On March 27, 2025, Belgian metals recycling group Umicore announced significant plans to reduce its capital expenditure by 1.4 billion euros (approximately $1.51 billion) between 2025 and 2028. This reduction will bring the total capital expenditure down to 1.6 billion euros, with the company’s battery cathode materials unit bearing the brunt of these cuts.
Umicore's decision to slash its capital expenditure is primarily driven by lower-than-expected sales growth in the electric vehicle (EV) market. The company will cut 800 million euros from the capex allocated to its battery cathode materials segment, which is the largest reduction among its various business units. This move reflects the ongoing challenges faced by automakers as they navigate opposition to measures aimed at phasing out fossil fuels, which has tempered the expected demand for EVs.
Umicore is well-known for its production of catalytic converters and its supply of battery materials, including nickel, manganese, and cobalt, to major automotive manufacturers like Nissan Motor. However, the company has faced headwinds in recent years, particularly after suffering an impairment related to a Chinese battery materials plant in 2024.
Looking ahead, Umicore anticipates its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to range between 1 billion and 1.2 billion euros by 2028. For the year 2025, the company is projecting an adjusted EBITDA of between 720 million and 780 million euros, indicating a cautious outlook amidst the current market dynamics.
The announcement of these capital expenditure cuts has had an immediate positive impact on Umicore's stock, which rose by 3.8% as of 08:22 GMT, positioning the company at the top of the Bel20 index. This increase reflects investor optimism, even as the company grapples with the implications of its strategic decisions.
Umicore's situation underscores the broader challenges facing the EV industry. As car manufacturers work to transition away from fossil fuels, they are encountering a complex landscape of regulatory and market pressures. The hesitancy among some automakers to fully embrace these transitions may further complicate growth projections for companies like Umicore, which are heavily invested in battery materials.
In summary, Umicore's capital expenditure reduction is a response to the shifting dynamics in the EV market, and while the company is taking proactive steps to adjust its financial strategy, the future remains uncertain as it navigates a landscape marked by both opportunity and challenge.
