2008 report to shareholders & society · succession of karel vinck as chairman and of thomas...
TRANSCRIPT
2008 report to shareholders & society
2
Overview
Highlights•
Economic report
•
Environmental report
•
Social report
•
Governance report
2009 Q1 update
Economic
report
4
Continued strong performance
Recurring EBIT
48 48
155122
170199
215
49
98
126
111
159160 140
7,4%8,3%
15,3%
13,6%
19,2%19,7%
17,9%
98
146
280
233
329359 355
0
100
200
300
400
500
600
2002 2003 2004 2005 2006 2007 2008
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
H1 H2 ROCE
Restated for discontinued operations in 2004 and 2006
(in million €)
Revenues (excluding metal)
510 529
883 861 844965
1126526
829
810 864 841
9459978,2%
9,4%
14,7%
11,5%
17,3% 17,4%
15,2%
1036
1358
1693 1725 1685
19102124
0
500
1000
1500
2000
2500
3000
3500
4000
2002 2003 2004 2005 2006 2007 2008
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
H1 H2 REBIT margin
Restated for discontinued operations in 2004 and 2006
(in million €)
5
Rapid deterioration of business environment in Q4
•
Annual global car production down 4% (down 12% in H2 and down 21% in Q4); Plant closures at most major OEMs and significant destocking underway
•
Sales of mobile phones down 13% in Q4, while sales growth of laptops was slower than generally anticipated
•
Activity in the construction sector slowed, notably in the US (-11%) and Western Europe (-3%)
•
The prices of precious, base and specialty metals suffered major
reverses in H2
6
Dealing with reduced demand
•
Umicore is continuing to adapt its production profile to the current demand situation
•
Workforce of consolidated companies reduced by 400 people from October 2008 to date with a further reduction of 150 planned
•
More than 1,000 people on reduced working time or temporary
unemployment
•
Other measures such as overtime limitations, in-sourcing of contractor work
•
Measures do not significantly affect R&D efforts
7
Investing in the long-term: R&D focus
R&D
5763
73
53
62
93
2,5%
3,2%
5,4%5,7% 5,8% 5,8%
7,0%
31
48
104112 110
125
166
0
25
50
75
100
125
150
175
200
2002 2003 2004 2005 2006 2007 2008
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
H1 H2 R&D / revenues
Restated for discontinued operations in 2004 and 2006
(in million €) R&D expenditure increased further in 2008
•
Higher expenditure in Automotive Catalysts (mainly due to the inclusion of Delphi R&D)
•
Corporate projects
43 patents filed in 2008
R&D efforts planned to continue at high level in 2009
8
Investing in the long-term: Capex
Capex
78 64 51 54 5069
91
7478 94 91
58
84
125151
142 146 145
108
153
216
0
50
100
150
200
250
300
2002 2003 2004 2005 2006 2007 2008
H1 H2
Restated for discontinued operations in 2004 and 2006
2008 capex
up by 41%
•
pre-concentration plant (PMS)
•
production & testing investments (AC)
•
combined heat power generation (AM)
•
new Li-Ion cathode materials plant (AM)
•
API plant (PMP&C)
2009 capex
expected to remain high,
aimed at increasing capabilities
•
new rechargeable battery materials
•
germanium substrates (AM)
•
automotive catalyst technologies
•
jewellery production and recycling
9
The balance sheet remains strong
Net financial debt
254
743
577 610
773
168
329
118
620
438510
9,7%
34,2%
25,4%
33,4%
43,9%
9,9%
19,8%
0
250
500
750
1.000
1.250
1.500
1.750
2.000
2002 2003 2004 2005 2006 2007 2008
-1,0%
4,0%
9,0%
14,0%
19,0%
24,0%
29,0%
34,0%
39,0%
44,0%
Securitisation, excluded from net debt before 2006Net debt, continuedGearing ratio = debt / (debt+equity), continued
Restated for discontinued operations in 2004 and 2006
(in million €)Gross debt
Long-term loan
(maturity 2013)3%
Revolving credit facility
(maturity 2011-2013)
40%
Commercial paper14%
Other bank facilities
17%
Bonds(maturity
2012)26%
10
EPS
EPS
0.28 0.32 0.33 0.37 0.42
0.65 0.65
0.57
0.80
1.41
1.21
1.731.80
1.93
0.00
0.50
1.00
1.50
2.00
2002 2003 2004 2005 2006 2007 2008
EPS adjusted, basic, excluding discontinued operations
Dividend (proposed)
Restated for discontinued operations in 2004 and 2006
(in €)
•
Adjusted EPS increased by 7 %
•
Accretive share buy-back effect of 9 %
•
Proposed dividend of € 0.65 per share, stable versus 2007
•
Ex-dividend date is 30 April with payout commencing on 6 May
11
Stock performance
Environmental report
13
Environmental performance analysis: key indicators
key indicators:
•
Metal emission to water & air
•
Greenhouse gas emission to air
•
Water and energy consumption
Metal emissions(in kg)
0
5 000
10 000
15 000
20 000
2007 2008
0
2
4
6
8
to water
to air
per unitrevenueper unitrevenue
Water and energy consumption
0
2 000
4 000
6 000
8 000
10 000
2007 2008
0
1000
2000
3000
4000
5000
Water consumption(1.000m³)
Energyconsumption( TJ)
per unit revenue
per unit revenue
Greenhouse gases emissions(tonnes)
0
200 000
400 000
600 000
800 000
2007 2008
0
50
100
150
200
250
300
350
Greenhouse gasesemissions
per unit revenue
14
Environmental performance analysis: key indicators
key indicators:
•
(hazardous) waste production
•
compliance excess rate
☺
Total waste produced (tonnes)
0
20 000
40 000
60 000
80 000
100 000
2007 2008
-50-45-40-35-30-25-20-15-10-505101520253035404550
Non hazardouswaste
Hazardous waste
per unit revenue
Input materials (% of tonnage)
Primary materials37%
Secondary materials41%
Recycled materials22%
Compliance excess rate(%)
0,0
0,5
1,0
1,5
2,0
2007 2008
15
2006
Actions completed Actions underway Actions yet to start
2007
Actions completed Actions underway Actions yet to start
2008
Actions completed Actions underway Actions yet to start
Environmental objectives 2006-2010
57%
71%63%
57%
14%
40%
25%
31%
29%
65%
3% 4% 6%14%
21%
0%
25%
50%
75%
100%
Emissionimprovement
plan
Managementsystem andregulatorycomplianceprogramme
Impactassessment
soil &groundwater
Energyefficiency plan
Product EHSdataset
2008
Objective met Actions ongoing Actions yet to start
good progress made in 2008 towards the five objectives
Social report
17
Human resources
•
85 production sites
Workforce, Dec 31 2008
Europe54%North America6%South America8%Asia-Pacific22%Africa11%
18
Social objectives 2006-2010
2006
Actions completed Actions underway Actions yet to start
2007
Actions completed Actions underway Actions yet to start
2008
Actions completed Actions underway Actions yet to start
78% 79%
90%
80%
95%
18% 17%
10%
20%
5%4% 4%
0%
25%
50%
75%
100%
Community Preferredemployer
Dialogue Learning Human Rights
2008
Objective met Actions ongoing Actions yet to start
19
Occupational health
•
Good progress was made in the area of occupational health, particularly
regarding the workplace exposure to the metals and materials that
Umicore produces
•
Lead in blood levels continue to decrease at Hoboken
•
Umicore supports research into occupational exposure to Indium
Tin Oxide and Nano materials
20
Occupational safety
•
Safety performance in 2008 was not satisfactory with accident frequency
rate and severity rate falling short of the improvement targets
•
A specific task force has been set up to identify ways in which further progress can be made with a specific remit to trial innovative methods and to encourage the sharing of best practices through the Group
Frequency rate
target
0
10
20
30
40
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Severity rate
target
0,0
0,2
0,4
0,6
0,8
1,0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Corporate
Governance
Report
22
Corporate governance
•
Succession of Karel Vinck
as Chairman and of Thomas Leysen as CEO
•
Chairman / CEO succession planning, reviewing the company’s capital
structure and the discussion of various acquisition projects were the main strategic issues at Board level in 2008
•
Excellent attendance record •
95% for full Board meetings
•
100% for all committees
•
Corporate governance rating from GMI remains well above Chemical
Sector average at 71%
23
Corporate
governance
•
Healthy balance between fixed and variable components for all managers
•
Top 114 managers receive stock options (712,500 options granted in 2008 at average strike price of €32.57)
•
Managers’
pay includes a variable portion based on:
•
personal performance and adherence to company values
•
unit performance / ROCE
•
group performance (ROCE)
2007 2008 ΔCEO
fixed 500,000 500,000
variable 1 2 473,616 435,000
Total 973,616 935,000 -4%
ExCom ³
fixed 2,096,996 2,303,094variable 1,331,076 1,326,719
shares granted 1 463,180 232,298
Total 3,891,252 3,862,111
Average per member 555,893 551,730 -1%
1 Lock up of two years on share grant
2 In 2007 all shares, in 2008 part shares
3 Excluding CEO
Executive Committee Gross Remuneration
Q1 Update 2009
25
Q1 overview
•
Market conditions deteriorated further from the fourth quarter 2008 with de-stocking prevalent in many industries served by Umicore
•
Revenues down by 23% year-on-year and down 9% vs
Q4 2008
•
Working capital reductions led to debt decreasing by some €110m compared to the end of 2008
•
All business units continue to adapt their capacities and costs in function of market developments while safeguarding important future growth opportunities
26
Q1 business summary
•
Advanced Materials revenues down 26% (-18% vs
Q4)
•
Decline in demand for cobalt-related products exacerbated by de-stocking, especially in tooling and rechargeable battery materials
•
Germanium-related activities have proved more resilient
•
Very challenging market for Element Six Abrasives
•
Precious Metals Products and Catalysts revenues down 29% (-12% vs
Q4)
•
Global auto production down 36%
•
Reduction of inventories in the auto sector has been slow
•
End-markets for Technical Materials similarly affected
27
Q1 business summary
•
Precious Metals Services revenues down 9% (+4% vs
Q4)
•
Availability of supply from various streams is becoming scarcer
•
Commercial terms and premiums lower
•
Far less supportive market conditions for the Metals Management activities
•
Zinc Specialties revenues down 18% (-4% vs
Q4)
•
Lower demand for zinc chemicals
•
Tighter supply conditions for recyclables
•
Construction market in Europe remained difficult
28
Outlook
•
Visibility remains limited
•
Q2 should show a minor improvement on the very challenging conditions of the first three months
•
H1 REBIT not expected to exceed € 50m
29
Conclusions
•
Outlook on short term reflects very challenging business environment
•
Strong financial position allows Umicore to continue to finance longer term projects
•
Umicore is well positioned in emerging business segments which address important global sustainability issues
Annex
31
Advanced Materials
•
Strong growth in revenues and profits
•
Cobalt & Specialty Materials grew well, although sales volumes fell in Q4
•
Strong growth in germanium substrates feeding increased demand in new applications
•
Continuing development of new TCO materials in Thin Film Products
•
Lower contribution from Element Six Abrasives partly due to currency effects
•
Capex increases reflecting investments in Rechargeable Battery Materials
Key figures(in million €) 2007* 2008
Revenues 332.0 395.0 +19.0%
EBITDA 83.5 86.3 +3.3%
REBIT 62.3 71.1 +14.2%
of which associates 22.6 18.7 -17.2%
Capex 20.3 52.3 +157.1%
REBIT margin 11.9% 13.3% +1.3%
ROCE 14.7% 15.2% +0.4%
* 2007 restated due to move of Thin Film Products to the business group
32
Precious Metals Products & Catalysts
•
Revenues increased, largely as a result of full-year inclusion of Delphi operations
•
Automotive Catalysts felt the full impact of significant contraction in automotive production in Q4 and negative mix effects
•
Downturn in automotive and construction sectors led to lower performance in Technical Materials
•
Strong contribution from Jewellery & Electroplating and Platinum Engineered Materials
Key figures(in million €) 2007* 2008
Revenues 926.0 1,016.9 +9.8%
EBITDA 193.5 136.6 -29.4%
REBIT 159.9 104.7 -34.5%
of which associates 5.4 14.8 +172.9%
Capex 39.2 73.3 +86.8%
REBIT margin 16.7% 8.8% -7.8%
ROCE 22.0% 11.5% -10.6%
* 2007 restated due to move of Thin Film Products from the business group
33
Precious Metals Services
•
High availability of both industrial by-products and end-of-life materials
•
Higher revenues generated from by-
products
•
Performance aided by contracted high metal prices
•
New pre-concentration plant fully operational in H2 providing more flexibility and reducing inventory
•
High contribution from Metals Management due to exceptional trading conditions and demand for investment gold bars
Key figures(in million €) 2007 2008
Revenues 357.9 420.1 +17.4%
EBITDA 173.3 218.2 +25.9%
REBIT 133.9 183.7 +37.2%
Capex 52.1 60.9 +16.8%
REBIT margin 37.4% 43.7% +6.3%
ROCE 54.4% 80.1% +25.6%
34
Zinc Specialties
•
Improved contribution from Building Products (compared to a weak 2007)
•
Construction sector in Europe weakened through 2008
•
Reduced contribution from Zinc Chemicals with demand from key end-user industries falling in H2
•
Deliveries of Zinc Battery Materials stable through most of 2008 but dropping in Q4
Key figures(in million €) 2007 2008
Revenues 294.1 291.7 -0.8%
EBITDA 61.7 65.5 +6.1%
REBIT 41.9 45.7 +9.1%
of which associates 0.2 1.7 +793.5%
Capex 25.5 18.5 -27.4%
REBIT margin 14.2% 15.1% +0.9%
ROCE 11.6% 15.2% +3.5%
35
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 subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Umicore
Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected
As a result, neither Umicore nor any other person assumes any responsibility for the accuracy of these forward-looking statements
2008 report to shareholders & society