves ample balance sheet room to execute the growth strategy.

Group shareholders’ equity stood at € 2,609 million resulting in a net gearing ratio (net debt / net debt + equity) of 24.4% compared to 31% end of 2017.

 

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