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Catalysis

Economic performance

Revenues were up by 3% for the business group as a result of volume growth and the first time consolidation of Umicore Shokubai Japan, more than offsetting lower pass-through costs. Recurring EBIT was 19% lower due to a less favourable product and regional mix as well as costs related to new product introduction and infrastructure. Capital expenditures continued to increase as we invested in new production and technology capabilities. Overall R&D expenditure was lower as a number of projects moved to commercialization.

In Automotive Catalysts, car production worldwide increased by 3% in 2013. Growth in China and the Americas more than offset a decrease in South Korea and Japan while the production level in Europe was stable year on year. Excluding the effect of the consolidation of Umicore Shokubai and lower pass through costs, Umicore’s global catalyst revenues were up year on year. Margins, however, were negatively impacted by the above mentioned mix effects, costs related to the introduction of heavy duty diesel catalysts and products for Euro 6 compliant light duty vehicles as well as the expansion of the technology development infrastructure.

After a decline in the first half of the year, European car production stabilized in the second half of the year and showed a modest year-on-year increase towards the end of the year. Full year production was at a similar level to 2012. The purchasing trend towards smaller vehicles continued and the share of diesel cars produced stabilized at around 45% of the total market. Umicore’s sales volumes were in line with car production while revenues were lower due to a less favourable product mix.

North American car production was up 5%, with small and medium-sized vehicles gaining market share. Umicore’s sales volumes followed the same trend while revenues grew slightly less due to the platform mix. In South America, car production was up 4% despite the slowdown observed at the end of the year. Umicore’s sales volumes in the region grew in line with the market.

Overall Asian car production was up. In China car production grew 13% year on year. Umicore’s catalyst revenues in China continued to grow faster than the market. In South Korea and Japan, car production was down by 2% and 4% respectively with lacklustre domestic sales in contrast with the success of Korean and Japanese production in overseas markets. Umicore Shokubai has improved its position with Japanese car manufacturers which resulted in additional global business awards.

Umicore inaugurated two dedicated production lines for heavy duty diesel catalysts in Florange, France, in 2013. The construction of a third line started towards the end of the year and should be completed towards the end of 2014. The construction of the HDD production facility in Suzhou, China, made good progress and will start production in the first half of 2014. New technology development centres were commissioned in Japan and Brazil and further progress was made in the new production capabilities in Onsan, South Korea, and in Suzhou, China, which are expected to come on stream in the first half of 2014. The facility in Bad Säckingen, Germany, with two new lines for the production of catalysts that meet the Euro 6 standard for light duty diesel vehicles became fully operational during 2013. The costs for the finalization and start-up of these new operations, as well as the higher depreciation charges that they bring, weighed on the profitability of the business unit in the second half of 2013.

In Precious Metals Chemistry, although sales volumes were well up compared to 2012, revenues were lower as a result of a less favourable product and regional mix.

Demand for precursors for both catalytic and non-catalytic applications was higher. The same trend was observed for products used in bulk chemical applications. In contrast, sales of organometallic catalysts for the life science sector were lower. Sales of APIs (Active Pharmaceutical Ingredients) continued to show strong growth and sales started outside South America to customers in Asia and Europe and production capacity was therefore increased at the plant in Argentina. A pilot line for compounds used in MOCVD (Metal Organic Chemical Vapour Deposition) applications was started up in Germany. These compounds are mainly used in the production of higher-performance microprocessors. The construction of the new production facility in Tulsa, Oklahoma made good progress in 2013. This facility, which is set to open in 2014, will manufacture the business unit’s entire portfolio of precious metal-based catalysts and chemicals including advanced products such as ruthenium metathesis catalysts and palladium cross-coupling catalysts. The costs related to these development projects weighed on the overall performance of the business unit.