Umicore Braces for Earnings Decline Amid Precious Metals Price Dip

Belgian materials technology group Umicore is poised for a downturn in both revenue and earnings for the fiscal year 2023, impacted by the declining prices of precious metals such as rhodium and palladium, which have adversely affected its recycling operations. According to a consensus among analysts compiled by Vara Research, Umicore's financial performance is expected to reflect these challenges.

The analysis indicates a slight dip in revenue, from €4.15 billion in 2022 to €4.11 billion last year, with adjusted EBITDA also experiencing a decrease to €987.1 million from the previous year's €1.15 billion. Moreover, net income is anticipated to decline to €412 million from €570 million.

Berenberg Bank projects an adjusted EBITDA of €996 million for 2023, with expectations moderating to €973 million in 2024 and then rebounding to €1 billion by 2025.

The first half of the year already showed signs of strain for Umicore, attributed to less favorable precious metal prices, subdued macroeconomic growth, and escalating costs. Consequently, analysts foresee a decline in annual earnings and have adjusted their price targets and opinions on Umicore accordingly. Since the start of the year, Umicore's shares have seen a 16% decline, with a more pronounced 35% drop over the past twelve months, positioning it as the most significant underperformer in the Bel20 index.

Despite the current downturn, KBC, among other financial institutions, has recently lowered its valuation of Umicore but maintains that the company is strategically well-placed to contribute significantly to the transportation sector's electrification. Furthermore, battery recycling is identified as a potential key growth area for Umicore in the coming decade.

Umicore is scheduled to disclose its financial results this Friday, offering a clearer insight into its performance and future outlook in these challenging times.