Umicore Sa · EURONEXT:UMI
Umicore Sa — FY2005 Earnings Presentation
40 slides from Umicore Sa's earnings presentation, February 2006
Slide 1: 2005 Results
2005 Results
Slide 2: 2005 highlights
2005 highlights • Reshaping of Umicore as a materials technology group • Strong results • EBIT recurring € 233 million • NPAT recurring € 152 million • ROCE 13.6% • Important investments for the future • Capex € 145 million • R&D € 112 million • Acquisitions € 42 million 2
Slide 3: Fundamental reshaping of the company
Fundamental reshaping of the company • Cumerio spin off • Zinc focus on specialties • Sibeka / De Beers relationship restructured • Sale of Traxys stake completed 3
Slide 4: Successful spin-off
Successful spin-off shareprice evolution (in €) 140 Cumerio • Spin-off carried out in record time 120 Umicore 100 • Very favourable reception by all 80 stakeholders 60 • Value recognition for copper 40 activities and rerating of Umicore 20 0 2001 2002 2003 2004 2005 2006 4
Slide 5: A materials technology group
A materials technology group application know-how chemistry material metals material science solutions metallurgy recycling 5
Slide 6: Strong results
Strong results Recurring ROCE (in million €) 2004 2005 20% Revenues 1,692.9 1,725.0 Recurring EBIT 280.3 232.9 15% 13.6% 13.1% of which associates 31.1 34.0 EBITDA 441.4 389.9 10% 8.3% Net consolidated 6.5% 174.3 151.5 report Group share* 5% ROCE 13.1% 13.6% Adjusted EPS - 7.06 6.05 basic* 0% * recu
Slide 7: Dividend raised
Dividend raised EPS* & dividend (in €) 8 7.06 6.05 6 • Dividend of € 1.85 proposed 4.41 (compared to € 1.65 in 2004) 4 3.33 • Pay-out ratio of 30.6% 2 1.65 1.85 1.40 1.60 0 2002 2003 2004 2005 Gross dividend EPS* * basic adjusted EPS w ithout discontinued operations (for 2002 + 2003 EPS has been rec
Slide 8: Stable capex
Stable capex Capex • Automotive Catalysts (in million €) • Test center in Hanau, Germany 200 • Plant in Suzhou, China 153 148 • Electro-Optic Materials 143 145 150 • GASIR assembly plant in Quapaw, USA 100 • Precious Metals Refining • H2SO4 plant in Hoboken, Belgium 50 • Environmental • Capex: € 13.
Slide 9: Continued growth in R&D efforts
Continued growth in R&D efforts R&D expenditure (in million €) • R&D expenses up by 25% 125 112 (also now includes Element 6 Abrasives R&D) 100 89 • New products brought to market 75 in 2005 • Pd-based diesel catalysts 50 44 • GASIR® lenses for night-vision 25 systems 25 • new materials for recharge
Slide 10: Acquisitions
Acquisitions • Specialty Oxides & Chemicals • Todini • Precious Metals Chemistry • Reaxa • Technical Materials • Global Stars • Suzhou Alloys • Zinc Alloys • Kunming • Active acquisition screening again underway 10
Slide 11: Advanced Materials
Advanced Materials Co Optics Batteries Ni Li Mn Photovoltaics Pigments Ge Tools 11
Slide 12: Advanced Materials
Advanced Materials • Growth continues in lithium- (in million €) 2004 2005 cobalt compounds and new generation materials Revenues 308.6 275.1 • Solid performance of products Recurring EBIT 85.4 59.4 of which associates 18.6 18.4 for tooling applications EBITDA 106.3 83.6 • GASIR introduction continu
Slide 13: Advanced Materials Sales volumes
Advanced Materials Sales volumes Co battery products 800 • Rechargeable Batteries Co precursor 600 • Market for Li-Ion remains strong Lithium cobaltite • Sales of handsets up 15% in 2005 400 • Sales of laptops up 17% in 2005 200 • Umicore focusing more on LiCoO 0 and new advanced compounds 2001 2002
Slide 14: Precious Metals Products & Catalysts
Precious Metals Products & Catalysts Au •Ag Lay out as per AM Electronics Emission control Pt Pd Rh Catalysts Jewellery In Ru
Slide 15: Precious Metals Products & Catalysts
Precious Metals Products & Catalysts (in million €) 2004 2005 • Automotive Catalysts remained Revenues 698.0 766.2 on growth track Recurring EBIT 122.8 136.1 of which associates 9.0 8.4 • Slight improvement in Technical Materials versus a strong 2004 EBITDA 166.6 177.7 Capital Expenditure 49.2 43.6
Slide 16: Automotive Catalysts
Automotive Catalysts Worldwide auto sales (in millions) • Increasing importance of Asian 70 manufacturers 60 50 • Umicore’s palladium technology 40 for diesel engines introduced on 30 the market 20 • First commercial contracts for 10 HDD applications 0 • Umicore well positioned 2001 2002 2003 2004 2
Slide 17: Precious Metals Products & Catalysts
Precious Metals Products & Catalysts • Since PMG acquisition the Asian market has been priority • New automotive Catalysts facility opened in Suzhou in 2005; deliveries to customers began in H2 • New acquisitions in Technical Materials • Global Stars: Brazing alloys • Suzhou Alloys: Contact Material
Slide 18: Precious Metals Services
Precious Metals Services Ag Au Industrial Pt Pd Rh Ru Ir applications In Se Te Sn Bi Cu Pb Ni End-of-life Sb As materials
Slide 19: Precious Metals Services
Precious Metals Services (in million €) 2004 2005 • Excellent performance Revenues 204.9 234.5 Recurring EBIT 34.0 56.8 • Significantly improved supply of which associates 0.0 0.0 situation for most materials EBITDA 59.0 97.7 Capital Expenditure 20.9 23.5 • Strong PGM and specialty Average capital m
Slide 20: Precious Metals Refining
Precious Metals Refining Refining feed 4% (in RC/TC) • Improved supply conditions versus 2004 By-products from 24% the refining industry • Residues from copper industry End-of-life well up materials • Further increase in electronic Concentrates scrap due to combination of 72% higher availability and
Slide 21: Precious Metals Management
Precious Metals Management • Good performance continues in Precious Metals Management • Precious metals prices (particularly rhodium) improved further through 2005 metal price (in $/oz.) 1200 3500 Platinum 3000 1000 Palladium 800 Rhodium 2500 • Introduction of Umicore branded 2000 600 1500 precious
Slide 22: Zinc Specialties
Zinc Specialties Building Die-casting Zn Chemicals Pharma
Slide 23: Zinc Specialties
Zinc Specialties • Much lower received zinc price (in million €) 2004 2005 in € versus 2004 Revenues 481.4 448.4 • Second half also impacted by using slower production rhythm Recurring EBIT 79.9 24.7 of which associates 3.4 7.2 at Auby EBITDA 134.0 65.1 • Chemicals businesses benefited from the recy
Slide 24: Zinc Specialties Volumes
Zinc Specialties Volumes Zinc refining Zinc sales (in thousand tonnes) (in '000 tonnes) 800 800 700 700 600 600 80% 90% 500 78% 500 75% 71% 400 400 300 300 200 200 100 23% 26% 24% 24% 28% 100 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 primary sources Building Products Zinc Chemicals & oth
Slide 25: Financial review
Financial review
Slide 26: Segment breakdown
Segment breakdown Revenues Recurring EBIT Average capital ZS AM 9% employed 16% AM ZS AM ZS 21% 23% 26% 24% PMS 20% PMS PMS 16% 14% PMPC PMPC 44% 50% PMPC 37% • AM Advanced Materials • PMPC Precious Metals Products & Catalysts • PMS Precious Metals Services • ZS Zinc Specialties Corporate & Investme
Slide 27: Income statement Recurring
Income statement Recurring (in million €) 2004 2005 Operating Profit 249.2 198.9 Financial cost (41.9) (34.0) Income from other financial investments 0.0 0.2 Income from associates 31.1 34.0 Income tax (48.8) (35.3) Net recurring result 189.7 163.9 of which group share 174.3 151.5 of which minority
Slide 28: Income statement Total
Income statement Total (in million €) 2004 2005 Net recurring result 189.7 163.9 Income from discontinued operations 21.3 20.8 Non-recurring items * (18.5) (30.0) net result 192.5 154.6 of which group share 177.9 142.2 of which minority share 14.5 12.4 EPS declared (€ / share) 7.2 5.7 * Non-recurrin
Slide 29: Cash flow build-up
Cash flow build-up cash flow build-up (in million €) 500 114 9 77 400 Other 145 300 276 Change in working Cumerio capital debt 200 47 Capex 35 Tax 25 100 70 Net dividends Interest 0 Operating Reduction cash flow in net debt 29
Slide 30: Net financial debt
Net financial debt Debt (in million €) 800 643 • Gearing ratio stable at 33% 584 600 515 400 • Net debt at end of year up compared to H1 2005 204 34% 31% 33% 200 • due to increase of working capital 11% • due to year-end customer 0 payment delays in the 31/12 31/12 31/12 31/12 automotive sector 2002
Slide 31: IFRS
IFRS • Financials of 2004 recast to account for Cumerio demerger + new or revised IFRS standards • Adoption of new and/or revised standards in H1 including • IFRS 2: share based payments • IFRS 3: business combinations • IAS 19 (amended): changes of actuarial assumptions recognized in equity • IAS 3
Slide 32: Hedging summary
Hedging summary Cash flow hedges updated • Zinc price • 80% of zinc price exposure hedged for 2006 at average of € 1,125 per tonne • Slightly more than 60% of exposure hedged for 2007 at average price of € 1,450 per tonne • US dollar • No hedging in place other than relating to metal hedges 32
Slide 33: Relative performance
Relative performance Shareprice versus indices (in €) Umicore Umicore 120 BEL20 DJ-SC Bel20 31/12/2000 + 14.6% + 3.7% 100 DJ-SpCh 31/12/2001 + 20.0% + 12.3% Umicore 80 31/12/2002 + 27.0% + 12.6% 60 31/12/2003 + 22.0% + 32.6% 40 31/12/2004 - 4.8% + 10.3% 31/12/2005 + 37.5% + 26.4% 20 14/02/2006 + 1.6
Slide 34: Outlook
Outlook Overall business environment of H1 2006 likely to be comparable to H2 2005 • Advanced Materials • In line with market trends of H2 2005 • Precious Metals Products & Catalysts • Uncertain outlook of automotive sector, other segments expected to continue to grow • Precious Metals Services • Su
Slide 35: Forward-looking statements
Forward-looking statements This presentation contains forward-looking information that involves risks and uncertainties, including statements about Umicore’s plans, objectives, expectations and intentions. Readers are cautioned that forward-looking statements include known and unknown risks and are
Slide 36: Annexes
Annexes
Slide 37: Cash-flow statement
Cash-flow statement (in million €) 2004 2005 Cash flow generated from operations before tax 362.9 288.6 Tax paid (45.4) (46.5) Change in w orking capital requirements (73.0) (77.0) Net cash flow generated by (used in) operating 244.5 165.0 activities Capital expenditure (145.6) (144.6) Acquisitions
Slide 38: Balance sheet
Balance sheet (in million €) 31/12/2004 31/12/2005 Non current assets 1,109.4 1,188.4 Current assets 1,724.2 1,748.5 Assets of discontinued operations 699.8 - Total assets 3,533.3 2,936.9 Group shareholders' equity 935.0 971.1 Minority interest 53.6 44.3 Equity of discontinued operations 294.2 - Non
Slide 39: Glossary
Glossary • Revenue All revenue elements – value of purchased metals • EBIT Operating profit (loss) of fully consolidated companies + Group share in net profit (loss) of companies accounted for under equity method • non-recurring Includes non-recurring items related to restructuring measures, impairm
Slide 40: Slide 40