Umicore soared as much as 8 percent on Euronext Brussels, the biggest intraday gain since Sept. 14, and traded 1.32 euros higher at 33.59 euros by 10:13 a.m. local time. The shares had lost 23 percent this year through yesterday, the worst performance among the 24 companies in the Stoxx 600 Chemicals Index.
Earnings before interest, tax and one-time items will decline to about 315 million euros ($418 million), plus or minus 15 million euros, this year, the Brussels-based company said today in a statement. That compares with the 302.1 million-euro average of 14 analyst estimates compiled by Bloomberg.
“The reiteration of the guidance range should come as a relief to some that were looking for a cut,” Filip De Pauw, an analyst at ING Bank NV in Brussels, wrote in an investor note. “On 2014, we remain concerned given the limited scope for volume growth in recycling, coupled with weaker spot metal prices.”
Umicore’s recycling business, which accounted for more than 70 percent of operating profit last year, may not see the full impact of the drop in precious-metal prices before next year as the company tries to lock in prices 18 months to 24 months in advance, Chief Executive Officer Marc Grynberg said on a conference call in April. Recycling profit fell 16 percent in the first half amid lower spot prices for specialty metals such as selenium, tellurium and rhodium, which Umicore can’t hedge, and declining supply of spent auto-catalysts.
Precious-metal prices have fallen more than 17 percent from a Feb. 6 peak, as measured by the Bloomberg Spot Precious Metals Index tracking prices of platinum, gold, palladium and silver. The price of selenium was on average 36 percent lower in the first half compared with the same period a year earlier, tellurium 30 percent and rhodium about 17 percent, according to Metal Bulletin and Johnson Matthey Plc (JMAT) prices compiled by Bloomberg.
Umicore trades for about 15.1 times next year’s profit, according to data compiled by Bloomberg, while Johnson Matthey trades for 16.5 times estimated earnings.
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