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Energy Materials

Economic performance

Revenues for the Cobalt & Specialty Materials business unit grew substantially, mainly due to the integration of Palm Commodities and higher sales volumes in ceramics & chemicals.

In the ceramics & chemicals business, order levels for precursors and metal carboxylates were well up year on year. The distribution activities continued to perform well and benefited from the acquisition of Palm Commodities in the US at the end of 2013. Sales volumes of cobalt compounds remained stable. Revenues in the cobalt and nickel refining activities were slightly higher year on year. The acquisition of US-based CP Chemicals in the third quarter of 2014 had a positive impact on cobalt and nickel refining volumes and also allowed Umicore to add rhenium recycling to its portfolio. The market for hard metals used in tool materials remained challenging and demand was subdued. At the end of 2014, Umicore acquired full ownership of Todini and Co, a former Umicore joint-venture and a leader in the distribution of industrial chemical products in Europe.

Revenues in Electro-Optic Materials increased, driven by volume growth in finished optics and a greater contribution from the recycling and refining activities. The measures to reduce costs and increase operational efficiency continued to benefit earnings. Revenues for finished optics showed significant growth, primarily due to strong demand for commercial infrared applications. Demand for blank optics remained low in a generally depressed market. Umicore continued to defend its margins in this segment with a selective approach. Sales of germanium tetrachloride for the fibre optics industry remained steady and revenues benefited from a favourable product mix. In the germanium substrates activity, lower demand for terrestrial CPV (Concentrator Photovoltaics) products was offset by higher demand for space applications where a move towards larger and more efficient wafers - in which Umicore is a leader – continued. Revenues remained stable in the LED segment.

In Rechargeable Battery Materials, the Li-Ion battery market continued to grow in 2014 and Umicore’s sales volumes and revenues were well up compared to the previous year. The segment of portable electronics is currently still by far the largest segment and continued to grow. The introduction of new applications and devices such as battery-powered home appliances and power banks also boosted the growth of the market. Sales of electrified cars are grew steadily and should continue to do so as an increasing number of electrified models get introduced in the market. Sales volumes of Umicore’s proprietary High Energy LCO (lithium cobaltite) used in high performance Li-ion batteries for smartphones and tablets were well up year on year. In this segment, the average battery size is increasing due to a higher power need per device (larger screens and 4G-connectivity) and more intensive use of the mobile gadgets. Overall sales of NMC (nickel manganese cobalt) cathode materials were down year on year as a result of lower shipments of NMC grades used in portable electronics. Due to continued aggressive pricing levels for these grades and their commoditization, Umicore further decreased its presence in this sub-segment. NMC sales for automotive and power tool applications were up year on year, albeit with an erratic demand pattern over the year. Strong efforts went into product qualification schemes for automotive platforms and Umicore successfully qualified for new platforms to be launched in the coming years covering all degrees of electrification (EV, pHEV and HEV).

The production capacity expansion projects in Korea and China were completed on schedule and were brought on stream during the year.

In Thin Film Products, revenues were up compared to the previous year driven by higher demand for Umicore’s highly efficient indium tin oxide rotary targets used in large area display applications. Margins, however, did not fully reflect the volume growth and were impacted by pricing pressure in Asia and a higher indium price. A new JV with First Rare Materials Co Ltd was established in mid-2014. This partnership will help Umicore to meet the growing demand from the large area display market in China. Revenues for optics and electronics were stable year on year and margins benefited from the streamlining of the product portfolio.