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Catalysis

Economic performance

Revenues and earnings for the Automotive Catalysts business unit were up year on year due to the ramp-up of catalyst production for HDD vehicles in Europe and China and higher sales of catalysts for passenger cars.

The most significant growth in HDD catalysts was in Europe, driven by the introduction of Euro VI-compliant platforms and where a third HDD production line in Florange, France, became operational towards the end of the year.

Light duty vehicle production rose by 3% globally, supported by a recovery in the European market and continued growth in North America and China. Umicore’s sales volumes broadly tracked the global market growth. Revenues were also up despite an unsupportive mix.

In Europe, sales volumes for passenger cars slightly outperformed the market which was up by 3%. Revenue growth for Umicore was lower, however, due to a less favourable product mix. Although the overall share of diesel in Umicore’s sales in 2014 was lower than the previous year, some of the Euro 6 platforms which were delayed in the third quarter of 2014 were successfully introduced in the last quarter. Umicore’s gasoline catalysts business grew faster than the market and Umicore successfully secured major awards for upcoming gasoline platforms with key European players. Construction of the new production facility in Nowa Ruda, Poland, progressed well during the year and production is expected to start at the beginning of 2016.

Sales volumes and revenues were down in North America, where light duty vehicle production grew by 5%. This was the result of an unsupportive vehicle mix as small and medium sized vehicles, to which Umicore is less exposed, gained market share. Umicore felt the continuing impact of low demand in South America, where car production fell by 16%. While the market remains generally depressed in this region, the first signs of stabilisation started to be seen towards the end of 2014.

Umicore outperformed the thriving Chinese market in both revenues and volumes due to its strong exposure to international brands which continued to take market share away from domestic producers, and a favourable engine mix. In South Korea, Umicore’s volumes and revenues stayed in line with the fairly stable market. Construction progressed well at Ordeg’s new technology development centre in Incheon City and the facility is due to be commissioned by the end of 2015. Umicore was successful in securing additional market share with Japanese OEM’s globally. In 2014, Umicore announced that it will build a new facility in Hemaraj, Thailand, to produce catalysts for light duty vehicles, with commissioning anticipated in the second half of 2016. This investment will allow Umicore to meet the increasing demand for automotive catalysts in the fast-growing South East Asian market and the facility will mainly serve Japanese OEM’s which have a high presence in that region. The new plant in Pune, India, was commissioned in 2014 and production of catalysts for light duty vehicles started at the beginning of 2015.

Revenues for the Precious Metals Chemistry business unit were lower year on year. This was due to lower order levels for precursors used in catalytic applications, particularly in the Brazilian automotive market which contracted significantly in 2014. Demand for precursors used in non-catalytic applications were up compared to the previous year with demand increasing in the second half. This was particularly the case for bulk chemical applications, for example in the synthesis of silicones. Sales of API’s (Active Pharmaceutical Ingredients) continued to show good volume growth and the business unit is successfully securing sales contracts in the European and Asia-Pacific markets.

Customer qualification continued for the products at the new plant in Germany for metal deposition chemicals and high purity MOCVD (Metal Organic Chemical Vapour Deposition) precursors. The start-up costs for this facility and the new plant in Tulsa, Oklahoma, weighed on earnings.