Umicore Aktie

Hello, and welcome. My name is Bill, and I will be your conference operator today. At this time, I would like to welcome everyone to the Umicore 2026 Half Year Results Call.

Please note that this call is being recorded. [Operator Instructions]

I would now like to hand over the call to Bart Sap, Umicore's CEO; and Wannes Peferoen, Umicore's CFO. You may now go ahead, please.

Okay. Now it's my turn. Good morning to all, and welcome to our H1 2026 earnings call.

Let's open this presentation with a personal note for our CFO, Wannes Peferoen, for whom since the last set of numbers. Wannes, on behalf of Umicore, I'd like to express my sincere thanks for all your investment and dedication over many years at Umicore. We've worked together in different moments throughout our career. I've always valued our collaboration. I wish you the very best in what is to come. And first of all, some well-deserved if you're close ones.

Thank you, Bart.

As also announced in April, Lily Liu will succeed Wannes as of August 1. Lily is leaving this call in Wannes's capable hands. She's, of course, following this very closely, and those who participate in our roadshow next week will get to meet her. So once again, also a very warm welcome to you, Lily.

Now let's have a look at our H1 performance and where we stand today. I'm really pleased with the broad-based earnings uplift that we delivered in H1 2026, primarily driven by strong business execution and efficiency.

Underlying earnings were up strongly in the double digits. Earnings growth also benefited from a metal price tailwind, particularly pronounced in Q1 2026. This tailwind came from a broad basket of metals.

In addition to that, our drive for efficiency had an even greater impact on earnings growth. This is something we are really proud of as a management team. So, thank you to our teams for their remarkable efforts. These results provide us with confidence to upgrade our full year 2026 adjusted EBITDA guidance to slightly more than EUR 1 billion, while previous guidance provided in April was to approach EUR 1 billion.

Let me also draw your attention to our midterm strategic framework highlighted at the bottom of this slide. Our trajectory today shows indeed that we are well on track with our core midterm plan. We delivered increased margins, stronger returns, improved cash generation and a robust balance sheet.

Our H1 2026 performance and numbers now on the next slide. We have revenues growing 7% to EUR 1.9 billion. Earnings growth outpaced revenue growth and adjusted EBITDA increased 33% year-on-year. We delivered remarkable adjusted EBITDA margin accretion of about 600 basis points to 30.2% in H1 2026.

The ROCE is follow suits with a 660-basis point increase year-on-year to 23%. Cash conversion of earnings increased sharply as well with a free operating cash flow of EUR 295 million versus an outflow in H1 2025.

Strong adjusted EBITDA growth allowed to achieve a significantly lower leverage ratio year-on-year to 1.52, well within target. In short, these numbers reflect strong momentum, greater underlying business activity and sustained efficiency, further supported by a favorable metal price environment.

Let's now go through business group performance, and we start this time with Catalysis. A quick overview of market dynamics first. Overall, and as anticipated, global internal combustion engine production in H1 2026 was EUR 1.5 million lower year-on-year.

The global decline was driven by the light-duty vehicle market, so the passenger cars, production dropped 4% year-on-year. You will notice mixed regional trends. The slowdown in China and Europe was only partially offset by stable to growing production in North America and South America.

Looking at HEV production, Europe was flat and China increased slightly. India and Thailand, on the other hand, delivered combined a 16% increase in production.

Now on to performance in Catalysis on the next slide. Very solid set of numbers, largely driven by sustained operational excellence. Automotive Catalysts, earnings up on broadly stable revenues year-on-year. Umicore did outperform the light-duty vehicle market as well as the HD market with strong volumes.

Precious Metals Chemistry delivered materially higher revenues and earnings. Sustained demand levels across inorganic chemicals and homogeneous catalysts were further supported by favorable PGM price environment.

Fuel Cells & Stationary Catalysts. The segment was weaker year-on-year overall, yet we saw different trends between the Fuel Cell Catalysts and the Stationary Catalyst divisions. So, on Fuel Cell Catalysts, a lower adjusted EBITDA due to lower hydrogen technology adoption in China. We see some delay there. Yet at the same time, and on a positive note, we start production at our new proton exchange membrane catalyst plant in Changshu, China. This brings, of course, some start-up costs.

Then on Stationary Catalysts, volumes remain strong as demand for backup power solutions for data centers continues to grow. As you know, we are very well positioned to further capture the growth in this market segment.

So, take a step back on Catalysis, and I do want to highlight the long-term trajectory of the segment, which you see in the chart at the bottom right, steadily growing revenues over the long term with improving adjusted EBITDA margins. Adjusted EBITDA margins reached a remarkable 28.3% in H1 2026. Operational excellence remains our core focus, and Catalysis is a great example for that.

Recycling now with another outstanding performance. Metal prices overall continued to increase in H1 2026 versus 2025. This was most prominent in Q1. We saw continued high volatility overall in 2026, and Umicore benefited from a broad basket of metals, so not only PGM and precious metals, but also minor and specialty metals. The Recycling segment performance was stellar.

Our revenues increased, yet most remarkably, we had significant adjusted EBITDA margin accretion to 52%. And also here, you can see an attractive return profile of the recycling segment over time. First, Precious Metals Refining. Revenues were broadly in line with H1 2026. We successfully managed the anticipated maintenance shutdown of the Hoboken plant. And as a reminder, 2025 was a year without a shutdown. Adjusted EBITDA was higher, the favorable metal prices and mix did offset lower volumes and lower average hedging prices versus 2025.

Then Jewelry & Industrial Metals, very high volumes on the back of high gold and silver prices, the over-the-counter business successfully captured the momentum even longer than what we had anticipated before. Demand for gold and silver bars was strong, mostly in the first quarter, combined with robust demand in the luxury end market. This resulted in sharply higher revenues and adjusted EBITDA.

On Precious Metals Management, sustained volatility and high prices offered ideal market conditions for trading and Precious Metals Management captured that momentum.

Before diving into the Specialty Materials results, I would like to come back to a statement made by Veerle Slenders, our EVP, Specialty Materials during our Capital Markets Day in London last year. She described Specialty Materials as the hidden gem of Umicore. Over the past year, we have worked to increase the visibility of these activities, and we will continue to do so.

In the first half of 2026, Specialty Materials delivered an excellent performance, benefiting from favorable market dynamics while leveraging its strong position in structurally growing technology-driven end markets. These businesses are creating tangible value in increasingly connected and geopolitically complex world, supported by our unique metals expertise and closed-loop business model. So more to come here.

Now back to the numbers. In H1 2026, revenues and adjusted EBITDA were up strongly year-on-year in the double digits with significant margin accretion. In Cobalt & Specialty Materials, we delivered a material increase in revenue and earnings year-on-year on the back of strong cobalt momentum.

Efficiency benefits also contributed to the earnings growth. The business is looking at Tungsten as part of our closed-loop business model, another example of metal and metal affected by the geopolitical situation.

In Electro-Optic Materials, demand for substrates and high-purity chemicals for space applications and data communications was again strong. The combination of high germanium demand and export controls as well as the broader market conditions remain supportive for our closed-loop refining and recycling services. Here again, operational excellence also contributed to the material increase in adjusted EBITDA. Looking ahead, we will keep diversifying our customer base in these growing end markets.

In Metal Deposition Solutions, revenues increased year-on-year on the back of solid demand for semiconductors and industrial applications. Growth was only partially offset by softer demand in the decorative applications.

Battery Material Solutions now. In Battery Cathode Materials, revenues increased, yet volumes remained in line with last year. As a result, the year-on-year increase mainly relates to take-or-pay compensations related to contractual volumes. In H1 2026, adjusted EBITDA reached EUR 90 million compared to minus EUR 15 million last year. Going forward, we will keep our disciplined approach for this business.

Battery Recycling Solutions. As we said before, the lithium-ion recycling opportunity is expected to materialize from the middle of the next decade. In the meantime, we continue to optimize our processes and technologies. In this context, earnings contribution was negative as anticipated. We remain very diligent here on execution and cost management.

I'll now hand over the floor to Wannes for the financial review.

Thank you, Bart, and good morning, everyone.

As you heard from Bart, we delivered a strong first half with a significant improvement in EBITDA, margin, cash generation and returns. I will start with the overall performance of the group.

Adjusted EBITDA increased 33% to EUR 577 million as a result of 3 key drivers, first, broad-based growth in volumes and activity; second, ongoing top line and efficiency measures; and third, favorable prices for precious metals and minor metals like cobalt. All 3 drivers made an equal contribution, and they more than offset inflation. The EBITDA margin increased from 24% to 30%.

We also delivered strong cash generation. Cash flow from operations was EUR 565 million compared to EUR 260 million last year. Working capital represented a cash outflow of EUR 132 million, mainly reflecting higher activity levels and higher metal prices, in particular in Catalysis.

CapEx was EUR 130 million, up from EUR 109 million last year. This is mainly due to the planned maintenance shutdown in Precious Metals Refining as well as some selective growth investments. After CapEx and capitalized development costs, free operating cash flow amounted to EUR 295 million compared to a cash outflow of EUR 54 million last year.

Free operating cash flow was largely absorbed by taxes, net interest, dividend payments and equity injection into Ionway and other associates. In January this year, Umicore contributed EUR 175 million in equity to Ionway. Net debt increased EUR 151 million to EUR 1.5 billion. The leverage ratio improved slightly from 1.6x to 1.5x.

Now looking at the consolidated P&L. I already covered EBITDA, so jumping to EBIT. Adjusted EBIT increased 47% to EUR 442 million as a result of strong operational performance and continued efficiency measures.

Adjusted net finance charges were EUR 80 million, down from EUR 102 million last year. This was mainly due to lower foreign exchange losses, partly offset by the impact of interest rate changes. The adjusted tax charge was EUR 78 million, up from EUR 64 million last year, reflecting higher profit before tax.

The adjusted effective tax rate decreased from 31.7% to 21.3%. Adjusted net result group share was EUR 273 million, up from EUR 135 million last year. And adjusted earnings per share doubled to EUR 1.14. Adjustments had a negative impact of EUR 34 million, largely related to restructuring programs and environmental provisions. Net result group share was EUR 240 million compared to EUR 137 million last year.

Finally, return on capital employed improved significantly from 16.4% to 23%, supported by strong EBIT in the first half and continued capital discipline.

Now turning to the balance sheet. Our liquidity remains strong with a cash position of EUR 1.8 billion and continued access to EUR 1.1 billion of undrawn credit facilities and commercial paper. Gross debt was EUR 3.2 billion and the cost of debt increased to 3.5%. Group equity amounted to EUR 2.45 billion, corresponding to a net gearing ratio of 38.1%.

Now we continue to hedge precious metals in order to reduce volatility, increase visibility on future cash flows and protect future earnings. At the end of June, we had forward contracts in place, covering part of our expected exposure for precious metals up to 2030. This includes meaningful coverage for gold, platinum, silver, palladium and rhodium up to and including '29.

There was limited additional hedging this half due to minimal counterparty interest and a strong backwardation. We also maintained energy hedges for a significant portion of our European electricity and natural gas. So we are also reasonably well protected from rising energy prices.

So to conclude, we had an excellent first half. We delivered broad-based earnings growth with adjusted EBITDA up 33%, a margin of 30%, strong cash conversion and a robust balance sheet. The foundation business performed well, and we continue to exercise discipline on costs, capital and cash.

Bart, before handing it over for the outlook, today is my last earnings call for Umicore, and I would like to thank you for your trust, your engagement and your constructive dialogue over the past 4 years and you being the investors and the analysts next to you, Bart.

It has been a privilege to interact with you and to be the CFO of Umicore. I leave the company in good hands with Bart and Lily, and I wish them the team at Umicore every success going forward.

And Bart, here, I hand it over to you for the outlook.

Well, thank you for your kind words, Wannes. And I understand that not only for me, but also for the broader set of people. So I said, but it's really well deserved as well. So thank you, Wannes.

And so let's now talk about the outlook for the rest of the year. In short, as said, we are increasing our adjusted EBITDA guidance to slightly above EUR 1 billion. The upgrade is based on the confidence provided by strong results in the first half of 2026. Please keep in mind 2 assumptions, stable metal prices versus June 2026 and no major deteriorations in the macro environment, which we all know remains volatile.

Looking now at each business segment. In Catalysis, we have strong ongoing momentum, and we expect 2026 adjusted EBITDA to be in line with our record high of 2025 on the back of our excellent positioning and sustained operational efficiencies.

And Recycling, given remarkable performance in H1 2026, full year 2026 adjusted EBITDA is likely to be significantly above 2025. Yet keep in mind that H2 will be lower than H1 as exceptional conditions are not expected to continue beyond H1.

Specialty Materials, full year 2026 expected significantly above year-on-year, yet with a slowdown in H2 versus H1. Specialty Materials is expected to continue to benefit from supportive margins for cobalt products, although the performance uplift from H1 2026 should further moderate into H2. In addition, performance should be supported by healthy demand for germanium products and resilient activity across end markets. Overall, the business is really well positioned to capture high-quality growth opportunities going forward.

And in Battery Materials, the importance of take-or-pay mechanisms is increasing, as we said previously, in a context where the volume trajectory is expected to be stable year-on-year. As such, we continue to focus on executing our midterm plan while navigating volatile and competitive market dynamics. This requires continuous rigorous capital allocation and cost base reductions.

Then on corporate costs and CapEx. We remain selective and disciplined on both fronts. Corporate costs. We continue to invest in AI-driven solutions to further enhance operational excellence. Capital expenditures are expected to be in line with 2025, including selective high-quality growth investments in our foundation businesses.

So, to summarize on the outlook, we're confident in our ability to continue executing our plan. H2 will not be as high as H1, yet full year 2026 is expected to be a strong year overall.

A few words of conclusions now before the Q&A. Looking at the first semester, 2 things really stood out to me. a broad-based earnings growth driven by strong execution. This led to high margin accretion year-on-year. Importantly, we were disciplined in our spending. We delivered strong cash generation and maintained a robust balance sheet.

And as we move forward, we remain firmly convinced of 2 realities. First, our circular multi-metal platform is unique and well positioned as it continues to benefit from the growing strategic momentum behind critical raw materials. Secondly, volatility is the new normal of the world we operate in, yet Umicore is built for change. As such, we will continue delivering value through a clear set of priorities, disciplined execution and strong customer focus.

And with that, we can go to the Q&A.

[Operator Instructions] Your first question comes from the line of John Campbell with Bank of America.

I was interested to learn a little bit more about the fact you're exploring further opportunities towards tungsten. Can you maybe elaborate on exactly kind of what you're looking at? What is the rationale, et cetera? And are these opportunities maybe that you see in the U.S.? Or would that be mostly in Europe?

Yes. So, thank you, John, for that question. I mean tungsten is somewhat part of our portfolios, and we see actually tungsten coming in with some raw material streams that we have. Today, we -- well, today, we are starting to valorize tungsten while we did not do it before, for instance, coming from our filter cakes, and this is something that we're now further investigating.

At the same time, we have a strong flow sheet in Poland, where we will be able to recover that. So, this is what we are referring to. And as we further develop our capabilities, more could be there to come. Of course, everything depends on the further evolution of the tungsten price. So, it's more Europe oriented, not so much U.S. at this point in time.

Your next question comes from the line of Georgina Fraser with Goldman Sachs.

My question is related to your Battery Materials segment. Bart, earlier this year, you were quite vocal about the need for Europe to seek partnership with Chinese battery producers. There have been several partnerships announced between European auto OEMs and suppliers with Chinese players in recent months. I was just wondering how you're seeing the landscape evolving and whether there's any new opportunities coming up for value recovery in your Battery Materials segment.

Thank you, Georgina. Very clear question. And I can confirm that indeed, the momentum in Europe is warming up in that respect. I mean, there's indeed a more significant interest, especially for, let's say, new platforms looking at Europe. So yes, that trend is definitely there.

We always said that partnerships is what we are looking at next to our own midterm plan. So we'll continue to further explore these options. And if there would be something to announce, of course, we'll come back to you in due time. But in general, I would say that the ecosystem indeed is evolving in the right direction.

Your next question comes from the line of Christian Faitz with Kepler Cheuvreux.

Wannes, all the best for your future ventures. And also congrats on the results. I have also a question on the Battery Material Solutions business. Maybe a bit more mid- to long term. When would you see actual underlying demand returning? And can you describe a bit the current situation? Is it that your target market, i.e., the higher value added European vehicles are just not selling? Or are they also switching to cheaper cathode active material at this point in time?

Yes. Well, I think -- thank you for your questions, Christian. And also thank you for having attention for the full team here because indeed, they all do a great work sometimes even in the background.

Now on Battery Cathode Materials, I think we indicated earlier that for the time being, the importance of take-or-pay is higher than what you would have wanted it to be when you were showing our trajectory at the CMD in 2025. Of course, that's why we have the already at length discussed the take-or-pay provisions, which we will continue to enforce and continue to stand by.

Now if you refer more to technology, I think a lot has been said around, of course, the adoption of LFP, and we do see indeed some players really working on that and the market share in Europe, of course, for LFP is increasing. At the same time, we also see a very strong trend and a much more clear trend, which is firming up also over the last months in the mid-nickel high voltage, where we do believe that we have good solutions going forward.

And at the right nickel content, meaning nickel sufficiently low, this is definitely a contender for locally produced -- against locally produced LFP. So yes, there, we do see potential, and I think we have a good set of technologies to serve that market.

Your next question comes from the line of Sebastian Bray with Berenberg.

It's on the metals pricing dynamic as we move into '27. I have 2 parts. The first is on cobalt. It's very unusual to see a spot price of a metal literally flat as a straight line since last December. Is anything going on here where the informal market has a very different price? And what do you think is happening for '27? And if I might expand the theme of pricing, at current hedge levels, what would be the price impact for the recycling segment? Is it positive or neutral for '27?

Okay. Thank you, Sebastian. I will start with the cobalt market maybe and then Wannes, if you could do the recycling segment.

Yes, on the cobalt market, you know that the cobalt price, of course, is through a price discovery mechanism. So that's basically on feedback on, let's say, the metal transactions for cobalt as market participants see those, of course, substantiated with underlying trading transactions.

Now the cobalt market is much more, of course, than just the metal price. It's a matter of refinery income that you have. And on the other hand, the premiums on the end product that you sell. So basically, the refining charge and the premium, they constitute the revenue pool. And I think for our activities, that revenue pool is the most important indicator of the margin that you can make.

Now there has been a momentum late '25, early 2026 that allowed us given those market circumstances to really lock in a part of that revenue pool, and this is part of the strong benefit that you have seen in H1 2026 that lock in, of course, and these exceptional metals we have is somewhat reducing in the second half of the year and expecting it to be normalizing into 2027.

Okay. And then looking at the Recycling segment and the hedge levels that we have for the precious metals, looking at '26 this year was the year where we still had a substantial roll-off versus last year. Looking at '27, this is where the price levels are more or less in line with what we see in '26. So basically, the impact for Recycling segment moving into next year would be neutral.

Your next question comes from the line of Mutlu Gundogan with ABN AMRO.

One question on Catalysis. You've won market share in H1. You won market share in 2025. Can you elaborate a little bit on your recent platform win, so late 2025 and 2026 and thus your market share expectations going forward? And that would obviously be for LCD, but also HDD, please?

Yes. So on the market share in Catalysis, I think you are right. And of course, it depends a bit on the different markets that we're looking at. You're right that we have been gaining market share and that you see that in the numbers.

I think what you also see in the numbers is our strong position with local Chinese OEMs, which are still exporting quite a bit of volumes out of China, allowing our Chinese activities actually to continue to run at a very high level despite lower ICE sales in that market.

If we look at Euro 7, as mentioned before, we were successful in gaining platforms, and this is that you start seeing true, of course. It all depends ultimately also on the sales that the actual cars do depending on different customers that we have, and there's always some variation. But right now, it looks strong.

And if you then indeed see to the overall market development, it's indeed seems the case that we're still outperforming in terms of volume the market, which is supporting our results next to, of course, the high focus on operational excellence and efficiency.

Your next question comes from the line of Tristan Lamotte with Deutsche Bank.

I'm interested in some of the faster-growing areas of your business. I was wondering if you could just give a little bit of detail on your total exposure in areas like germanium, so sales or EBITDA and then also semiconductors, what your kind of total exposure is there?

And then just coming back on Battery Materials, you have a target of at least EUR 275 million by 2028. And that's obviously a very large step-up from where we are now. So I'm just wondering if there's a scenario where you don't make that and the level of confidence now as it stands.

Yes. Maybe I can start with Battery Cathode Materials. Looking at the plan that we have ahead of us. So as we shared with the capital -- or during the Capital Market Day, this plan is very much supported by the long-term agreements that we have with a few customers. And it's also on the back of that ramp-up volume program that is included in that contract, and it is protected by the take-or-pay clause. So that's basically the underlying foundation of the plan and that we still deem feasible.

Yes, indeed. And next to that, as mentioned already as well, we continue to focus on customer diversification. We had some first that we announced last year, of course, with our Korean customer, and we continue to grow there. Now as, let's say, to the other strong growing business, we always said that, for instance, for Specialty Materials, for instance, specifically then mainly also in the field of electric optical materials that we see a very strong CAGR of 10% plus.

We continue to stand by that. Even -- momentum is even potentially even stronger than how we saw it. We see areas indeed in -- so Electro-Optic Materials. We also see the stationary catalyst market still as an interesting market where we also foresee continued growth.

Now -- saying exact number on the exposure, I don't have it top of mind, but it's clear that in this geopolitical context, where critical raw materials for sectors like defense, but also data centers, et cetera, several metals are gaining into importance.

So if you look at the basket of metals in Hoboken, but also in Specialty Materials, right, you'll see that they all have been supporting undercurrent today for that metal price, and that's also, therefore, an indirect exposure to that end application. But rest assured, areas, as you mentioned, we are further exploring those and see how we can further leverage our unique business model across business groups to further extract value. So I would say more to come there, but too early to now fully quantify it at this moment in time.

Your next question comes from the line of Thea Badaro with BNP.

I have a question on your Stationary Catalyst business. We now have a bit more color on the size and the profitability of one of your closest peers in this division. Could you maybe help us understand how meaningful this business is for you? Any indication could be really helpful.

Yes. Well, I mean, we have seen indeed maybe more broadly the stationary market warming up, and we have seen one of our industry players also making a significant acquisition in that field, more specifically around Cormetech. We intend to grow that business. Let's say, it's definitely not yet at the level, let's say, of a PMR or ACC, that's for sure.

But we do see a potential to more than double the EBITDA going forward. And we will do that actually in a very capital disciplined way. We are working out these plans more concretely, and we'll be coming back to the market in due time. But definitely, we see it as a good growth opportunity next to elect optic materials. And that could be sizable, especially towards the end of the decade going into 2031.

Wannes, I wish you all the best.

Thank you.

Your next question comes from the line of Chetan Udeshi with JPM.

Can you hear me?

Yes.

I had a few questions. The first one is, when I look at the consensus right now for H2, it's sort of somewhere around EUR 465 million. You delivered EUR 577 million. I understand the sort of one-off nature with cobalt and refining. But I'm just curious, how do you think about that second half consensus given the magnitude of decline versus first half, which actually looks quite steep.

And I think the follow-up there and both related, right? I mean if I take consensus 465 by 2 times 2, you start with a number of 930, which is below this year going into next year. So how does market get a comfort that next year would not be a down year? Is there something that we should keep in mind, which can move the numbers next year? That's the first question I have.

And the second question, was -- have you seen -- and again, I think I asked this maybe a year back. You mentioned something about critical minerals and trade conflict. Have you seen any change in your recycling business model because of that in the sense, most of your business today is spot contracts. Are you seeing customers willing to probably lock in capacities for certain metros for a longer duration of time, meaning you get some sort of business model concept also starting to emerge in the recycling business?

Okay. I'll give it a go, Chetan. So, first of all, looking at the second half consensus, I would say that we feel comfortable with the order of magnitude that we see today in the consensus.

If you look at the underlying dynamics, as Bart explained or as we explained, the first half was exceptionally strong. I mean and what we see is that, in particular, in Specialty Materials in cobalt, there was an exceptional benefit looking at the cobalt dynamics but also looking at Jewelry & Industrial Metals and Precious Metals Management.

Also here, we have very favorable conditions, looking at price volatility and looking at the interest for the over-the-counter recycling business. So yes, there was some exceptional support in the first half, which explains why we cannot extend it or extrapolate it into the second half.

At the same time, then looking at the second half, is this a good basis to extrapolate into '27? We typically also have some seasonality across the business and in particular, in Catalysis. So that's something where I would say H2 is impacted by some of that seasonality, in particular in Catalysis. So to be taken into account when you use H2 as a basis for next year.

Maybe then looking at your question around critical materials in minor metals. Given the geopolitical tension pressure, we do see that customers are really interested in securing supply and/or willing to finance not only the supply, but also the expansion of capacity.

So looking at some of the CapEx that we have ahead of us this year, what we call selective growth opportunities, this is linked very concretely to, for instance, germanium capacity that we're building out, also in Stationary Catalysts, there is interest from customers to secure capacity looking at the infrastructure that is being built.

So here, customers are willing to prepay not only product materials, but also looking at investments in order to secure capacity. So that is an interesting dynamic in the market that we're facing.

No, no, that's right. That's right, Wannes. And of course, more specifically around Precious Metals Refining, as you asked, today, I mean, save the hedges that we do, and it's often with a physical counterparty that we do hedges, of course, the market remains on the sales side rather spot driven, especially if you talk on the typical PM and PGM metals.

Now of course, on the supply chain, we always have a combination of spots and evergreen and very long-term contracts. So that mix has not evolved substantially, I would say. At the same time, we will underline to what Wannes said, I think some sectors are really waking up to the criticality of some metals in their applications. I'm thinking data centers and others. And I would assume that they indeed will have to wake up. I mean, who has these units and how can we secure those is definitely something that could have further potential going forward.

Your next question comes from the line of Helena Xu with Jefferies.

Helena from Jefferies. Congratulations on the strong result. I have a question on Specialty Materials with regards to germanium. You had a really good run in H1 with healthy demand. And my question is how much of the current strength in germanium do you see is more of a scarcity pricing versus how much of this is your position in refining and recycling?

No, I think that's an excellent question. And I think when we talk -- when we refer to the strong run in H1 for Specialty Materials, especially around that cobalt momentum that we have seen, which we will think will start to normalize in second half and then going into 2027.

Now on germanium, as we have marked this business as one of the high-quality growth business, where we indeed in certain segments of that market see CAGRs well north of 10% due to market dynamics. Now if you look at production capacity in the West, I mean, really from an end-to-end recycling, refining, metal production, but also then really towards the end application lenses, substrate, et cetera, et cetera, I think we have a really strong position.

And it's not just a metal price scarcity drive. If you also then look at the sales side, I think customers are willing to lock in longer term. So it's also a technology transformation expansion that we see. But it's true that, of course, today with the export limits out of China or de facto no germanium leaving China, the supply-demand equation has substantially changed. And of course, we are able to also benefit from that yet with a focus on the long term. That's how we try to do it.

Your next question comes from the line of Mazahir Mammadli with Rothschild & Co Redburn.

I was just wondering, at a high level, how is your thinking about the metals price hedging evolved given that your CapEx need in Battery Materials has dropped substantially. And on Battery Materials, how do we explain the kind of apparent disconnect between the relatively strong EV sales in Europe and the underlying performance of the CAM sales volume?

Yes. Well, let me start with Battery Materials. That I would say it all has to do with the platforms to which we have been qualifying for and have been linked to. So as you know, we have an enlarged exposure and we built capacity, especially for Western battery makers here in Europe. We all know that, that ramp-up is slower than anticipated.

Now as such, therefore, in the shorter term because these qualifications in terms of batteries and vehicle testing, of course, take quite some time. You see that effect now into our numbers. Now as -- or in our shipments.

As mentioned before, we continue to focus on customer diversification. I also mentioned during the question of Georgina that we see an increased momentum around Europe as well with more interest. So, I would anticipate that this trend will continue. And as I said before, when we have new contracts that we would win, we will come back to the market and explain. And that, of course, would then change that volume trajectory going forward.

Yes. And then looking at the hedging policy, I mean, you referred to the CapEx needs in Battery Materials. And indeed, with those projections in the past that we had, that's where we started to lift some of the hedges going forward in order to reduce volatility, secure future earnings.

Today, we continue to adhere to that policy in a sense that it continues to protect our earnings, gives visibility. But also what we do is, of course, we take into account where are the prices from historical view or the prices attractive from a historical view. So that's a key element. And next to that, we also hedge up to, let's say, maximum 60%, 80% depending on how far you go out, which still leaves also room for upside in case metal prices would further increase.

Your next question comes from the line of Stijn Demeester with ING.

I have 2 actually. On Battery Materials, what's the actual volume outlook for 2027? Because if the platforms you're exposed to are slow to ramp up this year, why would they recover next year as the market is now basically flooded with new model launches? And a small one on recycling. What's the potential of a shutdown in '27? And lastly, also from my end, all the best Wannes.

Thank you.

Well, for '27, I would say it's too early looking at the volume outlook. At the same time, again, referring to the CMD, we mapped out the volume trajectory looking at what has been contracted.

But we also highlighted that we do see some slower take-up with those key customers, and that's what then needs to be compensated to the take-or-pay. So again, the exact volume outlook, the effective volumes is somewhat higher, somewhat difficult to project. But again, we have the trajectory, as you said, in the CMD.

Now looking at the recycling shutdown, this is where typically there is a lead time between 12 to 14 months in between shutdowns. So again, we would expect shutdown in the course of next year.

Your next question comes from the line of Ranulf Orr with Citi.

Two, please. Firstly, just on Catalysts and -- just on Catalysts really, where do you see the long-run normalized EBITDA margin for that business? That would be super helpful to give some thoughts.

And secondly, just on Battery Materials and the 2028 targets. If you maintain the current proportion of earnings from take-or-pay compensation that you have today, so if that ratio was the same in 2028, would you be able to hit that target? That would be my 2.

Yes. So maybe looking at Catalysis, this is where -- what we have projected in the CMD was adjusted EBITDA margin of 25%. Today, we are performing stronger, but that's what we at least anticipated. I think the question was on the trajectory, Wannes. The trajectory going out for Catalysis, I think that's Ranulf's question.

So, I mean, I think today, I think we continue to see a strong momentum in Catalysis here as well. We assume that, that market will stay strong for us all the way to 2030. Now today, we have, of course, some benefit, as always, also from the metal price here because we always indicated that 25% of the metal price uplift on platinum, palladium and rhodium is coming from that segment. So, I would assume the margins to remain very strong. indicating the exact margin, probably it's too soon for that.

And the second question, can you remind me, sorry?

Yes, just on the...

Yes. On the proportion of the take-or-pay, right?

Yeah.

That was it. Yes, exactly. Now I mean, we always said that the EUR 275 million, EUR 325 million was a mix of, on the one hand, expected volume delivery and contractual take-or-pays. This statement has not changed, right? So, if that proportion changes, yes, okay, the variability between those 2 numbers could change somewhat.

But in essence, the take-or-pays have been built in such a way that if the volumes are not there, that will deliver a similar amount of EBITDA. So we indeed would continue to stand by that 275 million, EUR 325 million by sticking to our contracts and of course, then further enforcing our contractual rights if need be.

Thank you, everyone. And we have no further questions at this time. I would like now to hand back to Bart Sap.

Yes. So thank you, everyone, for attending the call. Once more, I would like to reiterate that we are very pleased with our 2026 H1 results. As mentioned, they're broad-based and broad-based, I mean, across all financial metrics as well as across all our activities and businesses.

I would explicitly like to thank once more Wannes, but also the broader teams at Umicore. The results also show the transformation, which we are doing, much more focused on what truly matters, efficiency driven, but also you start to see that we're starting to focus again on high-quality organic growth. And this is what you can further expect of us also going forward.

Now with that, I look forward to meeting many of you next week during our roadshow in London and of course, also later on here in Belgium. So all have a wonderful day, and talk to you soon.

Thank you, everyone. And that concludes our meeting today. Have a nice week, and thank you.

Hello, and welcome. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Umicore 2026 Q1 Update and Outlook Call. Please note that this call is being recorded. [Operator Instructions]

Thank you. I would now like to hand the call over to Bart Sap, Umicore's CEO; and Wannes Peferoen, Umicore's CFO. You may now go ahead, please.

Yes. Thank you. So welcome and welcome all, and thank you for being here on this Thursday evening. So first of all, before I go through the Q1 update and the outlook, of course, I would like to give some more context to the leadership changes that we have announced this morning. So first of all, we welcome Lily Liu as our new CFO as of August 1. She has a strong record at public companies. She has worked in the chemical industry, manufacturing, engineering industry. At this point, she's the CFO of Synthomer, before that at Essentra, Xaar and Smiths Detection, but she's also a Nonexecutive Director and member of the Audit Committee at DCC plc. So I believe she's a strong asset for Umicore to also continue on the great path that I set forward together with Wannes on focus on operational excellence and capital discipline.

Now next to that, we are also establishing a role, which is this Chief Digital and Transformation Officer within the ELT. You know that we have started the transformation journey, that we will be more process-oriented and that we also would like to establish a stronger performance culture. And now we want to drive that focus across the group even more. We want more alignment throughout the group. And of course, next to that operational excellence for which Marten Zieris, which we welcome, will be focusing on. He will also be focusing on the digitalization, information systems and, of course, also further working on that -- on the artificial and augmented intelligence throughout the group. So Marten Zieris has a strong experience in transforming organizations. I've worked sometimes side by side by him. I know he's driven for excellence. He's widely recognized in the industry for transformational projects. So we are very happy and also looking forward to welcome Martin next to Lily.

But it also means, of course, that if a CFO joins, our current CFO, Wannes, he will be closing a chapter here at Umicore after more than 20 years. Wannes has been the CFO for the company for 4 years by now. I really would like to thank him for his dedicated service, his strong leadership, especially in quite, let's say, particular times in the recent history for Umicore. So his commitment to the core strategy, capital discipline, operational excellence really has set the group now again on a strong footing. And I would say that he was definitely part of that success that we can share today. So Wannes will be handing over to Lily on August 1, but he will stay on until February -- end of February 2027 to do the further handover and continue to work on some projects that we have. But maybe, Wannes, you would also like to give some perspective.

Yes. Thank you, Bart. I mean, as you rightfully say, after 20 years with Umicore, I will be closing an important chapter in my career. I'm grateful for the great opportunities and the trust that has been put into me over the past 2 decades. In '22, I stepped into the role of CFO at the time when the company was entering probably one of its most demanding periods in its history. Over the past years, we navigated through an extraordinary combination of challenges, initially financing an ambitious growth agenda, then quickly facing unprecedented inflation and market volatility, adapting to a sudden slowdown in electrification, leadership transitions, including yourself, Bart, and a strategic reset with our core strategy.

Now what I'm proud of is that with our focus on cost and capital, we have been able to rebuild the company's financial health and the credibility in the capital market. I was also very pleased that throughout these challenges, the leadership acted as one team with resilience, discipline, creativity and a firm commitment to the long term.

At this point in my career, I realize that I've built quite a bit of depth over the past 20 years within the same organization. And this is where I also realize I still have many years but also curiosity ahead of me. So this feels like the right moment to pause, to reflect and to explore new horizons.

I also want to thank my colleagues and my teams for their unconditional support and commitment throughout these demanding and challenging times. I'm proud of the progress we achieved together, strengthening processes and systems, increasing the agility and consistently finding solutions under pressure.

Now in my final months, I remain fully committed to the execution of our strategy and to a smooth transition to my successor in August. And this to ensure the continuity and value creation for our investors. And finally, I want to thank the investors for their trust in me.

Yes. Well, thank you very much, Wannes. And of course, we have been working for a very long period together in different stages of our career. So I can say that you will be missed at the company. We wish you a lot of success. But in the next 4 months, I intend still to work very closely with you. So looking forward to that as well.

So this brings us actually to the Q1 update and then later on the outlook. So I think it's fair to say that for -- that we had a very strong start of the year. Our sustained commitment to operational efficiency, capital allocation and that value orientation is definitely paying off now that while there's also a supportive metal price environment. So we are in a very good position to perform solidly or even strongly in 2026, and we are very happy with where we stand at this point in time.

If I look at Catalysis, here also a strong start to the year, outperformance of the light-duty vehicle market as we see it today. We see also a strong demand in the EU, China, India, but also HDD in EU and China is also stronger than the year before.

In fuel cells and stationary catalysts, it's actually a story of two tales. I think the fuel cell market is soft also in China at this point in time in Asia, while the stationary catalyst market with the strong data boom and need for data centers actually is gaining momentum and further growing and actually is contributing very substantially.

Now also precious metals chemistry had a strong start. Of course, it's linked to the strong business in automotive catalysts. The good PGM environment, but also the overall business is performing stronger.

If we go to Recycling, then I have to say a very strong performance. The planned maintenance shutdown was successfully completed. Our JIM business units, Jewelry & Industrial Materials, really enjoyed from a strong recycling market for jewelry basically. So we really enjoy that market. But we also see across their portfolio, strong end market demand.

Precious Metals Management, we have seen significant volatility, of course, in PGM prices. That is a good environment also for Precious Metals Management to optimize and further leverage those market circumstances.

When I go to Specialty Materials, I would say it's an outstanding performance for that business group. We have definitely a noteworthy profitability for cobalt and specialty materials. There's a strong momentum in the cobalt market, especially running from '25 into 2026, and maybe we'll come back to that later during the Q&A.

In Electro-Optic Materials and MDS, the growth track is also there. And also, we continue to grow on the solid foundations of these businesses.

Battery Materials Solutions, our focus is still and will remain on value recovery. We have a slight improvement in CAM material sales volumes, but as earlier indicated, the weight of the take-or-pay element in the overall EBITDA contribution for 2026 is growing, probably at a higher level than we would initially would have wanted for the year. Anyway, we have these contracts exactly for these circumstances, so they are also part of our EBITDA.

BRS is moving according to plan. And as you have also noticed, our anode joint venture with Hyosung is also now completed.

Now if I now go to the outlook. I think we -- with a strong start in 2026, we now expect a group EBITDA to approach EUR 1 billion for the year. Of course, this assumes that the metal prices will stay around the levels of Q1 2026. We know the world is volatile, no needless to say. But right now, I think the things that move the world at this point in time where our direct exposure is limited. We have a very limited exposure to the Middle East in terms of sales and purchases or supply of materials. We're well hedged on the energy side. So yes, that gives us confidence looking forward.

If I then go to the business groups. Catalysis anticipated to further benefit from the strong market position in light-duty gasoline. We see a declining, of course, global internal combustion engine production, but still our volumes remain very solid. We continue to focus on quality and resilience of earnings as we have done over the past years.

And Recycling, assuming, of course, that this continued favorable metal price environment stays and also the activity level, there, we see that we see a performance, which will more than offset the setback that we were foreseeing in the lower average hedge rate from '25 into 2026 as well as the shutdown. So there, we now see further progression beyond those 2 negatives that we were foreseeing earlier. Now so we are convinced that our performance will materially exceed the current market forecast.

If we go to Specialty Materials, this business is projected to slightly exceed present market expectations. So there's a positive -- so I have to rephrase, I made a mistake. So it's projected to significantly exceed present market expectations or beat significantly. The positive momentum in cobalt market is anticipated mostly in H1. H2, we will see a more normalized performance there. And the top line growth, of course, is sustained with the strong demand for germanium and of course, the other end markets.

Battery Materials Solutions. For the year, volumes somewhat expected in line with previous years. As the -- as earlier said, the anticipated ramp-up of certain customer platforms is not coming as we would have wanted during our CMD update. Again, the improved performance for the year is reflecting our take-or-pay commitments that we have. So we continue to execute our stand-alone midterm plan, and we continue to reduce our cost base. And of course, we continuously closely manage our capital expenditure for this business.

For CapEx, we see a slight increase versus 2025, mainly because of selective high-quality growth investment that we're starting in our foundation business. We're also investing already in the engineering for the [ Orion ] flow sheet, so basically the expansion of the flow sheet of our precious metals refinery in Hoboken, Belgium, in which we still think to take the decision -- the final investment decision for the expansion in the latter half of this year.

Now on the leverage, there we can confirm that assuming current price environment, of course, stays, we would see leverage below 2, basically significantly below the initially anticipated of 2.5 as we communicated earlier.

So in a summary, we had a strong start in 2026. We see a good momentum. We see high activity levels in our business. We benefit from current supportive metal prices linked to the geopolitical situation and new end applications which are emerging, of course. But our expertise, but also our value orientation and efficiency focus allows us to benefit to the best extent possible from these evolutions. So I would say it's very energizing and good to see how Umicore teams are taking the next step courageously going forward. They take their accountability, they collaborate. And this way, we make progress on our core 2028 strategy and are putting the foundation for good results going forward.

With this, maybe I would like to suggest to open the Q&A.

[Operator Instructions] Your first question comes from the line of Thea Badaro of BNPP.

Congrats on a great start to the year. Two questions from me, please. On the Recycling business more particularly, you mentioned strong industrial metal and jewelry businesses in Q1. So I was wondering if some of that might be linked to the situation in the Middle East. So i.e., have you seen any prebuying or inventory build that has helped the performance? And a quick follow-up on this. Can you maybe elaborate on what makes you so confident in the division for the rest of the year?

Yes. So thank you, Thea. On JIM, no, it's not actually a prebuy. We had already strong momentum in 2025 and yet at the latter half of second half of the year that really continues into the first quarter. And of course, as it's over-the-counter business, you cannot just extrapolate that for the full year. So we have to see, but the gold price remains supportive. We still see very good collection at this point in time. So, so far, so good, I would say. So indeed, that's one of the main drivers in the JIM.

Now if you then step from that strong Q1 to the full year, we also see that in precious metals refining, actually, we see a very good performance going forward at current metal prices throughout the full metal basket. And remember that in, of course, the first quarter, we had a standstill. So that means in the other months, we are good to process volumes.

Your next question comes from the line of Chetan Udeshi of JPMorgan.

I have a few. First one was, I'm just curious, you have a note in your release at the very bottom on the take-or-pay accruals. So you are essentially saying the way it works is you're accruing the take-or-pay contribution to your EBITDA. And then at the end of the year, it will be basically the difference between the committed volumes and the shortfall will be invoiced. I mean I'm just curious because historically, and we've had this discussion in the past, I mean, we've struggled to see customers uphold the take-or-pay volumes and Umicore are getting paid for it. So my -- I guess the risk is you are accruing this and maybe the customer just doesn't pay. I mean, have you seen that? How do we get comfortable that, that may not be the scenario that eventually plays out here? I know the numbers are small, but they are getting bigger as the volume shortfall perhaps is getting more substantial.

The second question was within your Specialty Materials, and you alluded a little bit to this in terms of your germanium business. I'm just curious how much of the upside in germanium is driven by pricing versus product? And what I'm trying to get to is how much of that upside is actually structural? And if you can talk about how you fit into the germanium value chain from a product perspective because I saw in your press release or media release recently, you talked about exposure to, of course, space satellites and stuff, but also silicon photonics and whatnot. I'm just curious how real these businesses are? Or are they still sort of pie in the sky in terms of [ jam ] tomorrow?

And the last question, it's a very natural sort of -- it's natural for people to think, okay, $1 billion of EBITDA for Umicore. Essentially, that's as good as it gets. I mean, what -- why would that not be the case? Like what we should be looking up to beyond $1 billion?

I like your ambition, Chetan. I like your ambition. Maybe, Wannes, you'll take the first one, and then I'll take the second question.

Yes, sure. So Chetan, looking at the take-or-pay, I mean, in past, we have different contracts in place, looking at some of the legacy contracts. So looking at this current contract, this is a particular contract where the contract is that the accrual -- I mean, that the shortfall is being monitored throughout the year and accrue for the shortfall. And then at the very end of the year, once we have the full view on the effective volumes shipped versus contractually agreed, that's where we then issue the invoice for the shortfall. So again, here, what we want to do through that note is also bringing that transparency that some of the fundamental support to the step-up in EBITDA is also coming from some of those take-or-pay accruals.

Yes, exactly. So on Specialty Materials and specifically -- more specifically germanium. Well, as you probably are all aware, today, there's not 1 kilogram of germanium leaving China for no matter what application, especially because, of course, germanium is critical for technology advancement. But of course, it's also a metal that is typically going into the defense sector. What we have seen both in customers across Europe, both at the governmental, but also at the general customer level as well as in the U.S., we really see heightened demand and a structural longer-term demand where customers are really also committing.

So yes, there is, of course, a tailwind of the germanium price because I mean, it's significantly higher, right? But at the same time, also on the product side and on the pricing side of the end products, we also see good progress. We also have some initiatives in the U.S. to further expand our capacity as well as in Europe. So this is one of these selective high-quality growth initiatives I typically refer to. So we are excited that this business will continue to grow in the next years with what we see today.

Clearly, the limitation of the export of China, of course, triggers through in the metal price and availability. That's an important driver going forward, but the momentum is now, and we will definitely do everything to seize that momentum.

Well, beyond the EUR 1 billion mark, I mean, I'm happy that you say that, of course, the EUR 1 billion is, well, in your terms, as good as it gets. I mean, let's see what really is good in the end. Of course, it's not today a CMD that we're doing on the future for Umicore beyond what we have today. But as I said before, given the geopolitical situation, the particularities around the ICE and the CO2 -- basically the CO2 tolerance in the U.S., the longer momentum for ICE in Europe, right, and also the way that China is limiting today exports of key materials, I think these are all positive undercurrents for our business, and we will continue to explore options how we can further capitalize on that.

Your next question comes from the line of Sebastian Bray of Berenberg.

I have one just on the IONWAY JV, which is not mentioned in the press release. But conceptually, the single largest use of capital at Umicore over the last 2 or 3 years has been the business which is performing the least well. People don't seem to muster the same enthusiasm internally when talking about the battery opportunity as is the case with market share gains in Catalysis and Recycling. Is this JV really going ahead as conceived? I mean you have a new CFO who has spent a lot of time restructuring the 2 previous companies. Is this full JV likely to proceed as conceived?

And my second one is a quick one, but the local press in Korea, I think, picked up that Umicore is going to receive EUR 120 million for its silicon anode contribution JV, which Hyosung will have an 80% stake in. Does this mean that the H1 results, there's an incremental EUR 120 million inflow?

So maybe I'll take one and you take 2, Wannes? Well, no, I think as we said before, I mean, we have the IONWAY joint venture together with PowerCo, so a daughter of Volkswagen. Both parties continue to contribute capital, and we continue to finish off this site. So there's no update to be given there. It is true that, of course, Lily has been instrumental in some of the restructuring and of course, putting the companies back on track at different -- well, at different companies right now. So it shows that she can focus really also on the finance operational excellence and capital allocation, but it's nothing to do -- you don't -- there's no read across at all with the IONWAY joint venture.

Yes. And looking at the joint venture that we concluded with Hyosung around the silicon anodes. So this is where Umicore contributed the assets and the IP and where Hyosung contributed capital in order to support further scaling. So looking at the next phase in that scaling being industrialization, this is where Hyosung will contribute further capital to the joint venture, but where Umicore gets diluted through that capital contribution by Hyosung. So it's not something you will necessarily see one-to-one in our balance sheet.

[Operator Instructions] And your next question comes from the line of John Campbell of Bank of America.

I wanted to just come back on the topic of your Battery Materials business. And maybe if you could reassure us related to the contracts that you have, there's no risk that you see, for example, that anything could be renegotiated such as any of the ramp-up phasing, ramp-up scale, et cetera, just to get, kind of, get comfortable on the take-or-pay clauses that none of it could be kind of watered down even if they proceed and go ahead.

Yes. No, I think our stance hasn't changed. I mean we have very strong contractual clauses. We will continue to enforce and leverage basically these contractual clauses. Nothing has changed to our stance in this respect and nothing to be mentioned at this point in time related to the question that you posed.

The next question comes from the line of Chetan Udeshi of JPMorgan.

Sorry, one last follow-up. You're saying CapEx will be slightly above last year. So are you able to quantify maybe it's, what, EUR 350 million, maybe less than EUR 350 million? And I'm asking this because you are taking this FID on your new brownfield expansion in Hoboken. And I'm just curious whether that will come on top of the -- of that number? Or is that CapEx mainly next year and the year after, so it won't impact the CapEx for this year?

Yes. So Chetan, a very good guesstimate, I would say. So indeed, we target a rough order of magnitude of EUR 350 million. And this includes the engineering that is ongoing for the expansion in recycling.

So yes, the majority of the CapEx will come in indeed '27, '28, '29 as we previously guided during the CMD. So we're perfectly according to plan.

There are no further questions at this time. With that, I will now turn the call back over to Bart Sap. Please go ahead.

Yes. So thank you, everyone, for attending the call. Once again, I think we're off to a great start for 2026. We are set for a solid performance for the overall year. Once more, I would like to thank [indiscernible] Wannes for all his contribution and resilience during these particularly interesting 4 years at Umicore with ups and significant downs. I continue to look forward to work together with the teams, also the new team members joining to further build on the foundations of the group and to continue to be ready then when opportunities come that we actually can strike those. So I wish you all a wonderful evening. Thank you for attending and talk to you soon.

This concludes today's call. Thank you for attending today's call. We hope to see you soon. Have a wonderful day, and stay safe.

Ladies and gentlemen, welcome to the Umicore Full Year Results 2025 Conference Call. Your speaker for this call will be Bart Sap, CEO; and Wannes Peferoen, CFO. [Operator Instructions] I will now hand the conference over to the speakers. Please go ahead.

Good morning, everyone, and welcome to the full year results 2025 of Umicore. And as you can see here, of course, we have taken this picture, a beautiful gold nugget. And I think for the ones following us will understand why we have put that picture forward. And of course, I'll be coming back on that later when I look back on 2025.

Now if you read our set of numbers, I would like to highlight again that we have adjusted during the CMD a new reporting structure, different segmentations in our business group. So please do have another good look at this slide because we will be reporting and commenting the numbers in the new structure. So Wannes is sitting here on the left with me, and he will also comment, of course, on the finance and some of the business trends as well as usual.

And let's have a short look at the agenda. So nothing particular here. First of all, we go on the core strategy, the key numbers. We're going to go over the outlook ultimately for 2026 and then hopefully have an engaging Q&A at the end of the session.

Yes, our core strategy. Now we launched our core strategy in March 2025, where we indeed had a different approach and not just chasing growth at any cost, much more towards that value recovery and battery materials, but also more value extraction in our foundation businesses. And roughly around the time that we were announcing our CMD, our new strategy, the world started to move violently, I would say. And the geopolitical landscape has been changing fundamentally. And therefore, also the markets as well as supply chains have been reshaped and continue to be influenced by new policies coming out. So the world is structurally different versus roughly a year ago. Volatility is, for the time being, the new normal, and we will continue to navigate and, of course, react and adjust according to the volatility that we see.

Now if I zoom out and see what's happening in the world, it's clear that we have a much more fragmented world and that the world is waking up that if you want to be a technology leader, if you want to have a strong economy going forward, you need these critical raw materials. You need to have your own supply chains, and that's where Umicore's circular business model, which is multi-metal on the one hand, on the recycling refining side, but also on the materials that activate the world downstream, the applications downstream is more relevant than ever. So having a secure and sustainable supply chain in different parts of the world becomes a key element for society.

And this is right up the alley of our strategy, and we [indiscernible] our business model with 4 key pillars: capital, performance, people and culture and partnerships. And let me now highlight some of the achievements that we had in these different segments over the years and some of the actions that we took. First of all, on the capital, and that was the first picture of the presentation. Obviously, we sold and had a subsequent lease-in of our permanent gold inventories. This has unlocked significant value. This also has helped further to deleverage the company, but also it transitions the price risk, the long-term prices of these inventories outside of Umicore.

Now we also said at that time that lease rates for gold are typically stable. It's an alternative versus cash or pure money in the end. And even in that volatility and that frenzy, let's say, around PGMs at this point in time, also lease rates have -- for gold have remained stable at 0.5% to the 1% mark, well below typical financing rates that you would expect for normal debt. Now next to the gold, we also have been very disciplined on our CapEx. Remember, we guided at the start of the year more to EUR 400 million. In the end, we came in at EUR 310 million by making deliberate choices, but also being very strict on the execution of the projects that we are having.

If I go to the performance pillar, there the full year results is in line with our latest upgraded guidance. So we said between EUR 790 million and EUR 840 million during the summer. We came out slightly above that EUR 840 million. So we're very satisfied with this set of numbers, a strong performance, I would say. And this was really, really also supported by the efficiencies, targets and the mindset that we are cultivating more and more within Umicore. And we promised EUR 100 million. We achieved that target, and Wannes will explain later on, of course, that has helped to offset the inflation, but also some FX headwinds that we had in2025.

So I mentioned it already, we're driving the company much more to a performance culture where we take our accountability. We really focus on what is the essence. We do what we need to do in a very disciplined way, and this is showing results, and we will continue to push forward in that direction.

On the partnerships, we also not have been sitting still, I would say. We had quite some action there as well. And we closed a partnership around our silicon anode materials with a Korean company, HS Hyosung Advanced Materials. And together with them, we will industrialize this really an interesting and exciting technology, and we found a way actually to bring that technology to the market without having to allocate excessive cash or very sizable amounts of cash for Umicore.

Next to that, critical raw materials. We have been working on that trend, of course, already for quite a while. And we announced our partnership with STL, Societe du Terril de Lubumbashi. So basically, we have shared technologies, have upgraded installations in the DRC in order to recover germanium from old mining tailings. And this was really a support for the business going in '25 and beyond.

Now let me go to the key figures. Wannes will go in more detail, so I'll stay pretty high level here. I would say we really had a strong performance in our foundation business. It was supported by group-wide operational excellence efforts and a favorable metal price environment. EBITDA up 11% to EUR 847 million, 24% EBITDA margin, a good free cash flow supported by the gold inventory sales of EUR 524 million and leverage of 1.6. I think we can all agree this is a very solid set of numbers in the current environment that we live in. So happy with that.

Let me now go to the different business groups. Let's start off with Battery Materials Solutions. So for your reference, Battery Material Solutions now represents, on the one hand, Battery Cathode Materials and the battery recycling business. And before I go in the details of the different business units, I would like to have another glance at the Battery Cathode Materials and EV markets out there at this point in time. So at the CMD in March 2025, we said that this market is still taking shape and has inherent volatility. Well, that's what we have seen in 2025 and also what we continue to see in 2026.

EV penetration around the globe is progressing, but at quite different speeds, China leading decisively. Europe is following more moderate and U.S., well, there, actually, we are quite behind. And of course, the policy change of the U.S. -- the new U.S. administration is not helping that. The CO2 tolerance is much higher than in previous administrations. That is clear. And that's why the policy is shifting and pivoting away, I even would have to say, from EVs to internal combustion engines, right? This clearly has an impact, and you have seen announcements that even battery makers in the U.S. are now focusing more on energy storage than pure EVs. And of course, quite a number of OEMs have had to make difficult announcements.

If I look to Europe and China, that's really a -- and it's depicted here as well with an arrow. That's really an area where there's an interdependency. Today, we see that China still has overcapacity that a lot of OEMs are relying on China to import their batteries into Europe. Also for cathode material, we still see cathode material flowing into Europe at this point in time. So competition is fierce. I think that is fair to say. Now at the same time, we also see that there's a heightened risk of trade tensions of potential restrictions on exports of certain technologies by the Chinese government on the one hand, but also in Europe, a much stronger talk about these local Brazilian supply chains and local content requirements.

So the next days, the EU is expected to come out with some policies. These will be important to monitor those and could really make a substantial difference in the European landscape. So in general, summarizing, the recent industry announcements are emphasizing that the growth in Europe is somewhat challenging, but it also highlights the increased importance of our take-or-pay contracts, and I'll get back to that.

Now going to the numbers. So if we look in 2025 for Battery Cathode Materials, we did see a revenue growth, a revenue growth of roughly 11% versus 2024. Volumes -- actual deliveries were up versus last year. We did collect take-or-pay compensation for contractual volume shortfall. And there was a partial offset by lower refining income because of a weaker, more challenging cobalt environment on the pure refining side. And also, of course, the nickel price environment was not necessarily beneficial. Now the adjusted EBITDA as per our expectation came in around breakeven, which is a clear improvement versus last year, where the breakeven result was still containing a substantial one-off, a positive one-off in 2024.

Now if you look at Battery Recycling Solutions, during the CMD, we said we would be roughly at minus EUR 25 million. We came in at minus EUR 21 million. Really also here, we continue to focus on optimizing our process and recycling technology. At the same time, we're also very diligent here on the execution and cost management. Overall, you can see a clear also improvement on the EBITDA level, '24 versus '25 despite that we did not have that one-off in there.

All right. Let's go to the next business group, and that's Catalysis. In good tradition, we also always start with an overview of the internal combustion passenger car production numbers. And here, we see that '25 is slightly lower than '24. It's not a substantial drop actually. It's minus 0.7%. Europe was more down. At the same time, South America and China, these regions even further progressed. If I then look at the HDD segment, Europe, a slight decline, but a positive evolution in China of 7.1% growth, of course, starting from a relatively low base as the previous quarters -- or actually the last quarters in 2024 were not strong.

Now looking at the numbers, a solid set of numbers. We see a sustained demand for our products throughout the business group in a volatile market, I would say, so in an overall challenging economic backdrop. At the same time, we also continue to focus on our operational excellence as we have been doing for the last years, and we're getting increasingly better at this year after year.

Now if I look to the Auto Cat, our volumes in Auto Cat were strong. We outperformed the ICE, so the internal combustion engine light-duty vehicle market, which reflects our strong position. But also the focus, as I mentioned, of operational excellence and efficiency is really part of the DNA. We continue further footprint consolidation, amongst others in Asia, where we have taken decisions around our Japanese operations.

Precious Metals Chemistry, that follows to a certain degree, of course, the Automotive Catalysts business with the inorganic chemicals. They're the supplier of the inorganic solutions to the Automotive Catalysts business. So also a strong performance there. A good set, of course, PGM price support helping this business also forward. Now our homogeneous catalyst business, which is selling typically in the broader chemical industry, we saw some softness in line with the overall chemical industry pain that we're all going through.

Fuel Cell and Stationary Catalysts, the earnings clearly improved. We had higher deliveries for our fuel cell catalyst solutions. We also are on track with our proton exchange membrane fuel cell plant in China, expected to start production in the course of 2026. On the stationary catalyst side of things, we do see a strong demand for backup power solutions and exhaust for these backup power solutions, specifically for data centers in the context of the high demand of the AI companies, AI application. So Catalysis EBITDA margin, 27%.

Recycling. Well, you cannot talk about recycling about -- unless you talk about the metal prices. And here, you can, of course, see that metal prices in 2025 are significantly higher than 2024. You know that Umicore that we decided to hedge quite a number of our -- quite an amount of our exposure forward. Why? It creates visibility. It stabilizes earnings profile and it also protects against downside risk. That means if the price environment rallies beyond the average hedge price, indeed, you have some opportunity loss. But still today, we're very happy with these hedges. Now on the remaining open exposure, of course, there's a positive upside of stronger PGM prices to the overall earnings of the business group segment.

Now if we look at the overall set of numbers for the business group, we see an advancement in the revenues. At the same time, a stable EBITDA performance with a 39% EBITDA margin. So in Precious Metals Refining, our revenues were in line with previous years. The metal price environment was supportive. We had good volumes. There were -- of course, we had some average hedge rates decreasing year-on-year, which was a backdrop or actually a drag, let's say, on the results as such. The overall mix was somewhat less favorable, still a very strong set of numbers for Precious Metals Refining.

We had some slight temporary process inefficiencies, which will no longer be there in 2026, but we were able to offset these by solid contributions from our operational excellence and cost-saving efforts also in this business unit. Jewellery and Industrial Metals, I mean, the central theme here is gold, gold recycling, gold processing. I mean, really a very strong market, strong revenue growth and also a good margin expansion. So this business is also doing really well on basically also the gold evolution and the gold focus, which is there in the market. Precious Metals Management, well, we've talked about already volatility in precious metals prices is an excellent market environment to trade and make trading gains. So this business unit also performed really strong.

Next business group would be Specialty Materials. And Specialty Materials is maybe a business group which is sometimes a bit yes, underrepresented or underappreciated maybe by the markets or -- and maybe we should also further strengthen our communication on this business group because it has a couple of beautiful gems in there.

If I look at the business group here, a 16% EBITDA growth in 2025, EBITDA margin approaching 20%. Cobalt and Specialty Materials, there was a support of a cobalt trend where we saw a better momentum for cobalt premium products, right? And also here, again, efficiency. You've understood by now that efficiency is really part of our overall performance, and that's why we continue to stress it.

If I look at Electro-Optic Materials, there we have seen that China has taken a stronger stance on exports and not a lot of germanium has left China in the course of 2025. We have this joint venture with, for instance, Societe -- so with STL basically, which I highlighted earlier. And this allowed us also to continue to supply our customers in a very strong germanium price market, added by our closed-loop refining and recycling services that we have. So Electro-Optic Materials sees strong top line growth at the end of the year, and we continue -- we expect to continue to see that growth also in 2026. So one to watch going forward.

Metal Deposition Solutions, I would say, overall, a good stable performance with a different mix between the business groups. But yes, also pretty good there. So I think this is where I would like to leave it at this point in time and hand the word to Wannes.

Thank you, Bart, and good morning, everyone. Today, I will start with EBITDA before moving on to cash flow, net debt, the P&L and balance sheet. Adjusted EBITDA was up 11%, reaching EUR 847 million, driven by volume growth across all businesses and efficiency savings. This broad-based growth resulted in EUR 125 million of EBITDA contribution. We also delivered EUR 100 million of efficiency benefits, which more than offset inflation of EUR 68 million. Metal result declined by EUR 17 million due to favorable hedges rolling off. This was partially offset by increased prices for precious and platinum group metals as well as minor metals for the remaining open or unhedged position. There was a headwind from foreign exchange of around EUR 45 million, largely due to translational effects as the euro strengthened. Adjusted EBITDA margin improved from 22% to 24%, in line with our Capital Markets Day target of more than 23%.

Now zooming in on our efficiency program. We delivered EUR 100 million of efficiency benefits, in line with our target. 25% came from top line growth, 20% was due to a reduction in cost of goods sold and 55% came from a reduction in SG&A and research and development, in particular, in Battery Material Solutions, Catalysis and Corporate. Headcount in the group reduced 3%.

Turning to cash flow. Cash flow from operations before changes in working capital amounted to EUR 1.1 billion. This was supported by cash proceeds of EUR 525 million from the sale and subsequent lease-in of the permanent gold inventory in recycling. We finalized this transaction in October last year. It enabled us to unlock significant value, strengthen our balance sheet and reduce finance costs. Net working capital increased by EUR 298 million, mainly as a result of higher activity and to some extent, increased metal prices. The significant reduction in CapEx down to EUR 310 million demonstrates our capital discipline. This reduction is most prominent in Battery Cathode Materials, where we are leveraging footprint flexibility and phasing our spending. Free cash flow from operations was EUR 524 million.

Moving to the net cash flow bridge and net debt. The free operating cash flow largely covered the EUR 250 million equity injection into our joint venture, IONWAY in January '25 as well as taxes, interest and dividends paid. In January this year, after the year-end, Umicore and PowerCo each contributed an additional EUR 175 million to the IONWAY joint venture. Net debt reduced slightly to EUR 1.4 billion, resulting in a leverage of 1.6x adjusted EBITDA, down from 1.9x at the end of '24. This is well below the anticipated peak of 2.5x as we focus on capital discipline and maintaining a solid balance sheet.

Looking at the consolidated P&L. Adjusted EBIT improved by 21% to EUR 579 million. Adjusted net finance costs of EUR 173 million were up EUR 65 million, mostly due to lower interest income on cash as rates came down and a negative impact from foreign exchange. Adjusted tax charges were in line with the prior year. Pretax income was slightly up, but the adjusted effective tax rate came down from 29% to 26%.

Adjusted net income of EUR 288 million was up EUR 33 million. And adjusted earnings per share were up 13% at EUR 1.2. We are proposing a dividend of EUR 0.50 per share, in line with last year and with our policy of a stable or rising dividend. And this represents a payout ratio of 42%. Adjustments to EBITDA amounted to EUR 365 million. As I said earlier, we optimized our business model in recycling by selling the permanent gold inventory and replacing it by revolving leases. This generates a pretax gain of EUR 486 million. This was partly offset by an impairment of our joint venture participation in Element 6 and provisions related to specific restructuring programs.

Adjustments to net result include a derecognition of a previously recognized deferred tax asset and the tax impact of the gold inventory sale. Net income was EUR 385 million compared to minus EUR 1.5 billion in the prior year when there was an impairment charge for Battery Cathode Materials. There was a big improvement in return on capital employed from 12.3% to 15.7%.

Now turning to the consolidated balance sheet. Our liquidity remains robust with cash of EUR 1.6 billion after repaying a EUR 500 million convertible bond in June. And as I said earlier, net debt was stable at EUR 1.4 billion, and the leverage ratio came down from 1.9 to 1.6 by the end of the year. Group equity improved to EUR 2.3 billion, corresponding to a net gearing ratio of 37%.

We have hedged a substantial portion of our metal exposure for '26, '27 and '28, and we continue to look for opportunities to hedge further, in particular, for '29 and 2030, taking into account market interest and forward rates. So to sum up, we delivered a strong performance in '25 as a result of volume growth across the board and EUR 100 million of efficiency benefits. Adjusted EBITDA improved in every business, except recycling, where it was stable and CapEx was well below the prior year. Selling the permanent gold inventory has given us additional headroom while reducing future finance costs. And we continue to focus on driving cost efficiencies, controlling working capital and disciplined capital allocation in '26.

I will now hand it back to Bart. Thank you.

Thank you, Wannes, for that overview. Very clear. Let's maybe have a look at the outlook for 2026. So the essence basically is that we entered the year on a stronger footing. And if I look at the different business groups, on Catalysis, we continue to have a very strong performance in this business group. We see that continue into 2026, and we are happy with the state in which it is, and that will continue going forward.

And Recycling, I think the essence is that in the current favorable metal price environment that we'll be able to offset the negative impact of the average lower hedged metal prices as well as the shutdown, which is foreseen in 2026. So also moving on well there. Specialty Materials, continued strong performance. We do expect we continue -- we believe we continue to see the top line growth, amongst others, in the germanium products, but also a supportive cobalt price environment will help to further support the results.

And in Battery Materials, we continue to pursue the midterm plan to recover value, while at the same time, we, of course, have to navigate a volatile and competitive market. So we continue to focus on rigorous capital allocation. We're going to continue to lever our customer contracts with our take-or-pay commitments on which we clearly say that the importance of the take-or-pay mechanisms is increasing given the volume development that we see. And in Battery Materials Solutions, we're going to continue to be disciplined in our spending broadly in line with 2025.

On corporate costs, we expect a slight increase because we continue to invest in AI-driven solutions to further enhance and support our operational excellence. For capital expenditures, we are expected to increase versus 2025. And this is mainly driven by a selective growth initiatives in Recycling. So engineering that we do for the decision we need to take around the expansion in Hoboken in our precious metals recycling business that we will take in 2026, but also selective high-quality growth investments in Specialty Materials. So on CapEx, we do expect to be in a range between this year and last year guidance of EUR 400 million with, again, a very good focus on disciplined execution.

So if I sum that up, I would say that we will not be providing a concrete guidance today and this is because the market is still very dynamic. And we will have to continue to navigate that environment. Yet based on what we see today, we would expect adjusted EBITDA to further progress into 2026.

Now shortly wrapping up before we go into the Q&A. So -- and this is also a shout out to the teams. I think 2025 was really a pivotal year. And Umicore and the teams have shown great resilience. They have shown great discipline also to focus on what our core is and taking courageous actions to basically be able to deliver this strong set of numbers. It's fully in line with our core strategy execution. We're well on track. We're entering 2026 on a much stronger footing, and we will continue to build on the momentum of 2025 going into 2026. So really positive 2025 and with confidence we go into 2026.

And with that, we go to the Q&A.

[Operator Instructions] The first question that we have is coming from Wim Hoste from KBC Securities.

Do you hear me?

Yes.

I have 2, please. On metal price hedging, you indicated that hedge levels in '26 will be below '25. Can you maybe elaborate a little bit on the outlook of your hedge book? Is it fair to assume that the hedging price levels will increase probably materially as from '27 onwards? Can you maybe elaborate on that? And then also linked to metal price hedges, what are the limitations to hedging more and further into the future? I think you indicated that you're looking to increase the hedging for '29 and 2030. What is prohibitive in this case? Is it just availability of counterparties? Is it financing costs, which get increasingly expensive, extending the hedges into time? Can you maybe elaborate also a little bit on that? Those are the questions.

Wim, Wannes here. I'll take those questions. So looking at the metal price levels of the hedges, that is something we don't communicate. But at the same time, we can also share that, I mean, moving from '25 into '26, there will be less support from the average hedge prices that we have looking at '26. At the same time, looking at the average hedges that have been locked in or the volume of hedges that we have locked in, looking at '26 and '27, this is where 70% on average of the exposure that has been locked in. So I think looking at the metal price exposure, this is where in the current favorable environment, there's still potential. There's still upward potential, but it's limited to that open exposure of, let's say, roughly 30%.

Now we are looking into hedging further looking at '29, 2030, again, on the back of creating that visibility, creating that predictability of the earnings. But this is where looking at the market environment, on the one hand, we see a heavy backwardation, looking in particular at the PGM prices, but also limited market interest from counterparties to lock in those prices, hence, also the heavy backwardation. So this is something that we are monitoring closely in order to secure basically at the right time, the right price levels for those years, '29 and 2030.

The next question is coming from Sebastian Bray from Berenberg.

Sebastian, we don't hear you.

I have a few, please. The first is on the financing costs. Are there any one-off [Technical Difficulty]

Sebastian, we lost you for a second. I will open your line again.

I think there's a lag on the mic, so I'm just going to speak. What would you provide as guidance for '26 financing costs? My second question is on the [Technical Difficulty]

Sorry, Sebastian, we really can't hear your questions.

What exactly -- why can't we go back by '28, '29 to a level of recycling earnings akin to what we had in '21, i.e. [Technical Difficulty]

So maybe let's see what we think we understood. So I think there's a question on the one hand around financing evolution...

And final one on the VW JV. Is there any chance [Technical Difficulty]

Maybe we go to...

I think we have an issue with the line on your side, Sebastian. So I think it's difficult to receive your questions. If there is any opportunity to send them over the chat, that would maybe be helpful, and then we can move on for now to the next analyst, I believe, because it's difficult to take these as such. Gaia, can you move on to the next analyst, please?

Yes. The next question is coming from Chetan Udeshi from JPMorgan.

Can you hear me okay?

Yes, yes. Loud and clear, Chetan.

Okay. Cool. So I had a few questions. First one, I appreciate you're not giving the guidance, even though you gave same point last year, some guidance for 2024, but I also remember Umicore historically never gave guidance at the start of the year. So I don't know if you are just going back to the old practice. But just based on all of the things that you mentioned, qualitative assessment, what you've seen so far, what is your feeling on the consensus that we have from [indiscernible] for 2026? Do you have a view on where the consensus is? And is that in the right ballpark?

The second question, I was just curious on your take-or-pay contribution in the Battery Materials. I mean it's pretty clear right now that some of your customers like ACC, they publicly announced that they are scaling back the ramp-up plans. So I'm just curious, are you getting compensated 1:1 for the lost volumes? Or is it more a negotiation where you are still trying to be flexible if your customer can't take the volumes?

And the third question, on Recycling, you mentioned some process inefficiencies. Can you quantify that? Is that a material drag last year, which shouldn't recur this year?

Okay. Wannes, you go on the guidance or I can go on the guidance, doesn't matter?

Well, I think on the guidance, again, we highlighted it's too early to be very concrete. At the same time, looking at EBITDA, this is where we say, yes, we are confident on the year '26, and we expect to make some progress in '26. Looking at other elements of guidance. CapEx, we highlighted, we expect the CapEx to come in between EUR 300 million and EUR 400 million. We will continue to be diligent and disciplined. If you look at Battery Cathode Materials, we reduced the spend in '25 versus what we anticipated, and we anticipate to do the same for '26.

At the same time, looking at the foundation business, this is where in Precious Metals Refining, we are working. We're engineering on that expansion of the flow sheet that will result in some step-up in CapEx. And in Specialty Materials, we see some very specific growth opportunities, which we want to support. So hence, the range of EUR 300 million to EUR 400 million. Now the favorable metal price environment is obviously -- can be supportive to the EBITDA, but it can also put pressure on the working capital. And this is something where we will diligently work on in order to make sure that we can offset to a maximum extent any upside pressure on working capital. I think those are key elements, I think we can guide on today.

Yes, that's right, Wannes. And last year, we decided to guide because of the specific circumstances around all the trade uncertainty and the tariffs, right? So we wanted to be clear also there where group was heading and to give you clarity because it was probably the biggest uncertainty out there in the market at that point in time.

Now on your second question, the take-or-pay and the further progress. Well, first of all, I mean, I think we have been pretty transparent and clear that in 2025, there is indeed a portion of take-or-pay in the results for which we are financially covered. The ramp-up across contracts. I will not talk about specific contracts. I will never do that. But we see that across -- if I talk more broadly on the ramp-up, it is slower than what we would have wanted to see or what our best view was at the CMD in March. So the weight of take-or-pay in that trajectory that we shared is increasing. right? And this is something that I would like to highlight. At the same time, we continue to have strong confidence in the contracts, and we will continue to leverage these contracts as we have done in '25 and will go -- will also be doing going forward. On the Recycling, I forgot what exactly the question...

The process inefficiencies.

The process inefficiencies. Yes. Wannes, if you want to.

Yes. So I mean, looking at recycling, we highlighted that the volumes were up -- the volumes processed were up. At the same time, looking at the downstream, this is where we had some technical hiccups resulting in some additional costs, some additional rework, but not too material, but at the same time, we also wanted to highlight as it does impact the results.

That's right. And as I highlighted in my presentation, we did offset those with further efficiencies in other parts of the plant. We just want to be transparent and open around this. Again, for 2026, there's not going to be any effect of these operational inefficiencies, so not to be taken into account for you for 2026.

Sorry, before we move on, we can maybe take the questions of Sebastian Bray that have come in through the chat.

Yes. Thank you, Chetan.

So the first question is the financing costs in 2026. Could this be down versus 2025? The second question is, could Recycling return to levels of full year 2021? And then the final question is on the JV, the IONWAY JV. Could this be recut or renegotiated as Volkswagen is cutting back on that?

Maybe you take the first one. I'll take the 2 other ones.

Yes. So looking at finance costs, obviously, very difficult to guide because there's 2 components which we don't have fully in control. One is basically the cash deposits and the interest rates we get on those cash deposits. And this is also where there has been a steep decline in '25 and hence, also less contribution to the finance income, I would say.

The other element is the forward points, looking at the financing transactions in foreign currencies. This is where we also carry the forward points and again, hard to predict, I would say. At the same time, I think '25 seems rather exceptionally high looking at the financing costs. I think I would anticipate to have that lower going into '26. But again, hard to give guidance on.

Yes. And then on Recycling, well, I think it's true. I mean, it's a fact that actually your hedged exposure or unhedged exposure, let's say, in '29, 2030, the more we move out in that period, I think we're substantially less hedged in that time frame. Suppose that the current favorable metal environment remains for all the main metals such as platinum, palladium, rhodium and of course, some others as well. Clearly, there could be a substantial upside versus the EBITDA that we are reporting today. Hence, at the same time, these prices are not guaranteed. So it's impossible for us to guide on that. But in theory, there would be, of course, a higher upside possible.

On the Volkswagen question, you understand I will not comment on that. We have clear contracts in place. We are going to continue to enforce these contracts. And at this point, I have nothing material to share with you on that point.

[Operator Instructions] We have our final question at the moment coming from Mazahir Mammadli from Rothschild & Co Redburn.

One from me. So assuming that we have a favorable metals price environment going forward in the next couple of years, what would your priorities be in terms of allocating the excess free cash flow that you generate?

Yes. So basically, if I understood well, it's actually a cash flow allocation question, Wannes. But I mean, let me start off here as well. I think our focus today is still really on further being cash disciplined. It's really on that value recovery. And once the balance sheet continues to remain strong and solid, we will, of course, then decide what to do with the excess funds and will be coming out to the market. So we don't have a clear view on that at this point in time because we're still -- our focus is still on solidifying in a structural way, the balance sheet. So Wannes, I don't know if you would have any...

No, completely right. I mean, looking at what we said in the CMD is that we look at landing at a leverage -- structural leverage between 1.5 and 2, let's say. And once we have that in place, once we see that recurring, that's the next topic that we will need to discuss.

We will now take our final question from Stijn Demeester.

I have received a message from Stijn. Sorry, I will read the message. Okay, you're in.

Yes, some difficulties here. So first one is on the SK On contract and the probability of renewal in '26. Second one, on the margins for take-or-pay versus actual volumes, can you say something there in terms of where they sit? And then the last one on the shutdown in Recycling, any view on when this will happen? These are my questions.

Sorry, Stijn, can you repeat the last question?

When the shutdown will happen.

On the shutdown in Recycling and when we should plan it in.

Yes. So okay. Thank you, Stijn. Very clear. On SK On, indeed, we said that there was a probability to extend the contract, and that did happen. So we continue to supply SK On in 2026. So that is definitely a positive. On the margin of the take-or-pay, there, I think what I said, I mean, the idea of the take-or-pay margins is to protect the investments that we have done. And as you have seen also when we were guiding for 2028, we had seen different scenarios of take-or-pay and actual volume delivery, and you saw that, that range, EUR 275 million, EUR 325 million, right, was rather muted. So you could, from that, of course, deduct that the margins indeed are sufficiently strong to cover volume shortfall margins. Now on the shutdown from Hoboken PMR, I mean, this is happening in -- yes, in the second half or later this month, actually. So we are preparing or entering, as we speak, the shutdown.

If I may...

And then before we close -- go ahead, Stijn.

So is it a correct assumption that if you would fully lean on take-or-pay that you hit the EUR 275 million? Or is that a too positive take?

I mean, we have said during the CMD that indeed different scenarios of take-or-pay as well as volume -- real volume offtake would give that range of EUR 275 million, EUR 325 million. So the answer is yes.

Correct.

Before we close it off, I still have an e-mail of Georgina from Goldman Sachs. I also want to highlight that we will look into the difficulty that people are having to connect to this call that this will not happen going forward. But so let me then phrase Georgina's questions here. How much CapEx investment needs still outstanding for Battery Materials? The next question is, is it increasingly in conflict with potential growth opportunities in recycling specialty materials in management's views? It feels to me like the opportunity cost is getting larger.

Okay. Very clear. Wannes, maybe you take 1, I'll take 2.

Yes. So looking at Battery Cathode Materials, as I said, in '25, we reduced the CapEx spend as we are optimizing the -- or using basically the footprint flexibility in order to reduce and phase the CapEx. So looking at Battery Cathode Materials, what we shared with the market during the CMD is that on the one hand, we have the fully owned capacity where we would need to invest about EUR 350 million. This is where we expect to be able to reduce it with EUR 100 million looking at '25 and '26.

Then what we also highlighted in the Capital Markets Day is that we have the capital injection into IONWAY, where we anticipated still to invest EUR 500 million between '25 and '26. This is where we invested in 2025, EUR 250 million and where at the start of this year, invested EUR 175 million. So bringing that to a total of EUR 425 million. We expect to stay within that budget of EUR 500 million in order to finalize basically IONWAY.

Yes. So I think that's correct, Wannes. So in other words, I mean, we're phasing our CapEx and function of the real underlying demand that we see, and we said that we would be disciplined. And for the time being, we're not spending those CapEx. As discussed earlier, the importance of take-or-pay is growing and that immediate need is not there.

And that's transit in that question on the conflict versus Recycling. Well, I mean, I would say, first of all, we have a set of businesses that we have today, right, a very strong core foundation business in which we're going to continue to invest in selective growth initiatives. I've been highlighting in the germanium in the field of Electro-Optic Materials. We will decide on the investment in Hoboken in 2026. And I think the current evolution in Battery Materials is not holding us back to do that if we wanted to do that from a financial point of view. So no, there's not an immediate conflict. Of course, if you would think about really bold moves, then, of course, value recovery in Battery Materials would definitely be, yes, an important milestone to achieve. So no, I don't see that immediate conflict on the CapEx as we are keeping it to the lowest amount possible, and we continue to lean on our take-or-pay contracts.

Okay. Then we still have questions from UBS as well. A small reminder that normally, we stick to one question per analyst but given the situation that we are in, I'm making some exceptions. So for UBS, the first question is, can you tell us what percentage of Battery Materials Solutions sales came from take-or-pay payments?

The second question is, does the guidance for the CapEx includes the IONWAY payments? If not, what should we anticipate for? And then in the cost savings, could you give an indication for the cost savings in 2026? And then we still have a question on what do you expect you to do to protect the EV supply chain? And then a final one has Umicore been asked to join projects?

Well, it's growing the list.

We will slowly start to close the call, but of course, IR will remain available to respond to your questions. And I'm now handing the floor back to Bart and Wannes to answer these final questions.

Yes. Thank you, Geoff, for the questions. Wannes, you take 1 and 2 or...

Yes, so looking at take-or-pay in '26, I mean, as you have seen, looking at the revenues, top line and bottom line, we saw a step-up. I mean, looking at revenue, it's 11% up. Looking at the bottom line and excluding the one-off of '24, we also saw a significant step-up. This is driven by effective volume shipments, but also by take-or-pay. And that's also why we highlighted because it is a material contribution to the top line and bottom line.

Now looking at CapEx guidance. So the guidance we gave, the EUR 300 million to EUR 400 million is excluding contributions to IONWAY. And this is where, as I highlighted earlier, in '26, we contributed already EUR 175 million, and we will stay within the budget that we shared in the Capital Markets Day. So meaning that for '26, we will not exceed EUR 250 million for IONWAY equity contributions.

Then looking at the cost saving objective for 2026, this is where -- in line with what we shared with the market in March last year is where we are targeting to offset inflation, and we anticipate inflation to be EUR 50 million to EUR 75 million. So that's a target that we have put forward to the teams to at least generate savings in order to offset that anticipated inflation.

Yes. And then on the question on the EU EV supply chain. Well, I think I can only base myself, of course, on the information which is out there in the press and that you might also have seen, but which somehow also confirms the feeling that I had earlier is that the commission might be looking at indeed onshoring more battery production as well as battery materials production in the EU, right?

The word on the street is that if you would want to get support from the EU in terms of CapEx or OpEx going forward that you would need to have a strong amount of local content, including for batteries and therefore, also cathode materials. So as mentioned in that one slide that I had, that could significantly change, of course, the equation of the European battery investments for battery materials investments, which are out there. So probably I'm as keen as you to learn what ultimately the commission will decide.

On Project Vault, I mean, I would say that in general, we're talking to several regional, let's say, leaderships, not only in the EU, but of course, also in the U.S. In the meanwhile, I think the biggest impact of Project Vault, of course, is that the overall price environment for these metals is supportive. So whether a direct or an indirect fact that you have is basically that such stockpiling, which they are talking about is typically supportive for price trends at least in the shorter term.

So with that, Caroline, I think we -- I don't know if there's any other questions outstanding.

No, I think with this, we can indeed wrap it up and close the Q&A for today.

Well, first of all, I was looking for an engaging Q&A. The quality of the questions was definitely good. The quality of the line, definitely not. But I mean, we can rematch with most of you next week in London and really looking forward to that. Now in a summary, it will not be a surprise. We're really satisfied on how things evolved in 2025. It was a pivotal year. Where '24 was a year of crisis management, '24 -- '25 was a year of a clear new direction for the company with disciplined execution on which we delivered strongly. Our culture and the organization is moving in the right direction. We are focused on our goals, and we will continue to do so for 2026.

So with that, I would like to thank you for your attendance and the ones that I see next week, looking forward to that and talk to you soon. Have a wonderful day.

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