Umicore will release its 3Q12 trading update on 23 October. We remind that 1H12 revenue grew by 8%.
We expect group revenue to have grown by 4% in 3Q12, broken down as follows :
- Catalysis +5% (1H12: +16%)
- Energy Materials +3% (1H12: +2%)
- Performance Materials -3% (1H12: -1%)
- Recycling +8% (1H12: +10%)
We remind that Umicore has narrowed (lowered) its FY12 Recurring EBIT guidance from a € 370-410m range to the lower half of that range (ie € 370-390m).
Since the 1H12 results release we believe that the European car market, which is quite relevant to the Catalysis division, has degraded further, as evidenced by an approx 11% decline in car registrations in September. That might put pressure on the performance of the Catalysis segment, for which Umicore hinted in August to expect a similar 2H12 performance. However, on the other hand, precious metals prices have significantly increased since the 1H12 results, which should be supportive for earnings momentum in the Recycling division in 2H12.
Our View:
Based on the solid precious metals price environment, we would expect Umicore to have restarted lock-in activity for 2013 price exposure and also believe that the FY12 guidance can be maintained. We stick to our Accumulate rating for now.