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Energy Materials

Economic performance

Revenues for Energy Materials were up 10%, primarily reflecting the growth in the Rechargeable Battery Materials and Cobalt & Specialty Materials business units. Overall profitability of the business group also benefited from the cost reduction measures that were initiated at the end of 2012.

Capital expenditure was significantly higher than in 2012 as a number of significant investments were made, notably in Rechargeable Battery Materials. R&D expenditure for the business group increased as the efforts to develop new generations of rechargeable battery materials intensified.

Revenues for the Cobalt & Specialty Materials business unit were up year on year, driven mainly by an increased contribution from cobalt and nickel refining and recycling. Earnings were impacted by lower average premiums as a result of increased competitive pressure in different end-markets. The ceramics and chemicals business recorded higher revenues, with an increase in sales volumes for both cobalt and nickel compounds more than offsetting lower premiums. Sales of metal carboxylates further increased due to the expansion of the product portfolio and successful introduction of the products in new markets. Sales volumes in tool materials were flat year on year, as volume growth in Asia was offset by a decrease in demand from the European and North American construction markets.

At the end of 2013 the business unit acquired Palm Commodities International, a leading manufacturer and distributor of materials to the surface treatment industry in North America. This acquisition will enable Umicore to expand its reach into the North American plating market.

In Rechargeable Battery Materials, sales volumes and revenues were up considerably. The strong demand for polymer cells used in high-end portable electronics, such as smart phones, tablets and ultrabooks, drove demand for high energy density cathode materials. Umicore’s proprietary High Energy LCO technology and broad customer portfolio enabled the business unit to further strengthen its leadership position in this segment. Overall sales of NMC (nickel-manganese-cobalt) cathode materials were down year on year, as a result of lower demand for traditional notebook PCs which use the more standard NMC-grades. The demand for NMC-products used in automotive applications benefited from the gradual increase in sales of electrified vehicles. This trend is set to continue with more car OEMs launching new hybrid and electric models. Umicore successfully qualified for additional platforms which will further support its growth in this segment. The capacity investments for cathode materials in Korea and China were successfully completed in the course of 2013 as was the commissioning of the precursor plant in Korea.

In Electro-optic Materials, revenues were down year on year mainly due to adverse market conditions in blank optics and the substrates activities. The effect of the downturn in revenues was mitigated by cost reduction measures that were initiated in 2012, selective price increases in certain segments and a higher contribution from the refining and recycling activities. The decrease of revenues in the germanium substrates business was largely attributable to a further deterioration in the terrestrial CPV (Concentrator Photovoltaics) market. Sales to the LED industry were also lower. Deliveries of space certified substrates were up as Umicore secured a number of contracts with various customers in this segment. Within the substrate market, a migration is taking place to larger germanium wafers and Umicore is strongly positioned to benefit from this trend. The high purity chemicals business benefited from a strong increase in demand for Umicore’s germanium tetrachloride used in optical fibres. Sales of finished optics were also higher year on year while demand for germanium blanks remained low in a highly competitive market.

In Thin Film Products, revenues increased compared to the previous year due to higher revenues for large area display applications. The overall business also benefited from the cost reductions that were initiated at the end of 2012. Sales volumes for ITO (Indium Tin Oxide) targets were up year on year driven by the success of the high efficiency rotary sputtering technology. The increased demand came mainly as a result of new investments in large area display production installations in Asia and retro-fitting of existing installations in the touch panel industry switching from planar to rotary targets. Lower revenues for optical evaporation materials reflected a somewhat slower demand, while demand from the micro-electronics industry remained largely stable year on year.