UPDATE 2-Umicore upbeat on outlook for auto catalysts, batteries

Thu Feb 6, 2014 5:47am EST

* 2013 recurring operating profit (REBIT) down 18 pct

* REBIT of 304 mln euros vs consensus of 307 mln euros

* 2014 REBIT may be lower if precious metals prices persist

* Upbeat on auto catalysts, battery materials

* Shares up 6 pct (Adds shares, analyst view)

BRUSSELS, Feb 6 (Reuters) - Belgian speciality materials maker Umicore is optimistic about growth at its automotive catalysts and high-tech battery materials businesses even though weak precious metal prices could depress profits further this year.

Umicore reported an 18 percent fall in profits for last year on Thursday partly due to the impact of lower metal prices on margins in its recycling business.

The company said it expected a definite improvement in the performance of its product businesses, which include automotive catalysts and battery materials for products such as mobile phones.

"Revenues and margins are set to increase further due to continued growth in sales of rechargeable battery materials and a recovery in some of the other end markets," the group said in a statement.

A rise in global auto production and higher demand for Umicore's rechargeable battery material in mobile devices, tablets and power tools should ensure growth for the group's catalysts and energy materials divisions.

But Umicore also said this might not be enough to offset the impact of lower metal prices on the profitability of recycling. "If current metal prices persist, full-year recurring EBIT (profit) could end up slightly below the level of 2013", it said.

Umicore shares rose as much as 6.0 percent to 33.48 euros, albeit only returning to their level of a month ago.

UBS analyst Joe Dewhurst said the market had been increasingly used to disappointing earnings and forecast downgrades from Umicore, such as its profit warning in October.

"The precious metal price risks are very firmly understood by the market ... But what you are seeing is growth in all the high-technology businesses and that's a step up," said Dewhurst, who has a "Buy" rating on the stock and a 37 euros price target.

"The real thing is this is an upbeat outlook message from a company that in the past has been very positive about the long-term technology potential but extremely conservative short term."

Umicore reported an 18 percent fall in REBIT to 304 million euros ($411.4 million). That compared with the 307 million euro average in a Reuters poll and Umicore's own forecast of the lower end of a 300-330 million euro range.

Operating profit for recycling fell 23 percent. Sales for silver-based applications were lower due to poor demand from the solar industry and jewellery industry demand dipped. But the chief cause of the decline was lower metals prices.

For certain precious metals, Umicore had locked in prices at previous periods. For others, such as selenium and iridium, such hedging is not possible.

Recycling made up 28 percent of revenue and 61 percent of group operating profit in 2012. That dropped to 25 and 57 percent in 2013.

Still, Umicore plans to invest 100 million euros at its Hoboken site in Belgium to expand its precious metals refining capacity there by 40 percent to 500,000 tonnes per year.

($1 = 0.7390 euros) (Reporting By Philip Blenkinsop; editing by Robert-Jan Bartunek and Jane Merriman)

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