Umicore Lowers 2024 Profit Forecast Amid Slowing Electric Vehicle Market

Belgian metals recycling and manufacturing company Umicore (UMI.BR) revised its 2024 profit forecast downward on Wednesday, citing a recent decline in demand projections for battery materials. This news sent the company’s shares plummeting to their lowest point in nearly a decade.

Electric Vehicle Market Slowdown Impacts Major Supplier

Umicore, a major supplier of catalytic converters and battery materials for automakers, is the latest industry player impacted by a slowdown in the electric vehicle (EV) market. The company’s stock price dropped by 7% during morning trading, placing it at the bottom of the STOXX Europe 600 index.

Missed Projections and Expiring Contracts Force Adjustment

According to Umicore, the company anticipated a surge in orders from Chinese EV manufacturers looking to establish a European presence. However, they now acknowledge that these anticipated volumes will not materialize in 2024. Additionally, existing contracts are expiring more rapidly than expected.

Revised Profit Outlook Anticipates Lower Earnings

As a result of these developments, Umicore has adjusted its projected earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 to a range of €760 million to €800 million (approximately $816.54 million to $859.52 million). This represents a downward revision from the previously forecasted range of €900 million to €950 million.

Umicore CEO Acknowledges Short-Term Challenges, Remains Bullish on Long-Term EV Market

“Our short-term outlook for battery materials is undeniably disappointing,” stated Umicore CEO Bart Sap in a press release. “However, it’s important to remember that, like any significant industrial transformation, the trajectory of electromobility is not, and will not be, perfectly linear.”

Umicore Focuses on European Battery Materials to Offset Combustion Engine Phaseout

Umicore is placing its long-term bets on its European battery materials division to compensate for the phasing out of internal combustion engines. The company is collaborating with its clients to develop revised projections in the coming months. They have also initiated a process to re-evaluate growth forecasts as EV manufacturers reassess their investment plans.

Umicore Stock Price Tumbles Year-to-Date

Umicore’s stock price has declined by roughly 38% year-to-date, currently trading at €15.50 per share. This represents the company’s lowest share price since October 2014 and a 27% decrease since the unexpected CEO change on May 15th.