Umicore SA (UMI), the world’s largest precious-metals recycler, rose the most in eight months in Brussels after saying a slowing economy didn’t affect supply conditions and profit from catalysts and battery cathodes rose.
Umicore gained as much as 6.7 percent on Euronext Brussels, the most in intraday trading since Nov. 30, and traded 1.46 euros higher at 36.83 euros by 11 a.m. local time. The shares have returned 17 percent including reinvested dividends so far this year, less than the 19 percent investors got from holding Johnson Matthey Ltd. in the period.
While lower metal prices, an extended maintenance shutdown and rising development costs reduced profit in the first half, Umicore’s recycling business boosted return on capital employed to a record 83 percent. The precious-metals refinery should post “another strong performance” amid “buoyant” supplies of electronic scrap and residues from base-metal smelters, the Brussels-based company said today in a statement. The catalysis and rechargeable-battery materials businesses, two key areas of investment for Umicore, reported an increase in profit.
“Despite the short-term concerns related to the economic growth in mature countries, Umicore has long-term promising growth potential in emission control, recycling and rechargeable battery materials,” Bernard Hanssens, an analyst at Banque Degroof SA in Brussels, wrote in an investor note today.
Umicore forecast a steeper decline in operating profit this year as an economic slowdown reduced demand for building materials and germanium substrates used in solar panels mounted on spacecraft. Increased competition in the battery market also affected the premiums at which Umicore could price its lithium- ion cathodes.
Earnings before interest, tax and special items will decrease to 380 million euros ($466 million), plus or minus 10 million euros, from 416.1 million euros in 2011, Umicore said. That compares with analyst projections of 388.3 million euros, the average of 13 estimates compiled by Bloomberg.
Second-half profitability will be “essentially in line” with the performance in the first half, Umicore said, adding that premiums for rechargeable-battery materials have started to stabilize. Operating profit in the six months through June fell 11 percent to 191.5 million euros.
Umicore, which had forecast operating profit of as much as 410 million euros on April 24, faces a contraction in recycling margins as prices for metals including cobalt, nickel, rhodium and tellurium declined. Depreciation charges rose 13 percent in the first half after Umicore increased capital spending by 24 percent last year to accommodate capacity expansions for automotive catalysts and battery materials.
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