UPDATE 2-Umicore warns of inventory surplus after weathering auto slump so far

* Adjusted EBIT up 1%

* Recycling offset weak auto parts demand

* Excess battery inventory to impact H2 (Adds share move, analyst comment, details from earnings call)

July 31 (Reuters) - Belgium’s Umicore SA warned on Friday that its growing auto battery inventory surplus would weigh on its second half performance, after its recycling business helped it offset a slump in demand for car parts in the first half.

The maker of catalytic converters and battery materials for carmakers beat first-half profit forecasts, reporting that adjusted earnings before interest and taxes (EBIT) rose to 243 million euros ($289.1 million) in January-June, from 240 million a year earlier.

That topped the 224 million euros expected by analysts in a company-provided poll.

However, Umicore said it expects inventory corrections in the rechargeable battery supply chain to amplify weak trading conditions in the second half, with core profit at its energy division - which produces materials for rechargeable batteries and other products - set to fall from the first half.

For the group as a whole, Umicore expects full-year adjusted EBIT to be lower than last year.

“I don’t see clear signs that the global electric vehicle (EV) demand will be recovering,” said Chief Executive Marc Grynberg.

While the European EV market looked supportive, China and North America were “anaemic at best”, he said.

Umicore shares were down 8% by 0930 GMT.

The auto industry has taken a significant hit from lockdowns which have halted car production and closed showrooms.

Umicore, which is active in the energy, automotive and recycling sectors, said its recycling business benefited from increased activity levels, high metal prices and favourable trading conditions.

Its recycling division, which in 2019 accounted for about a third of the group’s core profit, accounted for 72% of it in the first half with a consensus-beating recurring EBIT of 191 million euros.

ING analyst Stijn Demeester, however, said that the outstanding recycling performance was partly non-recurring.

“In automotive divisions Catalysis and Energy and Surface Technologies, the adverse impact of the pandemic was larger than feared,” he added.

Adjusted EBIT of the catalysis and energy and surface technologies segments declined 76% and 47%, respectively.

$1 = 0.8406 euros Reporting by Milla Nissi and Charles Regnier in Gdansk; editing by Jason Neely and Susan Fenton