Umicore Lowers 2024 Profit Forecast Amid Reduced Battery Materials Demand
On June 12, materials technology and recycling group Umicore announced a downward revision to its 2024 profit forecast due to a significant reduction in demand for battery materials. This announcement has caused the company's stock price to plummet to a near 10-year low.
According to Reuters, Umicore is the latest supplier to be affected by the slowing growth in the electric vehicle (EV) market. The company, which produces catalytic converters and battery materials for automakers, also has a battery parts joint venture with PowerCo, the battery division of Volkswagen Group.
Umicore now expects its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between €760 million and €800 million in 2024. This is a decrease from the previous forecast of €900 million to €950 million.
Umicore CEO Bart Sap expressed disappointment in the short-term outlook for battery materials, stating, "The short-term outlook for battery materials is disappointing." He noted that the EV market does not resemble the linear transformation seen in other major industries and suggested that the trajectory of the market would remain unpredictable.
The company is relying on its European-based battery materials division to mitigate the effects of the phase-out of internal combustion vehicles. Umicore anticipates more orders from Chinese EV manufacturers aiming to enter the European market, although these orders are not expected to materialize in 2024.
Umicore is working with its customers to provide new forecasts in the coming months and is reassessing growth expectations. Meanwhile, EV makers are also reassessing their investment plans.
Following the announcement, Umicore shares fell 7% to the bottom of the STOXX Europe 600 index in early trading. The company's shares have declined by about 38% this year and are now at €15.5, their lowest level since October 2014. Additionally, since the unexpected replacement of the company's chief executive officer on May 15, Umicore's share price has dropped by approximately 27%.
