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First half results 2003. Highlights. Stable operating performance Acquisition of PMG Promising strategic developments in Advanced Materials Separate copper company incorporated Marketing network expanded Shareholder base widened

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highlights
Highlights
  • Stable operating performance
  • Acquisition of PMG
  • Promising strategic developments in Advanced Materials
  • Separate copper company incorporated
  • Marketing network expanded
  • Shareholder base widened
  • Outlook for H2 indicates both EBIT and bottom line growth
  • Equity offering planned
key figures h1 2003
Key figures H1 2003

EUR Million H1 02 H1 03

  • Sales 1,663.7 1,480.2
  • EBITDA 113.6 111.3
  • EBIT 48.7 49.4
  • Net consolidated result, Group share 21.1 27.9
  • Net consolidated result, before extraordinary items and inventory write-downs, Group share 34.037.3
  • EPS(1) 1.51 1.65

(1)before extraordinary items and inventory write downs

Treasury shares not deducted for EPS computation

EBIT and EBITDA include operating profit in equity contribution

slide4

EBIT H1 02

EBIT H1 03

Zinc

Zinc

Advanced Materials

Advanced Materials

22%

19%

38%

29%

Copper

Copper

2%

1%

48%

41%

Precious Metals

Precious Metals

Before inventory write downs and not including Corporate & Investments

slide5

Advanced Materials

  • EBIT up by 38%
  • Strong growth in materials for rechargeable batteries
  • EaglePicher assets acquisition
  • H2 outlook positive
specialty oxides and chemicals
Specialty Oxides and Chemicals
  • Continued growth in materials for rechargeable batteries
  • Capacity increase at Korean plant
  • Improved markets for engineered powders
  • New range of alloyed powders introduced for diamond tools
  • Capacity increase in Shanghai on stream
  • Megapodesales volumes continued to increase
  • Price erosion continued for diamond grit products
  • Megapode’s results included in the figures for Advanced Materials

Engineered Metal Powders

Synthetic diamonds

electro optic materials
Electro-Optic Materials
  • High purity chemicals market remains very difficult
  • Optics stable
  • Substrates orders start to pick up
  • Project with SOITEC and IMEC for development of germanium substrates
  • Acquisition of assets from EaglePicher Technologies for $15 m
  • Stable demand from electronics and optics industries
  • Successful product development in ODS
  • Lower sales in indium products

Thin Film Products

slide8

EUR Million H1 02 H1 03

Turnover 189.1 195.1

Added value 51.9 62.8

EBIT 15.7 21.7

EBITDA 32.2 36.5

Average Capital Employed 416.4 373.0

ROCE 7.8% 11.5%

Capital Expenditure 11.2 7.9

slide9

Copper

  • EBIT slightly positive
  • TC / RCs and demand for products weakened further
  • Incorporation of SA Umicore Copper NV
  • H2 outlook stable at low level
slide10
Profitability affected by further decline in treatment and refining charges
  • Cathode production at Olen stable
  • Wire rod sales lower overall (particularly in Germany)
  • Sales of cast products improved
  • Expansion in the copper nuggets niche market
slide11
sa Umicore Copper nv incorporated
  • Cost reduction plan at the Olen site announced (127 FTE, mainly in support service functions)
  • Discussions on possible partnerships
sales of copper semis
Sales of copper semis

TC / RC evolution

slide13

EUR Million H1 02 H1 03

  • Turnover 492.8 439.4
  • Added value 41.1 44.5
  • EBIT 0.7 1.3
  • EBITDA 15.9 16.7
  • Average Capital Employed 438.2 424.7
  • ROCE 0.04% 0.4%
  • Capital Expenditure 23.4 17.1
slide14

Zinc

  • Slight EBIT decline by €1.3m
  • Structural adjustments start to take effect
  • Good sales of value added products
  • H2 outlook stable / slight improvement
zinc smelting
Zinc Smelting
  • Zinc price and TCs unsatisfactory
  • Production stable
  • Electricity costs higher
  • Sulphuric acid prices improve
  • Breakthrough in treatment of residues
  • Thai market strong
  • Proportion of alloy sales increased

Padaeng

zinc alloys chemicals
Zinc Alloys & Chemicals
  • Strong demand in Europe in diecasting but sales in Asia slowed
  • Higher premiums for metals and alloys
  • Fine powders stable
  • European zinc oxide market remained depressed
  • France and Benelux markets stable but market decline in Germany continued
  • Successful development of new products
  • IEQSA in Peru developing well, synergies in zinc calots implemented

Building Products

zinc price
Zinc price

Sensitivity 100$ Zn: 16 -18 mio $ EBIT

H1 Ave 2002 788 USD / t

H1 Ave 2003

780 USD/t

H2 Ave 2002 769 USD / t

2001

2002

2000

18/08/2003

(LME Cash, in USD/tonne)

sales of refined and specialty products
Sales of refined and specialty products

\'000 tonnes

% added value

76%

74%

75%

72%

73%

Commodity Zinc

Specialty alloys - galvanizing

Specialty alloys - die casting

Building products

Zinc fine powders and oxide

slide19

EUR Million H1 02 H1 03

  • Turnover 388.9 389.7
  • Added Value 105.8 110.0
  • EBIT 12.2 10.9
  • EBITDA 30.9 28.6
  • Average Capital Employed 259.6 276.0
  • ROCE 8.4% 7.1%
  • Capital Expenditure 20.7 23.0
slide20

Precious Metals

  • EBIT slightly down
  • LEW operational
  • Shift in raw materials mix
  • H2 outlook stable
slide21
Solid performance although slightly down on the same period in 2002
  • Tank house slimes availability from copper industry down
  • Closure of lead / zinc smelters
  • Reduced availability of e-scrap and auto-catalysts
  • Treatment of zinc production residues increased
  • Continued improvements in productivity and process efficiency
slide22
The new LEW commissioned slightly ahead of schedule
    • Greater flexibility
    • Independence from Olen
    • Increased process efficiency
    • Working capital reduction
  • Preparation for integration with PMG refining activities
slide24

EUR Million H1 02 H1 03

  • Turnover 431.8 347.7
  • Added Value 78.3 74.9
  • EBIT 26.2 23.3
  • EBITDA 36.7 33.3
  • Average Capital Employed 166.5 160.3
  • ROCE 31.5% 29.1%
  • Capital Expenditure 17.6 12.4
slide25

Corporate& Investments

  • Grouping of Umicore’s corporate activities (incl. UMS, Umicore Engineering) and investments (incl. Traxys)
  • Traxys created as 50/50 joint venture with Arcelor
  • Review of group support functions
slide26

PMG

  • Acquisition finalised 31 July
  • New operational structure defined
  • Integration team to achieve effective transition
  • Working groups to detect and implement synergies
  • Positive bottom line benefit expected as from FY 2003
  • To be consolidated from Aug ‘03
a new dimension
A new dimension
  • Turnover (€bn)1 3.2 7.0
  • Total staff 9,000 12,500
  • R&D staff 180 530
  • Patents 85 235

EUR Million Old Umicore New Umicore

Simulation based on 2002 figures

2002 pmg financials
2002 PMG financials
  • EBITDA 106 112 101 1
  • Restructuring (17) (18) - 2
  • Depreciation (11) (11) (22)
  • EBIT 78 83 79

USD€ Estimated as per as reported (M) conversion (M) Umicore rules (€ M)

1: Variance mainly due to revenue recognition and OMG consolidation entries

2: Extraordinary charges as per Belgian GAAP

precious metals services
Precious Metals Services

PGM Production Tonnes

  • Encompasses all the activities carried out by what was Umicore Precious Metals - precious metals recycling and refining
  • From PMG the following activities will be included:
    • The refining element of the Precious Metals Chemistry business
    • The Metals Management function
precious metals products catalysts
Precious Metals Products & Catalysts
  • Includes the majority of the businesses that were previously part of the structure of PMG:
      • Automotive Catalysts
      • Technical Materials
      • Jewellery and Electroplating
      • Precious Metals Chemistry (Organic & Inorganic Compounds)
      • Fuel Cells
integration
Integration
  • Intensive planning and preparation
  • Focus on communication
  • Organizational chart defined
  • Strengthened senior management team
  • Integration committee to oversee the process
  • Consolidation as from 1 August
synergies
Synergies
  • Unified metals management
  • Commercial departments of refining activities integrated
  • Decision on industrial configuration in refining by year end
  • Working capital reduction: target already €60m by December 2003
  • International sales network to be integrated
  • Further exploration of other synergy areas
contributions to ebit
Contributions to EBIT

EUR Million H1 02 H1 03

  • Advanced Materials 15.7 21.7
  • Copper 0.7 1.3
  • Precious Metals 26.2 23.3
  • Zinc 12.2 10.9
  • Inventory write-downs (0.4) 0.6
  • Corporate and Investments (5.8) (8.4)
  • Total 48.7 49.4
  • of which equity method 9.1 11.8
extraordinary result
Extraordinary Result

EUR Million H1 02 H1 03

  • Capital gain on sale of assets 2.1 0.1
  • Restructuring (7.4) (6.7)
  • Environment (2.9) (1.1)
  • Early retirement (2.7) (1.1)
  • Others (1.7) (0.7)
  • Extraordinary profit (12.6) (9.5)
slide36

Cash flows (H1 2003)

Second half cash flows will reflect the acquisition of PMG and the positive impact of the sale of treasury shares, reductions in working capital and the Traxys deal

million €

(*) including € 35 million dividend outflow to Sibeka minority shareholders

slide37

Cash flows (Jul 02 - Jun 03)

million €

(*) including € 35 million dividend outflow to Sibeka minority shareholders

consolidated net financial debt
Consolidated Net Financial Debt

EURMillion

500

400

300

200

100

0

refinancing
Refinancing
  • Total net financial debt now stands at approximately €900m
  • Public offering targeted for an amount of €125 - 150m
  • Envisaged for Q4 2003
  • Existing shareholders would benefit from priority allocation
  • Balance of refinancing through medium and long term debt
relative performance
Relative performance

Umicore/ Umicore/ Umicore/ Bel 20 DJNF* HSBC Euro Small Cap

  • 1999 +28% -31% -17%
  • 2000 +14% +20% +12%
  • 2001+20%+37% +34%
  • 2002+27%+4% +26%
  • 2003 (to 15 Aug)+11% +1% - 4%

* currency adjusted

comparative performance h1 2003
Comparative performanceH1 2003

Data: JCF Quant

+8%

30/06/03

31/12/02

Peer group of 15 companies (reduced from 17 after Xstrata takeover of MIM and suspension of trading in Metaleurop shares) : AXT; Boliden; Dowa; II-VI; Johnson Matthey; KGHM; Korea Zinc; Mitsui; Nippon Mining; Noranda; Norddeutsche Affinerie; OM Group;Outokumpu;Teck Cominco;Xstrata

other items
Other items
  • Limited share buy-back carried out in first half
    • Umicore sold one million of its shares previously held in treasury at the end of July
  • Umicore benefited from a USD / EUR exchange rate of 0.93 fixed in 2002 as part of hedging programme. This rate will also apply in the second half
  • On track towards implementation of IFRS accounting standards
outlook fy 2003
Outlook FY 2003
  • Advanced Materials:
      • To benefit fromsustained demand for rechargeable batteries and slight improvement in substrates sales
  • Copper
      • No sign of any recovery - deterioration in market terms will continue to affect returns
  • Zinc
      • No volume growth expected but improved cost performance and, hopefully, better market terms
outlook fy 20031
Outlook FY 2003
  • Precious Metals Services
    • Part of envisioned working capital reductions to be realised by year end with cost synergies to accrue to bottom line in 2004
    • Hoboken performance stable
  • Precious Metals Products
    • Umicore expects a stable operating performance despite slowdown in the automotive sector
  • Umicore Group
    • FY EBITexpected to be in the range of €125 to €130 million (vs €98.7m in 2002) with Group share in net income before extraordinary items to reach approximately €80 million (vs €68.3m in 2002)
consolidated figures income statement
Consolidated figures: Income statement

EUR Million H1 02 H1 03

  • Turnover 1,663.7 1,480.2
  • Operating Result (1) 39.6 37.6
  • Financial Result (5.7) (9.3)
  • Extraordinary Result (12.6) (9.5)
  • Income Taxes (4.0) 1.5
  • Result from Equity Method Companies 6.1 10.0
  • Net Consolidated Result 23.4 30.4
  • Group share 21.1 27.9
  • Minority share 2.3 2.5
  • Net consolidated profit before extraordinary 34.0 37.3
  • items and inventory write-downs, Group Share
  • (1) of which depreciation and amortisation 60.2 57.7
statement of consolidated cash flows
Statement of Consolidated Cash Flows

EUR Million H1 02 H1 03

  • Operating cash flow 89.2 59.31
  • Change in working capital 69.2 (99.5)
  • Net cash provided by operating activities158.4 (40.2)
  • Capital expenditures (77.1) (66.2)
  • Acquisitions (33.5) (5.9)
  • Disposals 3.9 5.4
  • Loans (1.6) (1.1)
  • Net cash provided by investing activities(108.4) (67.7)
  • Change in LT debts 25.1 (0.1)
  • Treasury Shares (23.3) (2.4)
  • Dividends (31.8) (64.4)
  • Change in net cash & equivalents 20.0 (174.9)

Includes a non recurring cash outflow of 11 million euro related to the externalization of certain pension plans

balance sheet
Balance Sheet

EUR Million H1 02 H1 03

  • Net Cash provided by Operating Activities 158.4 (40.2)
  • Cash flow before Financing (1) 50.0 (107.9)
  • Consolidated net financial debt 241.0 288.9
  • Capital Employed (2) (3) 1,461.8 1,427.4
  • Net Debt/Equity (2) 22% 27%

(1) Net Cash provided by Operating Activities + Net Cash provided by Investing Activities

(2) End of period

(3) Total Equity + Net interest bearing debt

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 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.
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