Umicore's Strategic Vision: A Roadmap to 2028 Success
Umicore's Strategic Vision: A Roadmap to 2028 Success
Today at its Capital Markets Day, the CEO of Umicore, Bart Sap, alongside the Executive Leadership Team, will share the pivotal outcomes of their Battery Materials strategy review and reveal Umicore’s roadmap guiding the company towards 2028.
Key Highlights
- Umicore’s circular business model becomes increasingly important.
- The mid-term plan leverages the group's strengths around four core areas: Capital, Performance, People & Culture, and Partnerships.
- Projected capital expenditures reduced by €1.4 billion between 2025 and 2028 from previous plans, indicating a more balanced capital allocation and disciplined spending.
- Increased focus on maximizing cash generation in core businesses while recovering value from Battery Cathode Materials.
- A robust mid-term strategy for Battery Cathode Materials aiming at value recovery and active partnership exploration.
Mid-term Targets Explained
- Expected adjusted EBITDA to be between €1.0 billion and €1.2 billion by 2028, with a margin exceeding 23% and return on capital employed (ROCE) exceeding 15%.
- A cumulative free cash flow target of €1.0 to €1.2 billion during the 2025-2028 period.
- Total investments are limited to €2.1 billion, including €1.6 billion in CapEx and about €500 million towards the IONWAY venture.
"Our circular business model is integral to our operations. Capitalizing on our expertise in metals management and materials science, we've established ourselves as industry leaders. This model underpins our strategy for battery materials, adapting to evolving market requirements," expressed Bart Sap, CEO of Umicore. "We are focused on strengthening our core businesses' cash generation capabilities while positioning Battery Cathode Materials for future value recovery by optimizing our resource management, nurturing key partnerships, and embracing a performance-driven culture."
Strategic Focus Through Key Imperatives
- Capital: Investments will be strictly regulated, ensuring balanced distribution within the group and disciplined capital outlay.
- Performance: Operational improvements are projected to yield savings of €100 million in adjusted EBITDA by 2025, with aims to mitigate inflationary impacts through efficiencies of at least €50 million annually from 2026 to 2028.
- People & Culture: Umicore emphasizes fostering a culture of value and efficiency, crucial for sustaining performance improvement.
- Partnerships: The company is actively scouting for partnerships to enhance its growth in battery materials.
Enhancing Cash Generation in Core Operations
Umicore anticipates unlocking between €2 and €2.2 billion in cumulative free cash flows from its foundational businesses through 2025-2028.
- Catalysis: With a strong market position, this division expects revenues around €1.8 billion, aiming at a 25% adjusted EBITDA margin while targeting over €1.4 billion in free cash flow by 2028.
- Recycling: Striving to optimize returns from existing assets while investing in future capabilities, it aims for revenues around €800 million and a significant EBITDA margin by 2028.
- Specialty Materials: Targeting market opportunities in high-tech sectors, it expects around €600 million in revenue with robust profitability metrics.
Battery Cathode Materials and Value Recovery
Umicore has devised a strong mid-term plan for Battery Cathode Materials focused on maximizing returns and maintaining rigorous financial discipline. By reallocating investments effectively, Umicore targets:
- Becoming adjusted EBITDA positive by 2026 and reaching positive free cash flow in 2027.
- Generating approximately €1.1 billion in revenues by 2028.
- Achieving an adjusted EBITDA in the region of €275 million to €325 million.
- Maintaining an adjusted EBITDA margin exceeding 25%.
- Having a ROCE of about 9% by 2028.
Partnership Exploration in Battery Cathode Materials
Umicore is actively seeking partnership opportunities in its battery material segment, having strategically reshaped its mid-term plan for Battery Cathode Materials. Eleven years of experience positions Umicore well for accelerating value recovery and the company remains committed to building strong customer relationships with competitive protections.
The group had its Capital Markets Day for investors and analysts earlier today. This event highlighted its vision to navigate through the complex market landscape effectively.
Frequently Asked Questions
What are the main objectives of Umicore's roadmap to 2028?
Umicore aims to strengthen its business model, maximize cash generation, and recover value in its Battery Cathode Materials segment.
How does Umicore plan to achieve cost savings?
By implementing stringent operational efficiencies and targeting gross efficiencies to offset inflation.
What investment strategies does Umicore outline for 2025-2028?
Umicore plans to limit total investments to €2.1 billion while focusing on balanced capital allocation and disciplined spending.
In which business areas is Umicore focusing its future growth?
Umicore is enhancing its foundational businesses while actively seeking partnerships within the battery materials domain.
What financial targets has Umicore set for itself by 2028?
Umicore targets an adjusted EBITDA of between €1.0 and €1.2 billion and cumulative free cash flow in the range of €1.0 to €1.2 billion.
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