2009 report to shareholders & society€¦ · increasing in 2010 as business recovers net...
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2009 report to shareholders & society
2
Overview
Highlights•
Economic report
•
Environmental report
•
Social report
•
Governance report
Economic
report
4
2009 highlights
•
Revenues and earnings impacted by the economic downturn, although recovery started in H2
•
Selective cost reduction programmes started to have a positive impact
•
Strong net operating cashflow of ¤
451 million, net debt reduced
•
Continued investment in strategic growth initiatives
•
Unchanged dividend of ¤
0.65 per share proposed
5
Revenues
1,358
1,6931,725 1,685
1,910
2,100
1,723
1,036
0
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006 2007 2008 2009
(in million €)
Restated for discontinued operations in 2004, 2006 and 2008
Recurring EBIT
98
146
280
233
329359 355
146
7.4%8.3%
15.3%
13.6%
19.2%19.7%
17.9%
8.2%
0
100
200
300
400
500
2002 2003 2004 2005 2006 2007 2008 2009
(in million €)
ROCE
Restated for discontinued operations in 2004, 2006 and 2008
Revenues and EBIT evolution
− − ROCERestated for discontinued operation in 2004, 2006 and 2008
6
Revenues and EBIT evolution per half year
Revenues
965
860
1,115
945985
863
0
250
500
750
1,000
1,250
H12007
H22007
H12008
H22008
H12009
H22009
(in million €)
H1 H2
Recurring EBIT
199215
50
160
140
97
0
50
100
150
200
250
H12007
H22007
H12008
H22008
H12009
H22009
(in million €)
H1 H2H1
H2Restated for discontinued operation in 2004, 2006 and 2008
7
The balance sheet remains strong
•
Net debt reduced to ¤
161 million
•
Positive impact of the reduction of working capital requirements through the year
•
Working capital requirements are increasing in 2010 as business recovers
Net financial debt
254
743
577 610
773
168
329
161
118
620
438510
9.7%
34.2%
25.4%
33.4%
9.9%
19.8%
10.5%
43.9%
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2002 2003 2004 2005 2006 2007 2008 2009
-1.0%
4.0%
9.0%
14.0%
19.0%
24.0%
29.0%
34.0%
39.0%
44.0%
Securitisation, excluded from net debt before 2006Net debt, continuedGearing ratio = debt / (debt+equity), continued
Restated for discontinued operations in 2004 and 2006
(in million €)
8
EPS
•
Adjusted EPS at ¤
0.73
•
Strong cash position and confidence in business outlook enables a proposed dividend of ¤
0.65 per share, stable versus
2008
•
Dividend payout to commence on 06 May
EPS
0.28 0.32 0.33 0.37 0.42
0.65 0.65 0.65
0.57
0.80
1.41
1.21
1.731.80
1.93
0.73
0.00
0.50
1.00
1.50
2.00
2002 2003 2004 2005 2006 2007 2008 2009
EPS adjusted, basic, excluding discontinued operations
Dividend (proposed)
Restated for discontinued operations in 2004 and 2006
(in €)
9
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0 €
5 €
10 €
15 €
20 €
25 €
30 €
35 €
40 €
Umicore yearly / monthly average daily trading volume (year-to-date in 2010)
Umicore share price
Bel 20 index (indexed)
Dow Jones Specialty Chemicals index (indexed)
Stock performance
2009 +66 %
2010
+19 %
Q1 Update 2010
11
Q1 overview
•
Umicore performed very well in the first quarter of 2010
•
Revenues up by 17% year-on-year and also showed a strong improvement on Q4 2009
•
The full benefits of the cost reduction measures are now being felt
•
The improvements in the business environment, coupled with metal
price
increases, has led to increased working capital requirements
12
Outlook
•
Based on the first quarter performance and assuming current market conditions continue to prevail, Umicore expects full year recurring EBIT to be in the range of ¤
260
million to ¤
290
million.
•
This reflects improving demand in most segments, buoyant supply conditions in Precious Metals Services and the impact of higher precious metals prices.
Investments
14
Continued investment in growth projects
•
R&D spend of some ¤
136 million, representing
6.9 % of revenues
•
Includes ¤
8.9 million of capitalised development costs
•
In Automotive Catalysts, efficiency improvements led to lower development and testing costs
•
R&D efforts were stepped up in precious metals refining, rechargeable battery materials and electro-optic materials, partly offset by reduced efforts in other units
•
Capex
reached ¤
190 million
•
Some 50 % dedicated to growth initiatives
Capex
151 142 146 145
108
153
216190
0
50
100
150
200
250
R&D
3148
104 112 110125
165
136
0
50
100
150
200
2002
2003
2004
2005
2006
2007
2008
2009(in €
million)
15
Growth investments Energy solutions → Rechargeable batteries
2009
•
Li-Ion cathode precursors & materials•
Capacity & capability expansion in Cheonan, South Korea and Jiangmen, China
•
Completed
2010+
•
Li-Ion cathode precursors & materials•
Greenfield production site in Kobe, Japan
•
Capacity expansion in Cheonan
•
Capacity expansion in Jiangmen
•
Total investment 2010-2011 of ¤
60 million
Cheonan plantCheonan plant
Cheonan
Kobe (area where the plant will be built)
16
•
Germanium substrates for high-efficiency cells•
Production plant in Quapaw, US
•
Plant constructed, under qualification
•
Rotary sputtering targets for thin film cells•
Development lab in Balzers, Liechtenstein
and Providence, US
•
Development intensified
•
Solar grade silicon for bulk cells•
R&D lab in Olen, Belgium;
Development facility in Porsgrunn, Norway
•
Development put on hold
Growth investments Energy solutions → Photovoltaics
Rotary sputtering targetsRotary sputtering targets
Quapaw plantQuapaw plant
Quapaw
ITO rotary target
17
2009
•
Expansion of testing and R&D facility•
Hanau, Germany
•
Completed
•
Expansion of production and testing facility•
Onsan/Ansan, South Korea
•
Completed
2010
•
Expansion of production capacity & capability in Suzhou, China
Growth investments Environmental solutions → Automotive catalysts
Suzhou
plantSuzhou
plant
Hanau R&D facilityHanau R&D facility
R&D facility Hanau
Suzhou
18
•
Jewellery and electroplating materials•
Recycling and production facility in Foshan, China
•
Completed
•
Battery recycling•
Pilot line in Hoboken, Belgium
•
Initial investment of €25m approved
•
Construction work underway
Growth investments Recycling solutions
Batteries to be recycledBatteries to be recycled
Foshan
Environmental
report
20
Environmental performance analysis: key indicators
key indicators:
•
Reductions mainly due to lower activity levels
•
Sustainable improvement actions undertaken in a number of sites
Water and energy consumption
0
2 000
4 000
6 000
8 000
10 000
2008 2009
Water consumption(1.000m³)
Energyconsumption( TJ)
Greenhouse gases emissions(tonnes)
0
200 000
400 000
600 000
800 000
2008 2009
Greenhousegasesemissions
Metal emissions(in kg)
0
5 000
10 000
15 000
20 000
2008 2009
to water
to air
21
Environmental performance analysis: key indicators
key indicators:
•
Complaints lower partly due to targeted action in Guarulhos and Hoboken
•
Slight increase in input of primary materials due to supply mix in PMR
Input materials (% of tonnage)
Primary materials41%
Secondary materials39%
Recycled materials20%
Compliance excess rate(%)
0.0
0.5
1.0
1.5
2.0
2008 2009
Total waste produced (tonnes)
0
20 000
40 000
60 000
80 000
100 000
2008 2009
Nonhazardouswaste
Hazardouswaste
22
Environmental objectives 2006-2010
86%
75% 73% 75%
20%
11%
22%21% 15%
75%
3% 3% 6%10%
5%
0%
25%
50%
75%
100%
Emissionimprovement
plan
Managementsystem andregulatorycomplianceprogramme
Impactassessment
soil &groundwater
Energyefficiency plan
Product EHSdataset
2009
Actions yet to startActions ongoingObjective met
2008
Actions completed Actions underway Actions yet to start
2009
Actions completed Actions underway Actions yet to start
good progress made in 2009 towards the five objectives
Social
report
24
Social performance: overview
•
Umicore was able to face up to the economic downturn in a socially responsible manner
•
Focus on temporary measures wherever possible
•
Dialogue with employee representatives
•
Retaining competences
•
Voluntary leaver rate of 2.39% (3.39% in 2008)
•
Talent management review for all managers completed in 2009
•
Average total training hours per employee of 44 hours was lower than 2008 (51 hrs), mainly due to lower recruitment levels
25
Human resources
13,720 employees (of which 4,405 in associate companies)
64 production sites, 34 other sites / offices
Workforce, Dec 31 2009
Europe54%North America5%South America8%Asia-Pacific22%Africa11%
26
Occupational health
•
Further progress was made in the area of occupational health
•
Standard blood testing for metal concentration showed good improvements for lead, cadmium and cobalt
•
Umicore joined the newly-created Platinum Health Task Force in 2009
•
Umicore is working with authorities in the US and EU to further the understanding of occupational exposure to Indium Tin Oxide
•
Umicore continues to support research into the potential impact of nano materials on health and the environment; two EU studies were completed in 2009 (NanoInteract
and NanoSafe2)
27
Occupational safety
•
Umicore achieved a notable improvement in safety performance across all business units and all geographies
•
Undertakings were made in 2009 to drive the company further towards the ultimate goal of creating a zero accident workplace
Frequency rate
0
10
20
30
40
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Severity rate
0.0
0.2
0.4
0.6
0.8
1.0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
28
Social objectives 2006-2010
2008
Actions completed Actions underway Actions yet to start
89% 91% 92%88%
99%
7%9% 8%
12%
1%4%
0%
25%
50%
75%
100%
Community Preferredemployer
Dialogue Learning Human Rights
2009
Objective met Actions ongoing Actions yet to start
2009
Actions completed Actions underway Actions yet to start
29
Conclusions
•
Improvements in financial performance from H2 2009 to Q1 2010
•
Positive outlook for 2010
•
Continued investments in growth initiatives
•
Sustained progress towards environmental and social objectives
•
Momentum regained in safety performance
Corporate governance
report
31
Corporate governance
•
Main subjects of discussion: financial performance, sustainable development performance, budget, operational and investment plans, strategic development axes and acquisition projects
•
8 full Board meetings in 2009
•
Excellent attendance record •
98% for full Board meetings
•
94% for all committees
•
Performance review of the Board and its committees conducted by the Chairman in 2009
32
Board remuneration
•
No changes to Umicore Directors’
fees
•
Committee members’
fees similarly unchanged
•
Four-year contractual consultancy and advisory arrangement with Booischot
NV for ¤
300,000 per year:
•
At the request of the Board, Mr Thomas Leysen, through his company Booischot
NV, provides a number of services to the company that go beyond the standard duties of a Chairman of the Board, such as they were carried out by his predecessor in that function. These include in-
depth advice on strategic acquisitions and specific work on partnerships, investments and joint-ventures
33
Executive remuneration
•
Executive pay lower in 2009 due to impact of reduced variable portion
•
Total number of outstanding options held by Executive Committee members at end 2009: 672,125 (strike prices between ¤
4.736 and ¤
32.570)
•
Total number of shares held by Executive Committee members at end 2009: 174,250
2008 2009 ΔCEO1
fixed 500,000 500,000variable 435,000 250,000pension 86,782 234,672other 32,241 26,275
shares granted2 - 66,054options (Black & Scholes value at grant) 1,143,750 230,895
Total 2,197,773 1,307,896 - 40%
ExCom3
fixed 2,303,094 2,055,398variable 1,326,719 395,083pension 807,375 531,700other 395,972 454,153
shares granted2 232,298 396,591options (Black & Scholes value at grant) 1,601,250 492,576
Total 6,666,708 4,325,501Average per member 919,546 692,080 -25%
3 Excluding CEO
ExCom Compensation & Benefits
2 Granted for services rendered in the previous year; Lock up of two years on shares granted
1 Thomas Leysen in 2008
34
•
Implementation of requirements of Belgian legislation one year before mandatory
•
Deferred pay-out for CEO and Executive Committee members’
cash bonus:
•
50% paid undeferred
•
25% paid after two years
•
25% paid after three years
•
CEO maximum cash bonus increased to 100% of base salary (from 80% in 2009)
•
Executive Committee share grants to increase from 2,500 to 3,000
(already
implemented in February for services rendered in 2009)
Remuneration policy: changes for 2010
35
•
Healthy balance between fixed and variable components for all managers
•
117 senior managers (excluding Executive Committee & Chairman) received a total of 449,875 stock options in 2009 (at an average
strike
price of ¤
14.46)
•
Revised variable pay for managers includes variable portion based on:
•
1/3 personal performance and adherence to company values
•
1/3 unit performance (ROCE)
•
1/3 group performance (ROCE)
•
The Group performance criteria are based on a ROCE range. Thresholds are set between 7.5% (equating to zero bonus) to 17.5% and above (equating to maximum pay out)
General managerial remuneration
36
•
Umicore recommends that the mandates of Shohei
Naito and
Isabelle Bouillot
be renewed at the
2010 AGM for a term of three years
•
Mrs Bouillot
has broad experience
and expertise in finance and other domains and has been a key member of both Board committees since 2005
•
Mr Naito has been a director since 2007, bringing a wealth of experience from a variety of sectors; he has been instrumental in advising the company in its investments in Japan
Mandate
renewal
requests
37
Forward-looking statements
This presentation contains forward-looking information that involves risks and uncertainties, including statements about Umicore’s plans, objectives, expectations and intentions.
Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Umicore.
Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected.
As a result, neither Umicore nor any other person assumes any responsibility for the accuracy of these forward-looking statements.
2009 report to shareholders & society