The share price of Belgian multinational Umicore, which produces, among other things, materials for electric car batteries, has hit a fourteen-year low. This is due to the sudden departure of top executives, the lack of a clear future plan and weak growth in the electric car market. “The shares are falling sharply because the outside world does not have much confidence in the company today.”
Umicore’s headquarters are in Brussels, but the Belgian company is one of the largest employers in the province of Antwerp. It employs 1,900 people in Hoboken. At this plant, metals such as gold, silver and rhodium are recycled, among other things, from smartphones and electric car batteries. In Olin, 1,100 people work in the research and development center. Umicore employs 11,948 people in 29 countries around the world.
Umicore is still profitable. In the first half of this year, for example, net profit was 118 million euros. But this is not due to the battery materials it produces for electric cars. The profit is due to other activities, such as recycling metals and producing catalysts, which reduce emissions from diesel cars. Despite these profits, Umicore’s decline on the stock market is becoming increasingly severe. The price simply does not stop falling. Exactly three years ago, Umicore’s share price was still 56 euros. Today, there are still 11 euros left.
Why is UMICORE stock still falling so much?
“Because the outside world doesn’t trust the company very much today,” says Paul Dore, the magazine’s editor-in-chief. stock market success It is known about VTM News“This is quite understandable. The company has let go of two CEOs in three years even though they were not at the end of their contracts. No clear reason has been given for the departures of these CEOs. When new CEO Bart Sapp took over, it was said that he would come up with a new strategy when he presented the half-year results in July. But that did not happen. Bart Sapp simply said that we should be patient until next spring. Meanwhile, the company continues to announce that it will invest less and that construction of new factories will be postponed.
Why should Omicore delay investments?
Because demand for electric cars is not as high as expected. Umicore produces cathode materials for electric car batteries in various locations around the world. “In Belgium, electric cars are strongly supported by the government, for example through salary vehicles,” says Ben Rolls, lecturer in automotive technology at Karel de Groot University College in Antwerp. But in many other countries, electric car sales remain below expectations. This is because electric cars are still more expensive than diesel and petrol cars, and because infrastructure is underdeveloped. In Spain and many other countries, there are very few charging stations.
Maybe UMICORE is betting on the wrong battery type?
Regardless of the pace of electric vehicles, many investors are also concerned about the battery materials produced by Umicore. Umicore makes the materials for NMC batteries, which contain nickel, manganese and cobalt. Chinese car brands and US automaker Tesla are focusing on cheaper LFP batteries, which use iron and phosphorus. “In addition, with an LFP battery, you can charge your car 3,500 to 4,000 times before the battery runs out. NMC batteries that Umicore makes the materials for can only be charged about 2,000 times,” says Ben Rolls.
Does Umicore have a big problem? “No,” says Ben Rolls. “Because the more expensive NMC batteries also have a number of advantages. You can travel more miles before needing to recharge because NMC batteries have a higher energy density than their competitors. NMC batteries also retain their energy better at very low temperatures, so they lose less range in electric vehicles than their competitors. So there is definitely a place for Umicore battery materials in the automotive market.”
Does savings affect Hoboken and Olin?
“Not today. But it could still happen,” says Mark Butelanci, secretary of the socialist workers’ union ABVV Metal. “Umicore has already announced that there will be a 10 percent savings exercise on almost everything. Investment in a new smelter for recycling car batteries has also been postponed. Umicore has not yet announced where this new large smelter will be located in Europe. But a small pilot installation for this smelter has been in Hoboken since 2011. “Investment in a new plant will not take place until 2032 at the earliest,” says Caroline Jacobs, a spokeswoman for Umicore. “In the meantime, Umicore will work on improving the technology of the pilot plant for recycling electric batteries in Hoboken and reducing bottlenecks.”
UMICORE Stock Is Cheap; Should We Buy Now?
“No,” says Paul Dörr. “Because the share price could fall further. You never know what the bottom price will be. So I’ll wait until Umicore reveals its strategy next spring. If the company can convince me, I might buy shares. But not now.” Umicore is not focusing on electric driving alone. Umicore has also broken ground on a fuel cell catalyst plant in China in 2023, which will be built, for example, to enable large trucks to run on hydrogen. “I’m a big believer in hydrogen cars,” says Ben Rolls. “The Volkswagen Group has earmarked around €70 billion for research into hydrogen and fuel cells. BMW and Toyota are also working on it.
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