Umicore SA (UMICF) Q4 2022 Earnings Call Transcript

Umicore SA (OTCPK:UMICF) Q4 2022 Earnings Conference Call February 16, 2023 3:30 AM ET

Company Participants

Mathias Miedreich - Chief Executive Officer

Wannes Peferoen - Chief Financial Officer

Conference Call Participants

Charlie Webb - Morgan Stanley

Chetan Udeshi - JPMorgan

Geoff Haire - UBS

Sebastian Bray - Berenberg

Wim Hoste - KBC Securities

Nicola Tang - BNP Paribas Exane

Riya Kotecha - Bank of America Merrill Lynch

J.B. Rolland - Credit Suisse

Ranulf Orr - Citi

Operator

Hello and invited to nan Umicore Full Year 2022 Results Call. Please statement this telephone is being recorded. For nan long of nan call, your lines will beryllium connected perceive only. However, you will person nan opportunity to inquire questions astatine nan end. [Operator Instructions]

I will now manus you complete to Mathias Miedriech to statesman today's conference. Please spell ahead.

Mathias Miedreich

Thank you very overmuch and besides a lukewarm invited from my broadside for our 2022 yearly results call. I person nan pleasance to beryllium successful nan room pinch Wannes Peferoen coming who has started arsenic CFO of Umicore successful October past year. And wanted to present himself later, but I tin already authorities that I'm very happy that he joined nan squad pinch his wide and heavy acquisition of Umicore not only from a financial perspective, but besides from his acquisition successful operations and successful business world. So, arsenic I said Wannes will usage nan chance to present himself successful a minute.

So, if we spell to nan schedule of today's telephone connected Page number 3 you will spot that we commencement arsenic accustomed pinch immoderate highlights of 2022 earlier I springiness you much spirit connected nan different businesses that we person successful 3 business groups. And past I manus complete to Wannes to springiness you a heavy dive connected nan financials. Before I will screen our advancement successful sustainability and ESG and supply an outlook for 2023. And past arsenic accustomed we will person questions.

So, let's spell now to page number 5 wherever we will talk astir nan cardinal figures of 2022. 2022 arsenic you each cognize was a year marked by aggregate outer events that had important impacts to nan world system and besides to nan extremity markets that we were in.

And pinch that we are very proud that we person achieved a beardown consequence a beardown consequence successful net but besides particularly successful revenues, up 10% year-over-year contempt this important macro economical headwinds.

And successful this situation Umicore has again proven its resilience and operational excellence because nan adjusted EBITDA is nan 2nd highest successful nan history of nan group opinionated astatine 1.2 billion, beneath nan grounds levels of past twelvemonth because of nan costs ostentation situation and nan little favorable precious metallic value levels that we person seen, but besides because of an accrued spending that we person done for invention and maturation preparation. I will screen that facet successful a second.

So, 1 is we'll springiness you further granularity connected nan building blocks of this arsenic we deliberation beardown and robust results successful beforehand of each of nan headwinds of 2022. Strength that is by nan measurement besides visible successful our return connected superior employed that is reflecting a important worth creation astatine 19.2%.

So, connected nan adjacent page we person a reminder of what we person introduced past twelvemonth our RISE 2030 strategy. And we tin opportunity 2 things to that. First of all, nan underlying megatrends that we person been defining for nan strategy are not only confirmed they are really accelerating.

And there's besides a information I will screen a small spot later. But it's besides a truth that we person covered already rather immoderate important milestones successful achieving that strategy to build nan instauration for nan growth. And that's what I wanted to stock pinch you successful nan adjacent 2 slides.

So, connected descent number seven, you tin spot that we person made important advancement so connected nan customer broadside closing nan worth imaginative contracts for each of our businesses and particularly nan artillery worldly business.

The associated task pinch Volkswagen intelligibly was arsenic we deliberation a milestone and moreover benchmark for nan industry. It's a beardown awesome of nickname of our merchandise exertion and process expertise.

And we person fixed a ample group pinch an MOU that we person signed pinch Volkswagen pinch PowerCo for nan North American business besides giving bully momentum for our location description , but besides pinch ACC we person made very bully advancement connected our semipermanent proviso statement backed by Stellantis and Mercedes arsenic nan shareholders.

But besides extracurricular of artillery materials we are intelligibly recognized arsenic nan reliable translator partner that we want to be. An illustration would beryllium nan Mercedes Supplier Award 2022 that Umicore has achieved pinch besides this successful mind.

So, wide very bully traction connected nan discussions pinch nan customer broadside connected our artillery materials business particularly has been accrued acceleration successful nan 2nd half of nan twelvemonth pinch OEMs and compartment makers.

So I tin corroborate that we are afloat connected way for what we person said earlier, a ramp-up of our business already importantly visible successful 2024 starting already astatine nan extremity of 2023.

Then also, we person made awesome steps successful nan exertion portfolio successful our invention ecosystem, beardown IP creation complete nan year. If I want to prime 1 circumstantial topic, it is nan HLM exertion that we person brought into industrialization this twelvemonth and besides prepared this past twelvemonth of people pinch a batch of investigation activity that has been done to lick 2 of nan cardinal issues. And I will spell much successful item successful nan Q&A if you want to lick nan 2 cardinal issues, method issues that were opinionated successful beforehand of it, nan stableness of nan worldly and nan connectivity. And pinch that, we spot a marketplace preamble of 2026 of this solution that is catering nan needs of nan design-to-cost marketplace that presently LFP is sitting astatine little costs and higher performance. I tin springiness you much spirit successful nan Q&A if you want.

On nan adjacent page, we spot different very important success. And this is nan occurrence of location worth chains. You cognize that artillery worldly and nan artillery business is and will moreover beryllium stronger successful nan future, a location business pinch location proviso chains. And pinch nan opening of our Nissan plant, we person confirmed our activity position successful Europe to beryllium nan only institution pinch a Gigafactory up and running. And nan institution pinch nan largest proviso concatenation integration extracurricular of China from refining pCAM and CAM and we were very happy to supplement it pinch 1 very important statement connected nan earthy worldly supply.

Nickel which is 1 of nan if not nan astir important constituent and we person secured a semipermanent proviso of debased CO2 nickel from Finland from Terrafame that are moving connected a breakthrough process of bioleaching to bring nan nickel successful a very CO2 businesslike measurement and this is completing our image for nan reaping side. And besides we are further progressing connected nan description plans that we person successful Canada dealing pinch each nan momentum that we person done nan IRA. Also successful nan cleanable mobility ecosystems, we person made important steps up and ESG roadworthy representation is thing I will screen a small spot later successful nan document. So very bully advancement connected implementing impervious points for our strategy mounting nan foundation.

Now fto america stock a small spot much granularity connected nan different business groups starting pinch Catalysis and their 2022 results. So first of all, nan underlying market, nan astir important marketplace for Catalysis is nan automotive marketplace to beryllium much specific, nan combustion motor automotive market, arsenic you tin spot present 2 messages. This marketplace is still a large marketplace and will proceed complete nan clip to beryllium significant. However, it didn't move overmuch successful nan past 3 years. We cognize each nan reasons for that. It's proviso concatenation constraints, while nan extremity user request is there. OEM had to return down their accumulation target creating a rather volatile situation of galore changes successful nan proviso chains and pinch levels that are still importantly beneath nan pre-pandemic levels.

And pinch that if we move to nan adjacent slide, descent 12. It is moreover much awesome what our Catalysis business group has achieved against this backdrop, different grounds capacity successful 2022 pinch some revenues and net exceeding nan erstwhile results achieved successful 2021 up 5% and 4% respectively. And pinch that nan adjusted EBITDA stands astatine 490 cardinal and pinch that mostly offsetting costs ostentation done accrued operational efficiencies and besides a rather beardown pass-through expertise into pricing. And nan consequence of that we support nan EBIT margins good supra humanities levels pinch 23.6%. So very beardown capacity by automotive catalysts that I will screen successful a abstracted slide, but besides precious metallic chemistry activities were rather a capacity past year.

And successful substance cells and stationary catalysts, we had revenues that were successful statement pinch 2021 that was caused by nan shutdowns aliases lockdowns that we saw successful China owed to COVID, but very bully advancement connected nan customer side. So further contracts closed pinch commercialized conveyance customers successful China, which is nan biggest extremity marketplace arsenic good arsenic bully traction connected implementing what we person said past twelvemonth is simply a substance compartment catalyst works successful China that is connected way to beryllium ramped up.

So a small spot much heavy dive connected Catalysis, because we want to make judge you understand nan guidelines origin of nan beardown performance. So first of all, it's a beardown marketplace position. The activity position has intelligibly been concerned done nan 2022 results done marketplace stock gains successful astir each world markets, particularly successful China. So this is simply a impervious constituent arsenic we spot those results.

Also from an operational side, nan beardown rate flows that we person projected for our RISE 2030 strategy are afloat connected way are confirmed, and particularly nan resilient and I person to opportunity elastic operating exemplary is really paying retired successful an situation wherever astir apt volatility will if astatine each summation successful nan future. That's a beardown plus to person and we are very assured connected nan worth imaginative quality of that business besides connected nan semipermanent because now Euro 7 has been confirmed to beryllium a worth up for nan marketplace and a measurement for Umicore to moreover further differentiate done technologies. And nan bully point is besides that we're continuing our beardown marketplace occurrence pinch bully advancement successful securing Euro 7 platforms pinch respective customers.

So altogether our gross floor plan is system very beneficial, because we are complete 80% of our gross successful nan longevity segments, truthful nan ray work conveyance gasoline market, arsenic good arsenic dense work diesel. So that's a beardown guidelines wherever our teams pinch their operating exemplary and beardown abilities successful execution person really made a awesome year.

Next to screen is E&ST, Energy & Surface Technologies connected descent 15. Before we spell into nan reappraisal of nan capacity of E&ST, it's important for maine to statement a alteration successful nan gross meaning that we person decided to use from 2022 arsenic lithium and manganese are progressively valuable and volatile components successful Rechargeable Battery Materials, it was decided to not longer dainty them arsenic consumables but arsenic hedged metals successful bid to make nan accounting attack accordant pinch nan gross capacity indicators utilized successful Umicore's different business units.

And from now connected now nan pass-through worth of purchased lithium and manganese will, therefore, beryllium excluded from nan gross calculation arsenic it is presently already nan lawsuit arsenic you cognize for cobalt and nickel and nan E&ST 2021 and 2022 revenues person been restated accordingly. I deliberation this is giving besides overmuch much clarity and transparency connected nan fundamentals of nan business.

Now connected page 16, we again item nan truth that electrification is not only confirmed, it's quickly accelerating. It's driven by nan instrumentality and carrot attack successful nan different regions. US providing much carrots pinch nan IRA and nan instrumentality successful Europe pinch nan combustion motor set from 2035. That is now afloat confirmed.

And you mightiness person heard that nan European Parliament has put successful a connection now to moreover widen that quasi prohibition to nan commercialized conveyance broadside wherever now for 2040, a 90% simplification of CO2 is proposed, which of people would beryllium different beardown accelerator of nan request but besides nan readiness of renewable energies is making beardown steps forward.

The warfare and nan subsidies tin really beryllium seen arsenic a catalyst of renewable energies. The world power agency we conscionable saw a study this week is forecasting 2.4 terawatt, a caller renewable power capacity to beryllium installed until 2027, which is really nan existent powerfulness accumulation of China. So it's gigantic and you could fundamentally opportunity that nan power value is simply a catalyst arsenic COVID was -- for nan renewables arsenic COVID was for connection technology.

So now for us, of course, that's bully news successful position of nan addressable market. But for nan industry, it provides besides a important situation because nan supply/demand business successful nan different regions is by acold not balanced, which we will show you connected nan adjacent slide, which is descent 17.

So you tin spot that coming already successful Europe and successful North America, nan request and nan proviso are not balanced betwixt needs of electrical vehicles for batteries and artillery materials and nan capacities of CAM successful this instance. And you tin spot that this spread is continuing astatine slightest into 2030.

Now what is coming done? Obviously this spread is bridged by importing materials from mostly Asia. But we besides cognize and I deliberation work together that this will beryllium much and much difficult, if not impossible. Mainly because of 3 things, you person nan section contented requirements that are posed by subsidies and besides nan geopolitical fences, nan carrot and nan instrumentality approach.

But much simply speaking, it is nan CO2 requirements of nan car manufacturers that want to spell down, that request to spell down successful their Scope 3 emissions. And pinch that a ample carrier of thousands aliases millions of tons of material, it's simply not imaginable crossed continents.

And past portion of this nan lessons learned from nan microchip proviso concatenation situation is that you person to person reliable proviso chains being adjacent to your customers. And that's what nan customers want. So nan consequence, we tin spot a imaginable undersupply of CAM until 2030. Of people these are each announcements coming that tin change.

I'm personally frightened besides astir nan announcements successful a measurement that we cognize Umicore's spot successful building capacities. We don't cognize that of each of nan markets. So you tin -- besides if you want from nan greenish barroom discount moreover 10%, 20% of nan capacities that will ne'er travel true.

And past 4th trial it does not see yet, immoderate different effects for illustration successful nan U.S. I would expect that nan IRA will thrust up moreover much nan electrical car accumulation which is nan logic why nan IRA is existing and successful Europe, it's not yet including nan commercialized conveyance request that we conscionable person talked about.

So altogether, rather a tense business and for companies that person existing proviso chains successful nan regions are conscionable building it up for illustration we person successful Europe and nan building up for North America makes america rather assured that we tin beryllium of a important advantage to our customers pinch that successful nan future. And yet this will beryllium an advantage for Umicore.

So, a small spot much spirit connected nan 2022 results of nan E&ST segment. So we had higher revenues and net successful nan business group, rather important summation of them successful rechargeable artillery materials. The income measurement of cathode progressive materials from our bequest contracts remained arsenic we had anticipated and antecedently I deliberation discussed and communicated subdued.

Revenues and net were nevertheless good up year-on-year including besides favorable vulnerability to nan lithium value successful 2022 and this besides we had shared astatine our half twelvemonth results. This sensitivity of nan revenues and net to nan lithium value will arsenic discussed earlier decreased passim 2023 and this will beryllium further minimized from 2024 to nan measurement we person system our contracts and done hedging mechanisms.

So complete nan twelvemonth nan business portion has made beardown advancement connected nan customer side, pinch very bully traction connected commercialized discussions arsenic good arsenic merchandise qualifications. And we consciousness very good connected way for what we person said earlier which is our 2024 measurement ramp-up that is successful afloat swing. And arsenic nan adjacent measurement successful nan execution of our strategy, our volition arsenic good to group nan world Rechargeable Battery Materials activity wrong 1 ineligible entity.

This setup will arsenic we judge supply nan champion instauration for nan business portion to scale, and will springiness elasticity connected financing options to support nan maturation of nan activity wrong Umicore.

Cobalt & Specialty Materials besides revenues accrued substantially versus 2021, reflecting an exceptionally beardown request and supportive value situation successful nan first half of nan twelvemonth earlier an expected normalization of nan request shape happened successful nan 2nd half successful metallic deposit solutions and Electro-Optic materials recorded both, unchangeable revenues compared to nan erstwhile year.

Now, finally, past but not slightest recycling, let's person a look astatine nan past twelvemonth capacity of our recycling business group. Year 2022 was again marked by a volatile precious metallic and PGM value environment.

As you tin spot nan mean value of rhodium successful 2022 decreased versus nan grounds twelvemonth of 2021. And this of people is an imported input parameter for our business. And connected nan adjacent page you see, that against this volatile precious metallic value situation nan recycling business group so delivered different fantabulous operational and besides biology performance.

The revenues successful PMR precious metallic refining were adjacent to nan grounds levels, successful nan erstwhile years reflecting coagulated volumes and an wide bully readiness of analyzable input worldly nan net state, connected a very bully level compared to erstwhile twelvemonth strong, however, beneath nan grounds twelvemonth of 2021 reflecting only a partial expertise to offset nan important costs ostentation that is chiefly connected energy.

And successful addition, nan semipermanent quality of our contracts successful this business that only let for a constricted pass-through of ostentation during nan clip of nan twelvemonth and it is simply a more, longer-term process. In nan people of 2022, location was different important advancement we made successful recycling which is connected nan artillery recycling solutions.

We person created an ain business portion for that that has now implemented nan latest procreation of our lithium-ion artillery travel expanse into nan operations that we are moving already since 10 years.

So a batch of know-how and acquisition person been put successful to summation nan betterment yields and besides very bully steps person been made to widen nan customer portfolio, pinch respective further agreements pinch OEMs and artillery makers. So altogether, we are good connected track. Also, present and arsenic we said, this twelvemonth we will determine connected nan location for our high-capacity artillery recycling works successful Europe pinch up to 150,000 tons of capacity.

In nan aforesaid business group jewelry and business metals were besides had a beardown gross and capacity summation crossed astir of nan merchandise lines and precious metallic guidance was somewhat beneath nan exceptional beardown 2021 twelvemonth level.

So pinch this granularity, I will now manus complete to Wannes, who will springiness you much colors connected nan financials of nan 2022 business year.

Wannes Peferoen

Thank you, Mathias, and bully greeting to everyone. Obviously, I'm very excited today. This is my first net telephone arsenic nan caller CFO for Umicore, and I'm very overmuch looking guardant to our early interactions.

Let maine return a speedy infinitesimal to present myself. I person been pinch Umicore for 17 years and person had nan opportunity to activity for different business units crossed nan group, enrolled successful some financial and wide management.

In my caller role, I will proceed to attraction connected capacity and connected consequence management. And my individual ambition is to guarantee that we're still connected way pinch nan execution of nan RISE 2030 strategy.

Now, let's person a look astatine nan cardinal figures for 2022. As Mathias shared earlier, Umicore's financial results successful 2022 was driven by beardown business capacity successful a twelvemonth pinch plentifulness of macroeconomic challenges. Think of nan unprecedented costs inflation, nan continued proviso concatenation disruptions and nan volatile value situation for diligent metals.

Now contempt this challenging context, Umicore grew revenues pinch 10% to €4.2 billion. And arsenic we mentioned earlier, we now exclude lithium and manganese pans done income from a gross calculation. This will let america to amended comparison nan business capacity successful nan Returnable Battery Materials business unit.

Now, arsenic you tin spot successful nan chart connected nan apical right, nan gross summation was driven by nan Business Group's Energy & Surface Technologies and Catalysis. In Rechargeable Battery Materials, we benefited from a crisp summation successful lithium value during 2022 mixed pinch a clip quality betwixt connected nan 1 manus to purchases, and connected nan different manus nan income of nan lithium-based products.

Now going forward, nan lithium value vulnerability has been substantially reduced arsenic we started hedging lithium, arsenic we do for nan different artillery metals cobalt and nickel. Also, successful Cobalt Specialty Materials, revenues accrued substantially. Here we benefited from an exceptional beardown request and supportive prices for cobalt and nickel successful peculiar during nan first half of 2022.

In Catalysis, we were capable to turn revenues mostly acknowledgment to nan automotive catalyst business outperforming nan market. And past recycling, revenues were again outstanding and successful statement pinch past year's grounds level.

Now, if you person a look astatine EBITDA, nan adjusted EBITDA amounted to €1.2 billion, which is 8% down compared to nan grounds level past year. As you tin expect, nan unprecedented costs ostentation did create an important headwind successful 2022.

Now connected nan chart connected nan bottommost right, you tin find much specifications connected nan effect of nan outer factors connected nan EBITDA. The year-over-year costs ostentation earlier it passed done to customers resulted successful a headwind of much than €180 million.

And connected apical of that, nan little value levels for precious metals resulted successful €70 cardinal little publication versus past year. So really did we woody pinch this costs inflation? In Catalysis, and to immoderate grade successful Energy & Surface Technologies, we were capable to offset a important portion of this costs ostentation headwind. We did this done a operation of pricing adjustments and ratio improvements successful operations.

In recycling, nan bulk of nan costs ostentation resulted from higher power costs. These were harder to walk on, because nan proviso disruptions resulted successful an accrued title globally for definite recycling fleet.

Now, nan span connected nan bottommost correct intelligibly shows that, excluding for these exceptional outer effects, nan group's underlying capacity accrued substantially year-over-year. And nan beardown capacity of nan group is besides reflected successful nan adjusted EBITDA separator reaching 27.3%.

In Catalysis, nan adjusted EBITDA separator is successful statement pinch erstwhile year, again demonstrating that we successfully offset costs inflation. The ramp-up costs successful Energy & Surface Technologies, and nan power costs ostentation successful recycling did measurement somewhat connected our margins.

But successful each 3 segments, nan adjusted EBITDA margins remained good supra nan target of 20% that we person group successful our 2030 RISE strategy. ROCE for nan group reached 19.2%, which is still a historical precocious and ROCE accrued successful some Catalysis and Energy & Surface Technologies.

So now moving to nan consolidated P&L. Let america first person a look astatine nan bottommost line. As you tin spot nan group shows a coagulated nett consequence of €570 cardinal successful 2022. If you look astatine immoderate different P&L elements aliases P&L items, you will spot that depreciation and amortization accrued somewhat to €286 million, which resulted successful an adjusted EBIT of €865 million.

Adjusted nett financial charges are now astatine €125 cardinal up versus past year, which reflects higher liking charges connected short-term loans successful statement pinch nan wide marketplace and somewhat higher overseas speech related costs.

Adjusted taxation charges were little versus past twelvemonth now astatine €145 million. Next to little taxable profit, nan adjusted effective taxation complaint for nan group decreased to a level of 20% versus 23% past year. The adjusted nett profit group stock amounts to €593 million, which results successful an adjusted EPS net per stock of €2.47 versus €2.77 successful past year.

The adjustments had a antagonistic effect connected EBIT of €32 cardinal and are chiefly related to nan summation successful biology provisions for bequest items and besides includes restructuring and impairment charges related to nan stationary catalyst business successful Denmark.

Now moving connected to nan adjacent descent pinch nan free operating rate flow. Here I would for illustration to item that nan free operating rate travel for nan group remained beardown astatine a level of €344 cardinal and continues to support nan execution of our maturation strategy.

In nan apical graph, you tin spot that nan operating rate travel aft changes successful moving superior which is simply a acheronian bluish statement reached a coagulated level of €835 million. The moving superior successful 2022 accrued by €342 million. The higher metallic prices successful returns of astatine materials was 1 of nan main drivers here. In nan bottommost chart looking astatine nan greenish line, you will announcement that superior expenditures including capitalized improvement expenses accrued to €491 cardinal successful 2022.

Energy & Surface Technology accounted for much than 60% of nan group's CapEx driven by nan description of nan European footprint successful rechargable artillery materials. In nan different 2 segments, Catalysis and Recycling, CapEx somewhat decreased.

I would for illustration to stress again that wrong nan group CapEx subject remains a cardinal attraction area. We proceed to make early expenses conditional upon concluding value-creating agreements pinch our partners.

So moving to nan nett financial debt. At nan extremity of 2022, nett financial indebtedness amounted to €1.2 billion, which corresponds to a leverage ratio of 0.96 times past 12 months adjusted EBITDA. So we proceed to person a beardown equilibrium expanse supporting our 2030 RISE Strategy.

As you tin spot successful nan span nett financial indebtedness accrued pinch €144 cardinal versus past year. The coagulated free operating rate travel of €344 cardinal enabled america to money €488 cardinal related to taxes, nett interest, dividends and nett purchases of indebtedness shares.

I would for illustration to repetition that going guardant our backing argumentation remains unchanged meaning that we proceed to person nan ambition to support our leverage ratio astatine finance people level passim nan 2030 RISE plan.

As you cognize extremity of past year, we issued a sustainability linked US backstage placement. The magnitude of €590 cardinal has been drawn early this twelvemonth successful January. The USPP transaction was a occurrence successful peculiar considering nan volatile financial marketplace discourse extremity of past year. It besides illustrates nan spot of our narration pinch organization indebtedness investors and it was a beardown validation of our 2030 RISE Strategic Plan.

With this I would for illustration to reason my conception connected nan financial capacity and manus it backmost to Mathias. Thank you.

Mathias Miedreich

Thank you very much, Wannes. But not only beardown capacity connected nan financials, but besides a very bully advancement connected sustainability that we tin study backmost to you, important advancement successful nan roadworthy representation that we person called let's spell for zero that we started successful 2021. In position of CO2 reduction, our targets for Scope 1, 2 and 3 person been validated by SBTi. And nan moreover amended news is that we person moreover somewhat overachieved nan respective 2022 information constituent connected nan past twelvemonth that we person towards our 2035 and 2030 targets.

So that's a very bully news. And besides we are proud that already arsenic of past twelvemonth 55% of nan power needs successful Europe person been based connected renewable power is rather a precocious worth of that. We don't extremity and we will further increase.

In position of zero inequality and harm, we person made besides bully advancement successful safety. Safety capacity was amended successful nan group complete nan twelvemonth but besides by actively taking nan topics of h2o and biodiversity. And finally, we person besides group a bully momentum successful further improving our ESG governance, not only done nan applications of TCFD but besides by adding further committees to our Supervisory Board a Sustainability Committee arsenic good arsenic an finance Committee that will supply further guidance and governance for nan improvement of nan group RISE 2030 and nan sustainability road.

So past but not slightest earlier we spell into nan Q&A session, I want to supply you immoderate spirit connected nan outlook for 2023, starting pinch Catalysis. Automotive catalysts is expected to use from its beardown marketplace position successful gasoline catalyst applications, a proviso concatenation betterment and an anticipated rebound of nan Chinese heavy-duty diesel market. And therefore, adjusted EBITDA of nan Catalysis business group is expected to show a further bully uplift successful 2023 versus nan already very bully 2022.

In E&ST successful Energy & Surface Technologies, it is expected that nan net of nan rechargeable artillery worldly portion will beryllium successful statement pinch nan 2022 level, considering that successful 2023, nan Cobalt & Specialty Materials business portion will nary longer use from nan exceptional profitability that occurred successful nan first half of 2022. Adjusted EBITDA of nan afloat E&ST Technologies business group successful 2023 is anticipated to beryllium somewhat beneath nan levels of 2022.

Recycling. Finally successful recycling nan precious metallic refining business portion is expected to proceed to use from an wide supportive proviso environment. Assuming nan existent precious metallic prices are to prevail passim nan year, adjusted EBITDA successful nan recycling business group successful 2023 is expected to beryllium beneath nan levels of 2022 owed to nan afloat twelvemonth effect of nan costs inflation. So wide adjusted EBIT and EBITDA for nan group are expected to beryllium beneath nan levels of 22% successful statement pinch nan existent marketplace expectations.

So I want to adjacent this preamble connected Page 23, wherever if location would beryllium only 3 things that you would retrieve from this position I would inquire you to retrieve that first of each Umicore has shown a very resilient beardown business capacity successful a volatile marketplace pinch improving and confirming nan underlying capacity of nan group its resilience.

Second, nan megatrends that are nan ground for our RISE 2030 strategy are much than confirmed. They are accelerating. And yet we person taken large steps, affirmative steps successful implementing nan RISE 2030 strategy pinch cardinal milestones and arsenic we deliberation impervious points for nan validity of nan strategy achieved successful 2022 and we are afloat energized to return 2023 successful nan aforesaid pinch nan aforesaid magnitude of progress.

So convey you very overmuch for listening to america and we are now much than happy to reply immoderate questions you mightiness have.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first mobility comes from Charlie Webb of Morgan Stanley. Please spell ahead.

Charlie Webb

Good morning, everyone. Thank you very overmuch for nan chance to inquire a question. Maybe conscionable 1 connected free rate travel and benignant of CapEx expectations looking into 2023. Maybe you could conscionable thief america and punctual america wherever you expect CapEx to travel retired successful 2023. How are you seeing nan existent inflationary situation arsenic it relates to benignant of CapEx.

Obviously, you've sewage a batch of spending to do to position yourself for maturation conscionable knowing nan benignant of nan CapEx floor plan and benignant of remaining connected nan free rate travel part. Just besides moving capital. With nan caller works now benignant of expected to ramp up successful 2023, is that already afloat loaded erstwhile I'm reasoning astir nan benignant of nan moving superior – immoderate moving superior that will spell into that plant. Is that already done, aliases is that up of america conscionable truthful we benignant of get a gauge connected that benignant of moving superior dynamic? Thank you.

Mathias Miedreich

Thank you very much, Charlie. It's fantabulous that nan first mobility instantly goes to our caller CFO. So I will manus this complete to Wannes.

Wannes Peferoen

Okay. Thank you. So let's person a look astatine immoderate of nan cardinal components, arsenic you mentioned CapEx for 2023. I mean, fixed nan worth agreements that we person concluded successful 2 past years, we scheme to measurement up CapEx successful 2023, successful peculiar for nan footprint successful Europe. So yes, that's thing we anticipate.

Looking astatine inflation, ostentation pinch respect to CapEx that is not something. I mean, we person besides programs successful spot to amended CapEx density, wherever we already spot use successful nan people of 2022 and besides successful nan people of 2023. So from that angle, we don't expect a awesome effect connected nan scheme for 2023. And looking astatine your question, pinch respect to nan works successful Europe wherever we are. That's wherever we are still successful nan ramp-up stage, I would say, looking astatine nan capacity utilization.

Mathias Miedreich

Yes. In respect to moving capital, I deliberation nan moving superior needs successful ISA, they will summation but much astatine nan extremity of nan period, because arsenic we said nan ramp-up will commencement extremity of 2023 and past beryllium successful afloat plaything for 2024. So, that's what you tin expect.

Charlie Webb

Okay. So, conscionable to gauge, a small spot connected that. So CapEx, immoderate benignant of gauge connected wherever that should beryllium for 2023, comparative to up, but possibly much successful absolute position comparative to 2022 would beryllium helpful. And conscionable connected moving capital, I guess, is it correct past to assume, if we still sewage to load nan works successful nan 2nd half, but we should expect further moving superior outflows successful 2023? Thank you

Wannes Peferoen

Yes. So basically, pinch respect to CapEx, I mean looking astatine statement and analyzing statement I would say, that we don't consciousness uncomfortable pinch what we spot successful statement for 2022.

Charlie Webb

For, 2023. Okay.

Operator

Thank you. And now we're moving connected to our adjacent question, which comes from Chetan Udeshi of JPMorgan. Please spell ahead.

Chetan Udeshi

Yes, thanks, morning. I had a fewer questions. First, I'll conscionable commencement pinch nan mention of carving retired aliases I deliberation putting each of nan RBM businesses successful a abstracted entity. I'm conscionable curious, what is nan adjacent step? Because you besides mentioned Mathias, that this will beryllium wrong Umicore. So are you really ruling retired immoderate outer information successful this business? Because 1 would think, erstwhile corporates announced carving retired thing arsenic an independent entity, nan adjacent logical result is either, it becomes independent wholly aliases location is simply a nexus associated pinch raising financing done that independent entity. So I'm conscionable curious, what different benignant of adjacent thought milestones connected that business successful position of firm action side.

The 2nd mobility was, I was conscionable looking astatine nan firm R&D and it's bully that it's intelligibly going up. But I tin besides spot that immoderate of nan R&D costs, successful nan firm statement are associated pinch nan caller cathode worldly projects. And I'm curious, why is this not successful E&ST and why is it sitting successful nan firm line? Because it seems it's much straight related to nan E&ST business for sure.

And past mobility connected Catalysis, nan margins person continued to astonishment connected nan upside present for sure. And if I look astatine 2nd half, nan margins are up versus first half, I'm conscionable funny again here, you tried to reside it during your comments, but are location immoderate impermanent factors, aliases you deliberation structurally nan separator level successful this business has reached a shape wherever EBIT separator person to 20% is astir apt going to beryllium a norm astatine slightest for nan adjacent fewer years? Thanks.

Mathias Miedreich

Chetan, convey you very much, 3 very applicable questions. Let maine commencement pinch nan first one, RBM and what we person said astir nan structuring of nan entities. So RBM, nan artillery worldly business is an instrumental portion of our RISE 2030 Strategy. It's nan maturation motor of nan group and this does not alteration pinch this announcement, right. And what we person said successful nan Capital Market Day, remains wholly true. We are looking connected each of nan options to finance our business going forward.

At this constituent successful time, we don't exclude immoderate options and we person decided to return this measurement to springiness to decomplexify besides nan portion successful position of, needed structures for illustration SAP systems aliases nan IT systems, if you do it successful an early stage, wherever we are now earlier you spell into nan maturation of that complexity. But of course, a cardinal logic is besides to person each of nan flexibilities for financing options. And arsenic we said successful nan aforesaid statement, I conscionable tin repetition it, arsenic we are a nationalist listed group we person disposable astir apt each of nan options you could deliberation of and we will make bully usage of it besides for RBM.

Now connected firm R&D, yes, it's a very bully observation, and it's mirroring nan measurement we are treating R&D successful Umicore. We person a stage-gate process wherever we person everything that has a trajectory of much than 5 years for hitting nan marketplace successful position of invention is successful our firm R&D department. So these are things today, particularly nan activity has accrued connected nan solid-state artillery activities. You mightiness besides retrieve our announcement together to build pinch Idemitsu a caller artillery worldly catalyst. This is each successful nan firm R&D.

So, semipermanent topics sodium ion batteries different technologies that would bring awesome breakthroughs to that marketplace that's successful firm R&D. And past erstwhile it reaches nan industrialization phase. So that intends erstwhile actual customer qualification projects and motorboat preparations are location it is handed complete to nan artillery to nan RBM business group. And this has conscionable happened now arsenic we speak for nan HLM exertion wherever we person reached that captious milestones solving nan hurdles, nan method hurdles that were location for industrialization. And for that we bring that past up to standard and standard it up to ample quantities. That's nan trigger point.

Last mobility connected Catalysis. Do we deliberation that's a impermanent effect? No indeed, we don't deliberation that because location are 2 effects happening correct now. The first 1 is that nan mentation connected nan operations model, truthful to bring down nan breakeven points to summation nan elasticity they really salary disconnected now. That's connected nan 1 side.

On nan different side, we spot that nan connection that we person to nan marketplace to our customers wherever we telephone ourselves nan reliable translator partners possibly compared to different contenders successful nan marketplace that mightiness not person that truthful clearly, because we unrecorded successful some worlds and connected nan semipermanent combustion motor and electrification besides gives america a bully traction connected being awarded caller businesses successful nan Euro 7 domain that is besides mostly helping our equation connected nan profitability.

So that's really what is behind. So we spot it much arsenic a measurement usability and besides for 2023 arsenic we said successful nan outlook we are rather assured that we tin proceed aliases moreover summation nan capacity of nan business group.

Chetan Udeshi

Thank you very much.

Operator

Thank you. And adjacent we person Geoff Haire of UBS. Please spell ahead.

Geoff Haire

Good morning. Thank you for nan action to inquire immoderate questions. I person 2 questions if that's each right. The first 1 and it's reasonably straightforward. If you were to portion retired nan effect of cobalt and lithium and nickel from nan EFT profitability for nan 2nd half and past evidently that would use to nan guidance arsenic good for 2023. Would you still spot profitability done successful 2023 because it's difficult to spot wherever you're fixed nan activity of metallic prices wherever profitability is really going successful that business underlying?

And nan 2nd mobility I had is that we've evidently had nan European Green woody for business scheme published aliases good proposals published. What do you understand is nan differences that's going to make for nan EV business successful Europe going guardant if I may?

Mathias Miedreich

Yes. Yes. So fto maine reply nan first question. I'm not judge if I wholly understand it but I would constituent retired nan following. What we person said is that we had a step-up successful revenues and net successful nan RBM business portion wrong of nan E&ST business group successful 2022. And we person said that we deliberation that this will stay for 2023.

Now if you spell 1 level supra nan E&ST, which is nan wider business group location is 1 large alteration a alteration that is location year-over-year, which is nan cobalt and specialty materials that had an bonzer demand, but besides cobalt pricing situation successful nan first half of 2022.

And if you look to nan cobalt pricing and nan extremity marketplace request it has normalized successful nan 2nd half. So we spot nan capacity of that business much going guardant pinch that trajectory. And pinch that wide E&ST, we said should beryllium somewhat below. But nan important connection I deliberation is that nan RBM portion of it is connected track. We besides person said that nan effects of lithium successful 2023 will beryllium little for illustration successful 2022. We are adding different elements that are much connected nan operational efficiencies of our works ramp-up successful NISA arsenic good arsenic nan truth that we are now hedging, arsenic Wannes pointed out, hedging lithium arsenic a metallic and besides astatine nan extremity of 2023 nan first of our caller projects if you want to opportunity start, which are stabilizing that. And then, nan large step-up happening successful 2024 successful position of what volumes is concerned. Now I hope, I've answered your mobility connected that.

And now coming to nan greenish woody question. So you person seen that nan European Union did not transcript one-to-one what was nan ostentation simplification enactment and I deliberation they shouldn't. And what I personally would spot is and what I'm hoping for is, of course, connected nan backing broadside location will beryllium much momentum. And already coming location is rather important backing disposable successful nan EU.

But what I'm hoping for, and I spot signals successful that respect that particularly connected nan permitting broadside connected nan velocity to marketplace connected nan expertise to support up. I've shown you nan discrepancy earlier successful request proviso for nan cathode material. This is thing that I'm judge nan European Union will tackle truthful that we and different companies tin moreover velocity up and travel nan request of our customers.

Geoff Haire

So could I conscionable travel backmost connected nan RBM business? You said there's a step-up successful revenues and profit. Is that excluding lithium nan effect of lithium successful 2022 arsenic well?

Mathias Miedreich

As a whole, truthful nan effect -- what I was saying is that nan effects of lithium that we person seen successful 2022 and nan bully results that those effects will beryllium little than 2023 and that they will tail retired successful 2024. And past pinch nan measurement ramp up we are successful this caller business exemplary wherever we person lithium arsenic a hedge metallic and we are only measuring ourselves connected nan underlying business performance.

Geoff Haire

But for 2022, if you took distant nan effect of lithium would RBM revenues and profits still beryllium up?

Mathias Miedreich

So, I mean location are respective effects that spell into that. So nan first 1 is, obviously, nan lithium arsenic I said past we person talked astir nan subdued volumes, which is not a news, which we person said earlier. And you person nan mechanism, which is called nan take-or-pay contracts that are playing a domiciled successful that. So moreover if nan volumes were not arsenic contracted nan expected net are contributing and that each worked together successful that equation successful 2022. But arsenic we said 2023 and 2024, nan image will beryllium overmuch much straightened successful this regard, which is nan important connection that we wanted to nonstop today.

Geoff Haire

Okay. Thank you.

Operator

Thank you. And now we're moving connected to Sebastian Bray of Berenberg. Please spell ahead.

Sebastian Bray

Thank you very overmuch for taking my questions. I person 2 please. The first is connected magnitude of authorities aid. I fishy nan reply mightiness beryllium no, but I'm going to effort anyway. Can Umicore quantify what it is getting presently for nan Canadian works that it's agreed to build aliases conscionable nan magnitude of authorities assistance much generally? Is it a triple-digit cardinal amount? What is nan bid of magnitude we should beryllium reasoning about?

And past nan 2nd mobility was connected nan moving parts successful nan Energy & Surface Tech guidance for 2023, 2024 and into 2025. In nan adjacent term, let's look astatine 2023. If you were to person nary lithium effect successful nan twelvemonth 2023, truthful I presume it's still positive, would nan net successful nan cathode bid? So conscionable focusing connected nan portion margins successful cathode, beryllium level down aliases up?

And conscionable a speedy mobility connected nan VW JV. For modeling purposes fixed information is rather constricted astatine this stage, is it correct to presume that everything successful nan artillery materials area is still afloat consolidated until 2025 and past nan JV only really gets going from 2026, aliases really should we deliberation astir this? Thank you.

Mathias Miedreich

Yes. Let maine start. Thank you, Sebastian. Very bully questions. First authorities astatine Canada, obviously, we cannot disclose our contracts that we person closed successful nan MOUs pinch nan Canadian authorities and nan Ontario location government, but I tin springiness you truthful overmuch spirit arsenic nan dimensions we're talking astir successful percent of authorities adhd versus nan CapEx are rather akin to what you spot successful nan IRA successful North America.

I deliberation nan large quality betwixt Canada and North America is not truthful overmuch successful nan CapEx authorities assistance rates aliases backing rates but it's much connected nan -- what's called nan OpEx taxation credits that's presently successful nan chat connected US.

We besides perceive but arsenic nationalist knowledge, nan Canadian national authorities has announced that they will travel retired besides pinch nan counterproposal for that part, truthful that they really travel astatine par pinch what's seen astatine nan IRA, because arsenic you person seen rather a mates of large players person decided for Canada including ourselves. So we' remainder assured that location will beryllium nary differences successful authorities assistance betwixt Canada and North America.

But anyhow I deliberation that this is not for america -- has not been nan logic to put successful Canada aliases successful North America. It's driven by nan marketplace request and nan request and our customers are asking to do that. So wide it is simply a value-creative business for america successful immoderate way. Otherwise we wouldn't prosecute it. And nan contracts that we spot going guardant successful that guidance is really staying astatine that.

So successful position of E&ST, I deliberation -- I travel backmost to what we person said successful extremity of 2021. So we person successful 2022 and 2023 location is simply a transitionary clip wherever we person bequest contracts that we are very happy to person and we will fulfill them either successful measurement aliases take-or-pay. We had immoderate lithium effects that are stronger successful 2022 than successful 2023 and we person adopted our business exemplary arsenic we've conscionable shared coming to beryllium much independent of that.

The astir important connection for america coming was to spell into this ramp-up that we tin now moving overmuch closer. I mean, I understand it's a difficult extremity of 2021 to expect thing that has happened successful 2024. But now arsenic we travel overmuch person to that event, we tin moreover springiness much assurance that we're wholly connected that trajectory.

And now for Volkswagen, nan associated venture, yes, so retrieve nan Volkswagen associated task is simply a 50/50 1 arsenic we had discussed, which intends that for monitoring purpose, I deliberation nan presumption from 2026 onwards to usage nan respective streams arsenic non-consolidated I deliberation that's nan correct attack successful nan modeling.

Sebastian Bray

That’s helpful. Thank you for taking my questions.

Operator

Thank you. And we are now moving connected to Wim Hoste of KBC Securities. Please spell ahead.

Wim Hoste

Yes, bully morning. I person 2 questions please. The first 1 would beryllium connected nan ramp-up schedule for RBM towards nan extremity of nan twelvemonth and into 2024. Can you supply a small spot of further colour connected wherever nan maturation is going to travel from successful nan 2nd half of this year? Is it chiefly Nissan [ph], aliases is location besides betterment successful capacity utilization rates successful your Chinese plants for example? And past besides to which, benignant of customers is that to OEMs? Is that to artillery compartment producers? Can you possibly connection a small spot of further clarity connected that?

And past nan 2nd mobility would beryllium connected costs ostentation from power to different things. Can you possibly elaborate a small spot connected nan costs ostentation effect you will spot this year? And what's travel complete from past year? What is possibly past caller elements coming into nan picture? Those were my questions. Thank you.

Mathias Miedreich

Yeah. Thank you Wim. Indeed it's a bully opportunity to supply immoderate much spirit connected nan customer scenery for RBM. In astir of these calls, I'm asked astir is location immoderate news connected nan customer side, and I ever opportunity location would beryllium a news sometime and past we stock nan news. I will do nan aforesaid present again, truthful we are successful rather precocious discussions pinch respective customers and possibly important to mention customers arsenic good connected nan OEM side, but besides particularly connected nan compartment shaper broadside because pinch nan progresses that we person made connected nan exertion roadmap connected nan HLM side, particularly that becomes a very basking topic.

Now, we're besides very assured that successful nan first half of this year, we tin denote different awesome measurement up from a customer side. It will beryllium a bully adding to our location mix. That's what I would for illustration to opportunity present location mix, which will much spell into utilizing nan afloat world capacities of Umicore successful nan short-term.

And past thief america to transportation that into a much regionalized setup. I'm sorry, I cannot beryllium much specific. You will understand erstwhile we are capable to stock nan news. But I would opportunity that nan ramp-up my connection fundamentally is nan ramp-up will not only hap successful NISA it will beryllium starting successful each of our world factories because we request to beryllium accelerated and our customers request nan material. But past astir of those things that will start, because of nan localization requirements of those customers, complete clip they will past either spell into nan 1 aliases nan different region, but to commencement pinch we tin usage our existing capacities. And that's an important constituent to mention. Now for nan ostentation question, I will manus complete to Wannes.

Wannes Peferoen

Yeah. So looking astatine nan expectations for ostentation for this year, we tin expect that successful Catalysis and E&ST, we will beryllium capable to offset fixed nan operational efficiencies that we instrumentality and besides immoderate of nan measurement effect. In recycling, wherever we were chiefly deed by nan ostentation past twelvemonth because of nan energy, going guardant nan power information is wherever we were capable to hedge a important portion of nan power vulnerability and arsenic specified trim nan uncertainty there. At nan aforesaid time, looking astatine Belgium and nan circumstantial business of nan indexation is wherever we expect further ostentation connected nan payroll pinch nan payroll indexation. So arsenic we said earlier, successful recycling, we are moving connected nan basal initiatives to offset nan inflation. But this successful this situation it takes much time. Looking astatine immoderate of nan multiyear contracts and truthful on, it will return much clip to offset it, but it's ongoing I would say.

Wim Hoste

Okay. And tin you supply a number? There was €184 cardinal for 2022. Can you supply an further ostentation number for 2023 based connected your existent expectations?

Wannes Peferoen

Well, again, we will expect still a afloat twelvemonth effect peculiarly successful recycling. So location will still beryllium a important headwind, I would opportunity much than half comparative to that figure.

Wim Hoste

Okay. Understood. Thank you very much.

Operator

Thank you. And adjacent we move to Nicola Tang of BNP Paribas Exane. Please spell ahead.

Nicola Tang

Hi, everyone. Thanks for taking nan questions. Just wanted to inquire a small spot much astir nan taxation incentives astir nan IRA which evidently person travel into place, since you made nan determination connected nan Canadian investment. And considering besides nan comments you made astir undersupply successful North America until astatine slightest 2030. I was wondering if those 2 factors that made you see adjusting nan scope of your Canadian finance successful position of capacity? And astatine what shape aliases would you besides see reasoning astir benignant of adding artillery recycling successful North America arsenic good to benignant of create a location closed loop?

And past connected nan 2nd question, conscionable successful referring to HLM and nan developments that you've made there. Can you conscionable punctual america successful position of clip framework from benignant of wherever we are coming towards commercialization and really that's benignant of shaping up successful position of imaginable discussions pinch customers? Thank you.

Mathias Miedreich

Yeah. Yeah. Thank you. Thank you very much. So first mobility IRA impact. Of course, and I said this before, nan infinitesimal this IRA measure was clear and was decided, we received a batch of traction pinch our customer that person to -- today's aliases early imaginable customers that had to redo their proviso chains for North America because nan existent setup didn't work. And we spot presently besides pinch immoderate discussions that are successful nan news betwixt a US car shaper and nan Chinese artillery maker, really difficult it is to make that happen. And now, we of people are seeing that accrued traction.

There are 2 things that we person which we ever support successful mind. The first point is immoderate type of further finance needs to beryllium worth imaginative and needs to person -- we had rather immoderate standards successful nan statement that we person done together pinch Volkswagen. It's for some partners a very bully contract. And this is thing a small spot arsenic nan benchmark that we spot going forward. And we will ever make judge that we person nan very imaginative returns. And this sometimes takes immoderate clip to discuss.

The 2nd point is that we ever erstwhile we make commitments, we want to beryllium 100% judge that we tin operationally present because that possibly we tin telephone it prudent aliases you tin telephone it conservative, but and I said it before. I deliberation successful this market, nan ones who person nan biggest announcements are not nan ones that will make nan business later, but it will beryllium nan ones that person plants up and moving astatine nan value that is needed. And that's what we are focusing on.

So I would opportunity astatine this constituent successful time, it's excessively early to opportunity that we would widen anything. We are ever unfastened for discussions. We person our plan. Our scheme is good connected track. And for nan moment, we're concentrating connected that. But arsenic we said, we are ever unfastened to supply much worth imaginative finance opportunities, if they are location but astatine nan clip being we instrumentality to our plan. Our artillery recycling could beryllium and is already successful our much mid to semipermanent scheme for North America included. But also, present we want to ore first connected Europe to instrumentality what we person said, but besides nan adjacent measurement aft Europe for judge would past beryllium North America, but it's not yet concretely planned.

Now, HLM, it's a very bully taxable because HLM fits to what has been asked earlier. It has conscionable moved into nan industrialization shape because we person been capable to lick 2 cardinal issues, which is nan stableness of nan worldly and nan connectivity which is complicated, if you person a very precocious manganese rich | environment. So we person developed a proprietary coating and doping exertion that solves that. And now we person moved pinch really it's 5 different programs instantly moved into nan adjacent stage. These are programs pinch OEMs and compartment makers successful each of nan 3 world regions.

So, really liking from everyplace successful nan world. The clip framework of that arsenic we said, would beryllium to beryllium expect to deed our works successful 2026. Why would you opportunity why does it return truthful long? If you say, it's industrialized. It's fresh to beryllium produced successful nan plant, but it's still there's ever a agelong qualification process that's successful our business. And location is simply a 2nd point that is much connected nan OEM broadside and nan artillery compartment shaper broadside is nan adjustment of what's called nan artillery guidance system, because this is simply a caller artillery chemistry, it's now unchangeable and it now tin beryllium tested.

And nan existent artillery guidance strategy developed for NMC nan algorithms that we usage for LFP, you request a 3rd one, right, because it's a different setup. And pinch that, we are successful very adjacent interaction pinch our customers to supply samples and to thief them to really create this artillery guidance strategy to harvest nan large advantage that we spot for illustration we spot a 10% costs advantage of HLM versus LFP, based connected non-Chinese production. So for illustration nan accumulation successful nan US astatine a 25 – truthful measurement successful euro per kilowatt hr and a 25% amended power density than LFP alongside pinch nan different elements of recyclability capacity to nutrient successful nan existing NMC factories et cetera. So, that's really a breakthrough for america that, we are trying to accelerate arsenic overmuch arsenic possible, but we request our customers to beryllium besides fresh to digest it from their operating strategy constituent of view.

Nicola Tang

Sounds great. And if I could conscionable compression different speedy follow-up 1 connected HLM, you mentioned, you would usage existing facilities. Is it adjacent to opportunity that, immoderate benignant of CapEx aliases finance request that's factored into your midterm CapEx guidance?

Mathias Miedreich

Yes, so truthful we person successful our scheme that we person provided, we had said that, HLM is portion of that. And it's not that, HLM does require nary CapEx, nary further CapEx compared to an NMC factory, but it's much for illustration adding definite steps connected coating and doping. It's not only successful nan CAM, but besides connected nan PCAM phase. And pinch that, it's included successful our existent scheme indeed.

Nicola Tang

Thanks truthful much.

Operator

Thank you. And now moving connected to a mobility from Riya Kotecha of Bank of America Merrill Lynch. Please spell ahead.

Riya Kotecha

Hi. Good morning. Thanks for taking my questions. I person a mates ones. My first 1 is connected closing nan spread pinch peers. You've performed good successful palladium [ph] business catalyst, but what are possibly nan fines of information points you're capping pinch regards to marketplace stock that makes you deliberation you deliberation -- ?

Mathias Miedreich

Riya. Sorry, we tin hardly understand you. Can you travel person to nan microphone maybe?

Riya Kotecha

Yes sure. Is this amended now?

Mathias Miedreich

Yes, let's springiness it a try.

Riya Kotecha

Okay. So my first mobility is connected closing nan spread pinch peers. You performed good successful your bequest autocat business, but what are signs aliases information points that you're capping pinch regards to marketplace stock successful peculiar that makes you deliberation you're person to closing this gap, peculiarly erstwhile you possibly expect benignant of subdued RBM volumes into '23, while immoderate NMC payers are expecting to turn 30% to 40% into this year?

Mathias Miedreich

So fto maine repetition if I understood nan mobility correctly. So, it was a question, really to adjacent nan spread versus our peers, right? While you said that LFP capacity aliases marketplace maturation is beautiful strong, while we person not that growth. That's your question?

Riya Kotecha

Yes. So, NMC peers is expecting to revealing 30% to 40% and '23 was you'll person benignant of subdued volumes successful that make it difficult to past capture.

Mathias Miedreich

Yes -- very intelligibly understood. So, I deliberation that we are very assured that nan assumptions that we person made will play retired for us, because arsenic you know, correct we person benignant of been very successful pinch caller contracts successful nan past 18 months I would for illustration to opportunity and that's what we will person is going connected from now. The large differentiation that we person pinch our competitors successful position of velocity is capacity, because today, nan expertise to usage capacities that you person successful Asia to cater nan North American and nan European marketplace is location undoubtfully. That's nan existent business exemplary and that's why those competitors tin do that. But erstwhile we return nan adjacent steps and erstwhile nan IRA kicks successful and erstwhile we person nan respective regulations successful Europe kicking successful besides connected nan CO2 especially. What counts is that you person capacities successful those regions. And today, we are nan only ones that person capacity successful Europe and we are not nan first one, but successful nan very first group of players to play successful nan North American fields. So pinch that, we spot a beardown acceleration imaginable for us, erstwhile our caller programs deed nan factory. So actually, it's a clip advantage that is based connected location differentiation of nan different markets.

Riya Kotecha

Okay. And tin you possibly talk astir your shape of contracting pinch customers successful North America. Externally, it seems repairs aliases announcing contracts astatine a faster pace. I conscionable want to understand this. Is this because you're trying to discuss tighter statement building akin to nan Volkswagen JV aliases they're much competitive? And past related to that, is location 1 much statement to beryllium announced is my understanding. Is that correct?

Mathias Miedreich

So, yes. So first of each to answer, truthful successful North America, we use nan aforesaid principles we person applied successful Europe. We person applied pinch nan Volkswagen associated venture. We return capable clip to create worth imaginative contracts. There's a beardown request to activity pinch us. You person seen possibly that we person already signed an MOU again pinch Volkswagen besides to grow that is not yet decided, whether this will beryllium portion of nan associated task aliases will beryllium a abstracted initiative, but you tin remainder assured that nan aforesaid principles will use successful position of worth creation.

Now connected apical of that location are different very progressive and very precocious discussions for North American entry. At this stage, it's moreover much request than we person planned to put successful capacity. So we are successful a bully business to discuss successful nan correct way, if you cognize what I mean. And yes I tin besides corroborate that we are very assured to person astatine slightest 1 much announcement successful nan first half of this twelvemonth connected a awesome customer contract. So pinch that I tin conscionable repetition what we said. We consciousness very assured connected this ramp-up that we person already proclaimed 1 twelvemonth agone for extremity of 2023 opening of 2024.

Riya Kotecha

Okay. Thanks very much.

Operator

Thank you. And arsenic we're nearing nan extremity of nan telephone we will return a fewer much questions from group successful nan queue, but we kindly inquire to please limit to 1 mobility per person. Thank you. And pinch that we are moving connected to J.B. Rolland of Credit Suisse. Please spell ahead.

J.B. Rolland

Hi. Good greeting and convey you for taking my question. I would conscionable would for illustration to inquire astir what quality it makes for your artillery materials business for nan differential that you spot betwixt nan US IRA and nan European greenish business plan.

My consciousness is it is much a much important to person a section worth concatenation successful nan US than successful Europe. And I would for illustration to understand whether that is fundamentally a valid cognition aliases not.

The logic why I'm asking is because it's not clear from nan European regularisation that location is simply a push for having nan afloat worth concatenation wrong Europe i.e. nan -- location are plants for batteries, location are plants for EVs that's clear, but it is not clear that really nan materials has aliases will besides person to beryllium produced successful Europe whereas successful North America location are signs that propose that nan afloat worth concatenation including materials will person to beryllium local. I would conscionable for illustration to understand what's your return connected it whether it's a misperception aliases thing you tin remark on? Thank you.

Mathias Miedreich

Yeah. No, it's not a misperception. And that's fundamentally because nan plans connected nan European Union person not been afloat finalized. So it's very clear that successful nan US to nan IRA location is -- if it really turns retired for illustration it is said today, it will beryllium a adjacent shop right? It would beryllium a section for section marketplace that is intelligibly incentivized by nan taxation credits for nan cars astatine nan extremity of nan time that astatine nan extremity of nan worth chain.

In Europe this has not been truthful intelligibly outspoken yet. But for Europe, we spot from nan opening and that was why Umicore had invested we saw different beardown driver that has nan aforesaid effect, which is nan customer sound because what is location successful Europe and will beryllium is expected successful nan early is that CO2 becomes a costs and that nan Scope 3 of an electrical conveyance is beautiful bad today.

The CO2 emissions producing a artillery is nan biggest contributor to nan Scope 3 footprint of a car. And immoderate of nan OEMs successful Europe person already erstwhile they're sending retired their RFQs for artillery materials you person to perpetrate to a definite CO2 level that you are dealing with.

And pinch that being not successful nan region pinch a afloat integrated proviso concatenation you will person nary chance to meet that target. And I tin intelligibly speak because it's unfastened and nationalist BMW for illustration it's an successful and retired request either you do it aliases not and others person that arsenic well.

We cognize pinch our activity connected Volkswagen that they're besides very overmuch delicate connected CO2. So I deliberation nan consequence is nan same. The guidelines origin is simply a different 1 successful IRA. It's much a carrot approach. So you get money, if you're there. In nan EU, it's much a instrumentality approach. If you're not location you will person further costs because you CSU equation doesn't salary out.

And past we will spot really nan subsidy strategy is looking like. There is besides - nan past connection has not been spoken - but from a spot constituent of position intelligibly I spot some arguments likewise beardown from a different perspective of reasoning.

J.B. Roland

Thank you very much.

Operator

And we person travel to our past mobility which comes from Ranulf Orr of Citi. Please spell ahead.

Ranulf Orr

Great. Thank you for taking nan questions. Firstly, please could you conscionable explain nan RBM outlook for 2023? I deliberation you said it will beryllium -- net will beryllium successful statement pinch 2022, but what net you're talking astir fixed nan displacement EBIT/EBITDA? And tin you springiness benignant of a guideline connected measurement maturation comparative to nan wide NMC request numbers for adjacent twelvemonth successful statement good beneath perhaps?

And secondly if I could conscionable compression successful connected HLM, could you explain if aliases really you're capable to protect your caller developments successful nan coatings and nan opens. I mean is this thing we expect peers to travel very, very quickly, aliases is this really a differentiator for you? Thank you very much.

Mathias Miedreich

Yes. Thank you. So, nan net besides nan improvement connected nan E&ST side, we traditionally ne'er disclose nan actual numbers beneath nan level of nan business groups and we will besides not alteration this going forward, but I tin supply you truthful overmuch of a guidance that erstwhile we opportunity capacity past it's meant nan EBIT/EBITDA equation of nan business group of nan business portion successful this lawsuit is expected to beryllium successful akin territories than it was successful 2022.

And pinch nan effect that we person described successful different parts of nan questions and that's let's opportunity adjacent level nan quality connected nan E&ST business group is that nan cobalt and typical materials they person amended capacity successful H1 than successful H2 successful 2022 because of nan value situation of cobalt and nan extremity marketplace demands.

And this connected nan afloat twelvemonth effect for 2023 will somewhat trim nan EBITDA of nan full business group. So, this is nan mathematics again connected E&ST.

Now, for HLM so this circumstantial -- I mean HLM per se is not a caller technology. It's good location successful nan market. However, those 2 points that we person now present nan breakthrough to fundamentally make it from a laboratory point into an industrialized product. We person protected this besides pinch patents that we person put successful place.

And of people pinch nan accustomed waste and acquisition secrets that we put astir it. So, we are assured that we person thing that is representing a sizeable competitory advantage versus our peers.

Ranulf Orr

Okay, great. Thank you very much.

Operator

Thank you. And that concludes today's question-and-answer session. I would now for illustration to manus nan telephone backmost complete to Mathias Miedriech for immoderate further aliases closing remarks.

Mathias Miedreich

Yes. Thank you very much. Thank you very overmuch again for nan very well-educated and heavy questions. I very admit nan discussion. Thanks for listening to america and I wish each of you a very bully continued time and dream to meet you soon again successful personification possibly successful nan adjacent days erstwhile we're doing our roadworthy show. Thank you very overmuch and return care.

Operator

Thank you. That concludes today's telephone and you whitethorn now disconnect.