Hello and welcome to the Umicore Half-Year 2024 results call. My name is Caroline, and I'll be your coordinator for today's event. Today's call is being recorded for the duration, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over to your host, Bart Sap, the CEO, to begin today's conference. Please go ahead, sir. Thank you. Yes, thank you. Good morning, everyone, and welcome to the Umicore H1 results update. Today, I think we have a pretty packed and interesting agenda for you. We'll first start off with the strategic review on the Battery Materials where we stand. Let's then have a look at the key figures and the highlights of the first half 2024. Then we'll go over the business review for the different business groups. Wannes will talk to you about the financials. I'll be coming back with the outlook for 2024. Then we'll do a wrap-up, and then it's open for Q&A. So let me start off by the strategic review for Battery Materials. Now, there's a new market reality out there, and we have to adjust to it. The market context is challenging, and we have seen a slowdown in the growth of EV sales in the short and midterm. The OEMs are revising the speed, but also the regional setup of their electrification plans, and this results in a more limited visibility in the short and midterm. Now, of course, we cannot stand still, and we're taking, therefore, immediate actions, and we have been taking those actions already. Now, we launched already the strategic review to assess our growth projections beyond 2024 for the Battery Materials business. We talked about strict capital discipline, and this year, we will be spending less than EUR 650 million. Additionally, we have launched a further efficiency and cost-measure program on top of our Efficiency for Growth program, which we announced earlier. Now, if we look at the broader picture, and despite the current slowdown in the growth, we do see that policymakers continue to support this clean mobility trend, and this is also reconfirmed by the Green Deal as published recently. Now, this is where we are for 2024. Now, in a second step, and we're using here a layered approach, is that we're taking stock of what we have today. And today, we have an interesting footprint, and as well, we have a projected order book. And we brought those elements together in a base scenario. And some of the main assumptions and main considerations in this scenario are: we have at least an 18-month delay in ramp-up of customer contracted volumes. We see substantially reduced volume projections, reflecting the current off-take commitments at take-or-pay thresholds in line with the currently confirmed investment waves. We are more prudent on our assumptions on operational cost evolution, and we're minimizing further expansion of the existing footprint in Europe and Korea in order to serve our customers with the contract that we have today. This will result in lower CapEx spending going forward. This will also result that at the end of this decade, in the last years of this decade, we will have a well-utilized global capacity at the exception of our Chinese CAM assets, basically in China. So what is the consequence of this? We're taking an impairment across the Battery Materials business. This is a €1.6 billion non-cash adjustment, mostly related to property, plant, and equipment, and non-current inventory, mainly in Asia. This means that the remaining book value that we'll have at June 2024 stands at €1.5 billion. So the remaining book value, €1.5 billion. The Battery Materials EBIT will remain negative or below break-even in 2025 and 2026. In the last years of this decade, we will see returns above the cost of capital. Now, what I now discussed is the base scenario and where we take stock of what we have today. This is not an end point. This is the basis from which we start and build further for our strategic review. That is also what we're continuing to do in the next months. We are now having a comprehensive and structured review to see how we can further unlock more business value from this business. We're exploring opportunities on top of the current base that we have, and we do this in close cooperation with all our stakeholders, but then particularly also with our downstream industry partners. The guiding principles for this review are: we will focus on maximizing our capacity utilization of the existing assets first before we consider any further expansions. We're looking at our global footprints, and this includes, of course, Asia, Europe, but as well Canada. For Canada, we can say that pending the outcome of our strategic review, which is still ongoing, we are delaying at this moment in time our spending for that site. Again, no conclusions taken for that site, but we're spending our investments until we have that final review done. Further, we will optimize the battery material setup in close alignment with our customers and their new growth path. We will continue to leverage on the strong agreements that we have and on our differentiating CAM position that we have in Europe, which I do feel that our customers value a lot. We will focus on further customer diversification, and we are open to partnerships along the full value chain. Our focus on technology, as well as operational and cost efficiency, will remain an integral part of this review, and we will come with our conclusions at the Capital Markets Day in Q1 2025. Next to the review of the Battery Materials update, of course, we also keep focusing on our other business groups, our foundation businesses, and their strategy execution. At the same time, at group level, we are implementing capital and cost discipline across the group. Now, what I also felt in earlier discussions and based on feedback is that there might be merit in trying to explain our take-or-pay mechanisms even more clearly. So how do these take-or-pay mechanisms actually work? So on the one hand, we have a contractual annual off-take volume, which is agreed upon for the confirmed investment waves. That means that for every confirmed investment wave, there's a dedicated annual contractual volume, which is fixed. Next to that, we have also a take-or-pay floor defined as a percentage of that contractual annual volume. And that percentage is also defined for that specific year. So there's a specific percentage and a specific contractual annual volume for a given year. Now, at the start, and especially in the first year of the ramp-up of SOP, the first year of SOP, that percentage is somewhat lower. While once the contract is up and running, these percentages on average go to 85%. Now then, annually, what do we do? We look how much did the customer or how much will the customer take in that specific year, and then we compare it with the annual contractual volume multiplied by the take-or-pay percentage, and that difference, if the customer volume would be below that take-or-pay floor, we will receive a compensation. Now, let me transition to the key figures and highlights for the first half of this year. Now, we have been operating against a softer macroeconomic environment and also a less favorable metal price context for PGMs. Our revenues will stand at EUR 1.8 billion for the first half of the year. We have EUR 168 million free operating cash flow, 20% Adjusted EBITDA margin, and EUR 393 million Adjusted EBITDA. Our ROCE stands at 11.3%, and our leverage will be at 1.7. Yeah, that's where it is. Now, if I look high level at the performance of the different business groups, I should say that actually our foundation business is broadly in line with market consensus. Catalysis had another set of impressive margins, 25% return on capital of 40%. Our Recycling business continues to do well with EBITDA margins of 36.5%, a return of capital close to 70%, and this despite lower PGM prices and a maintenance shutdown. Our Specialty Materials business also had a good performance but was suffering somewhat from a more difficult market context for cobalt and specialty materials, and there the return on capital came in around 8%. Our Efficiency for Growth program is well on track, and this should yield EUR 70 million, as you know, for 2024, and I can tell you that we're there good on track and already more than halfway in two and a half of this year. We remain committed to a strong balance sheet, and we have a resilient debt maturity profile, and Wannes will talk more about that later in the presentation. We also reconfirm our Adjusted EBITDA outlook for 2024, and this will be in the range of €760-€800 million. Let me now transition to an overview of the different business groups, and let me start off again with Battery Materials. Now, I've talked about this before. We see that the market is changing. We see a slowdown in the ramp-up, and this is what we have to take into account for the short term, but also for our longer-term evolution. So if you then look at 2024, for the first half of this year, we do see a decline in our revenues and Adjusted EBITDA, which is quite significant versus last year. Revenues are down 33%. At the same time, our volumes are broadly in line with H1 2023. Our Adjusted EBITDA is close to break-even, and this EBITDA includes costs related to the startup of our greenfields in Canada as well as in Poland, EUR 170 million in CapEx, and of course, the EUR 1.6 billion impairment, which I highlighted earlier. When I go to Catalysis, there we see that the market actually, in terms of ICE productions, is globally flat. Now, it does disguise some regional changes. On the one hand, we see strong growth in China with 6%. Americas more muted. 3% decline in Europe, but especially Japan and Korea is rather weak. We also see in the HDD segment a decline in Europe with 13%. China, the HDD volumes remain at a low level, and despite that, they had a small growth, but overall low level. Now, if you then go to the underlying performance of the business, despite this more difficult market context, our EBITDA is still reflecting a very strong performance as it's in line with last year, and this is thanks to strict cost discipline and efficiency measures. In the automotive catalyst business, we are significantly improving our quality of earnings. Despite some lower light duty and HDD sales applications, we do see strong underlying performance. So in the future, it's not only about top-line development, it's also about the improvement and the evolution of the quality of earnings, and that's what we're working on, and that's what the teams are doing very successfully. We've started also the streamlining of our R&D organization, as we announced earlier, in the context of the maturing market of ICE, so internal combustion vehicles, but also in the context of the weaker Euro 7 legislation. In the PMC, we saw slower sales in the homogeneous catalyst business, but overall, despite the lower PGM prices, we did see that results are resilient and our metal hedges made up for those hiccups. The fuel cell market remains difficult in China, and the earnings of that business are affected by costs that we are incurring related to the startup or actually the construction of our plant in Changshu as anticipated. This project is on track and going well. Now, if we look at Recycling, there we also have some important news to share with you today. So we have taken some decisions around our Battery Recycling Solutions business. So what we basically, we came to the conclusion that we're going to postpone our investment in a large-scale European battery Recycling plant with a startup of production anticipated not earlier than in 2032, 2032 at the earliest. This, given the slowdown in EV sales, what does that mean concretely? Short term, there will be a lower availability of battery scraps. There will also be a delayed influx of end-of-life batteries as a consequence of this slower trend. But we also see that there's a longer useful life for batteries. As such, good news for the market, but that means that these batteries will come back only later to be recycled. Now, in the meanwhile, we are continuing to focus on the further industrial developments and deployment of our pilot plants in Hoboken. We're further optimizing our technology, and I'm talking, of course, here about the Hoboken plants in Belgium. Now, coming to the broader context of battery prototypes, that broader context of Recycling, and there, of course, the PGM prices do play an important role. We see that rhodium is down roughly 50% year-on-year, palladium 35%. You can imagine that for a business that has significant or high exposure to these metals, that this has an impact on our results. That's also what we see basically when we look to the H1 performance. Now, our revenues are down 30%. Our EBITDA is 16% for that business, and this reflects a less supported precious metals environment, as I highlighted earlier. Now, for the Precious Metals Refining business, we can say that our suppliers' mix is broadly in line with last year. Our revenues, of course, are impacted by the unfavorable PGM price environment. At the same time, in Q1, we also had the first, we also have the plant maintenance shutdown, right? That's all according to plan. Now, if we look at the earnings, these earnings are still robust and strong on the back of further efficiency improvements that we have taken, as well as a reduction in the energy costs. For the Jewelry and Industrial Metals business unit, we see stable revenues, but also here higher earnings based on cost discipline and efficiency measures. For Precious Metals Management, there, especially the rhodium environment was unfavorable, and therefore the earnings were significantly impacted and will be lower than last year. Let's now come to the specialty materials business group, and we report for the first time on this business group, and that's a business group which highlights, which actually centers around three business units. So cobalt and specialty materials is really working on cobalt and nickel chemicals and in all a variety of applications with a very strong distribution footprint. We have the metals deposition solution. It's all about layering semiconductors, microelectronics. That's what this business is focusing on. So coatings, that is the focus of that business. And then Electro-Optic Materials. Here you can think about solar panels in space, but also night vision. You can think about fiber for your internet. So germanium is in quite a lot of applications here as well. Now, the cobalt and Specialty Materials business unit is operating in a difficult market context, especially for cobalt. And this is, of course, also related to the weaker environment that we see for the Battery Materials business, as these metals are, of course, playing in both markets at the same time, and these are communicating vessels. For metals, the earnings are also reflecting that, while our revenues are relatively stable. Metal Deposition Solutions, there we see solid performance, solid earnings, solid revenues. Electro-Optic Materials, we see an increase in revenues. Our germanium solutions business is doing well. We see a slower demand in the optic fibers, and we have some production backlog in the infrared solutions. We also would like to highlight that we signed a long-term partnership with a company called STL on the refining of germanium in the Democratic Republic of Congo. Now, this is wrapping up the business group overview and section, so maybe Wannes, if you could guide us through the financial numbers, please. Yes, sure, Bart. Good morning to you all. As mentioned earlier by Bart, the performance across the different business segments was impacted by the softer macroeconomic environment and by a less favorable metal price environment. This resulted in revenues being 13% lower versus the same period last year, now amounting to EUR 1.8 billion. In Catalysis, volumes were down due to a less favorable customer and regional mix in the light duty vehicle market and a more challenging heavy-duty diesel market in Europe and China. In Battery Materials, while CAM sales were broadly in line with the first half of last year, the revenues from the refining activities decreased, and additionally, last year's revenues still included a non-recurring lithium margin effect. In Recycling, revenues were down due to the plant maintenance shutdown in Precious Metals Refining and the lower contribution from the trading activities. Now, the Adjusted EBITDA amounted to EUR 393 million, which is EUR 125 million below last year's first half. The good traction of initiatives around efficiency, together with the PGM hedges, helped us to offset some of these market headwinds, in particular in Catalysis and Recycling. In Battery Materials, EBITDA declined due to the absence of last year's one-off items and due to the increased cost basis related to the greenfield investments in Poland and Canada. The EBITDA margin for the group remained strong at 21.8%. Margins in Catalysis increased despite lower volumes, clearly illustrating the increased quality of earnings. The ROCE of the group reached 11.3%. This takes into account the impairment and write-off of capital employed in Battery Materials for EUR 1.6 billion. Last summer, we introduced a company-wide efficiency program called Efficiency for Growth. For this year, we targeted a saving of EUR 70 million, and today we achieved more than 50% of that target. The implemented initiatives include charging partners for additional services, better prices and payment terms for raw materials and services, increased throughput in operations, optimizing the usage of raw materials in our product, and improving the yields in our processes, so basically reducing waste or the cost of rework. Now, considering the latest challenges in Battery Materials and the overall market softness, we are now identifying additional cost savings and cash improvement measures across the group, and we expect to land on this target in the second half of this year. Now, moving to the consolidated P&L. Taking into account depreciations and amortizations of EUR 152 million, Adjusted EBIT amounted to EUR 241 million versus EUR 373 million in the same period last year. The adjusted net finance cost decreased to EUR 56 million, reflecting higher interest income on our cash deposits. The financing cost of gross debt remained stable, with the average cost of gross debt at 3.3%. The cost of debt is expected to remain well under control, considering the maturities of the existing instruments and the conditions of the recently secured funding instruments. The adjusted tax charge decreased to EUR 67 million. This is driven by the lower adjusted taxable earnings. In combination with a higher provision for uncertain tax positions, this also resulted in an adjusted effective tax rate of 36.3%. The adjusted net profit group share amounted to EUR 118 million, which results in an Adjusted EPS of EUR 0.49. The supervisory board proposes an interim dividend of EUR 0.25 per share, which will be paid on August 21st. The net result group share was impacted by the non-cash impairment and write-off in Battery Materials of EUR 1.6 billion, which amounted to approximately EUR 1.5 billion. Now, moving to the balance sheet. The balance sheet of the group continues to be strong despite the EUR 1.6 billion impairment and write-off in Battery Materials. Liquidity is high, with close to EUR 1.3 billion of cash at the end of June. Considering the net financial debt of EUR 1.4 billion and the equity of EUR 2 billion, the net gearing ratio remains balanced at 41.6%. Now, looking at the cash flows, I would like to highlight that the free operating cash flow amounted to EUR 168 million. Cash flow from operations before movements and net working capital amounted to EUR 185 million. Now, net working capital for the group decreased with EUR 269 million. Next to declining PGM prices, the strong focus on payment terms and inventory management helped us to reduce the working capital needs in Catalysis and in Recycling. Capital expenditures, including the capitalized development expenses, decreased to EUR 285 million, which is almost 20% lower than last year's first half. This reduction is primarily driven by Battery Materials, with the key investments in the first half of the year being the expansion of the European and North American footprint and some upgrades to the Korean plant. As mentioned earlier by Bart, we are actively managing the cash out across the company. For 2024, we aim to keep the CapEx below EUR 650 million by pausing or delaying projects across the company. Now, looking at the net cash flow bridge, you can see that the net financial debt increased with EUR 166 million and now amounts to EUR 1.4 billion. This equals a leverage of 1.7x the last 12 months' Adjusted EBITDA. The free operating cash flow of EUR 168 million covered partially the cash out related to taxes and financing, dividends, and also an equity injection into IONWAY of EUR 100 million. We continue to be committed to a strong balance sheet going forward. Although we expect net financial debt to move up towards the end of the year, we continue to expect our leverage to remain well below 2.5 by the end of the year. Now, as Bart mentioned earlier, we want to highlight also that the group has a debt profile that is well spread, as you can see in this graph. We have an average maturity of 5.6 years, and the long-term debt is fixed rate. Also important to highlight is that the debt to refinance between 2024 and 2026, and this includes the 2025 repayment of the EUR 500 million convertible bond, is fully covered by the new debt contracted in the first half of this year. So this year, we concluded an 8-year loan agreement with the European Investment Bank for EUR 350 million, supporting the financing of our R&D activities at attractive conditions. A first tranche of €250 million was drawn in February, and a second tranche of €100 million will be called early 2025. Next to this EIB loan, we completed in April a fixed rate sustainably linked U.S. private placement note for €499 million. This consists of tranches with maturities ranging from 7 to 12 years and a weighted average maturity of more than 9 years. We have drawn the funds in the meantime in the course of July. Now, as we shared earlier, we have entered into forward contracts locking in larger shares and longer periods of the strategic metal exposure at historically attractive prices. In these graphs, you can see that over the past six months, we increased forward metal hedges, in particular for rhodium in 2027 and even in 2028 now, and across the entire period for gold and silver. We also increased forward hedges for platinum, but to a lesser extent, as we expect more upside on this metal given its usage or future usage in fuel cell catalyst applications. This metal hedging approach enables us to protect future cash flows from metal price volatility, and it also provides better visibility on our future earnings. So here, I would like to conclude the section on the financial performance and hand it back to Bart. Thank you. Yes, thank you, Wannes, for that. And let's now have a look at the outlook for 2024. So based on the performance in the first half of the year and assuming precious metal prices remain at current levels for the remainder of the year, Umicore reconfirms that it anticipates 2024 group Adjusted EBITDA to be within a range of EUR 760 million-EUR 800 million. So for the Battery Materials business, we are expecting volumes in line or slightly below versus last year. We will have an EBITDA around break-even with a one-off of EUR 50 million, which is positive included in that number. For Catalysis, we are expecting the EBITDA of the business group 2024 to be in line with the previous record year, and this despite the lower price environments. For the Recycling business units, the EBITDA will be below the level of previous year, but broadly in line with the current market expectations. For specialty materials, here also, the expected EBITDA will be below last year, and this is somewhat below the current market expectations. So now, before going to the Q&A, I would like to still make a wrap-up. So what have I been sharing with you right now? First thing to remember is that we are adjusting to the new reality in Battery Materials. The market situation has changed. It's affecting the overall industry, and also Umicore has to react to that and respond to that and see that reality. That's what we are doing, and we're taking actions immediately. We have tried, we have actually shared with you today a view on 2024. We have shared with you a base scenario, what we have today, contracts and footprints that we have. We have mentioned to you that there's a significant painful impairment that we have taken. And therefore, we now, from this basis, will continue to review our Battery Materials business, and I'll come back to that in a Capital Markets Day in Q1 2025. Now, when situations are difficult or some areas are not going as planned, it's always tempting to look at the things that can be better. That's human. That must be that way. At the same time, we should also remind ourselves what we do have and also focus on the strong fundamentals that we are building on. Our three other business groups are performing well. They are world-class businesses, and they really are the backdrop of the company. And this helps us to go through these more difficult moments, especially for our Battery Materials business. Another strong fundamental in our organization is our people. We have a deep expertise. We have a deep knowledge. And this is what you hear each and every time when you talk with industry participants out there. That credibility, that depth we have. I also have seen from our colleagues the resilience and the courage and the willingness to succeed. And we're going to face these challenges head-on and have full trust that together we'll get through this step by step, day by day. Today is a period of repositioning for seizing opportunities, which will come in the future. If that day comes, we will be ready. So thank you for that. And I would like now to go to Q&A. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. Kindly limit to one question only. We will take the first question from Ranulf Orr from Citi. The line is open now. Please go ahead. Hi, Ranulf. Your line is open now. Please go ahead. There's no response from Ranulf line. We will take the next question from the line of Chetan Udeshi from J.P. Morgan. The line is open now. Please go ahead. Yeah, hi. Thanks for taking my question. I was just wondering, first, just coming to your auto catalyst business, pretty strong margins. Is this all underlying, or was there some unique specific one-off that may have supported the numbers? Because clearly, the margins in your catalyst business have been surprising on the upside now for the last two, three years consistently. And just in the context of some recent data suggesting maybe things are worsening in autos, can you also remind us or just indicate to us what you see in the business as we look into third quarter at this point? Just coming back to Battery Materials, it feels like at the moment, yes, you are adjusting to the new reality, but it doesn't feel like you are taking any dramatic actions at this point in terms of footprint optimization, etc., etc. If anything, you are saying your EBIT will remain below break-even now till 2026. So is it the base case for Umicore now to just wait for the market to recover and then participate in that recovery? Is that the way we should think about your Battery Materials strategy going forward? Yes, thank you for that. And maybe Wannes, you take the first part on the automotive catalyst, regarding the financials. Yes, sure, Bart. So looking at automotive catalyst, on the one hand, we have the volumes and the revenues. We are at a level where the volumes are peaking. In 2024, you see that the volumes have somewhat come down. At the same time, structurally in Catalysis, the teams have been working on EFG. And EFG consists out of different components. First of all, there's a top line looking at the pricing elements where the teams have been very active in pricing upwards, I would say, also including additional elements in the pricing. But also, if you look at procurement, the procurement of raw materials, raw materials used in production and in the product, those are also subject to negotiation, to price negotiations. And also looking at efficiency in the process, this is where continuous improvement continues to be made in order to drive the cost down. So it's really a structural improvement of the quality of earnings. I think also looking at the return on capital employed, what we also see is that the team is working on the net working capital, so reducing the inventory necessary across the operations, but also looking at payment terms with suppliers, improving those payment terms, also helping to bring down the net working capital. So also that plays into the overall equation looking at the process. Yeah. Exactly, Wannes. And I think this is basically the result and an applause to the many colleagues and the change in culture that we had over the last three years in that business. So going forward, please don't only look at the top line, but also look at the structural improvement in that quality of earnings and basically the lower PGM dependency that we will see going forward. So yes, we're proud of that. Yes, it's exceptional, but that's the merit of hard work and the position that we have in the industry. Now, your question on H2 is that in our forecast, we did factor in some slowdown in those sales. So we see some softness in the market, but still not at the level of 2019, that's for sure. And we also see that in overall, the average lifetime of a car is now 12 years instead of 10 years. So we do see that in this macroeconomic environment, consumers have been postponing already quite a while buying a new car. So I'm not sure how the next years will evolve, but if these consumers ultimately buy a new car, this would lead to an upside for this business potentially later on, especially if the electrification growth rates would remain, yeah, a bit more muted as they are looking now today. Now, coming to your question on the Battery Materials business, what I've been focusing on for the first months that I'm here now, it's now roughly two and a half months if I'm calculating in the royal way, is that we want to bring clarity. And I'm using a layered structured approach. So first, clarity on 2024, that's what the market needs immediately. That's what we need to do. We brought that clarity. Now, secondly, we're taking stock of what we have. And we looked at the customer commitments, the customer contracts that we have on which we can build. We look at the capacity that we have available in China, Korea, and of course, Europe. We brought those together in a base scenario. This is the basis from which we're now continuing our Battery Materials review. So you should not read any conclusions in these statements. It's the base from which we're starting our review. We're looking at many opportunities, many different scenarios, and we will be further refining those as we go forward in the next months. Our conclusions will come in Q1 2025. We're following a structured, detailed process. Thoroughness, that's what we do here at Umicore. We'll take our time. That's why I decided that the Capital Markets Day will be in Q1 2025. So can I confirm? So are you saying the numbers you are putting in the slide, which is EBIT anticipated to be below break-even in 2025 and 2026, that's before any actions that you might take post the strategic review? Exactly. And that's a very important remark that you make here. And it would have been better if I'd spelled it myself, but indeed, this is the assumption for the base plan. So any further actions, talking about cost improvement, talking about bigger decisions as you or more bold decisions, as you refer to it, are not included in that. So this is what we know today with what we have today without doing any further actions. Okay. And last question, sorry, not to give I'm sure others have questions as well. In terms of your take-or-pay agreements, have you really retested them in this market scenario? Because we've seen in the past with Umicore, the take-or-pay agreements haven't held in the past. So I guess this is the concern that why would customers still hold them in this environment? Yeah. Well, there's a reason why there are take-or-pay mechanisms, Chatham. The reason is that the Battery Materials business is a nascent business. That means supply chains have to be shaped. And if you want to do investments, there has to be an outlook on offtake, right? And there has to be a level of security because, I mean, these are business, these are expensive, and these are huge investments that we're making right now. That's why these contracts have been drafted that way. That is the underlying spirit of both parties signing these contracts, and both parties have signed knowingly these contracts. I can confirm that today these contracts are in full force. And of course, that we will stand by these contracts. And there's not any discussion ongoing on these mechanisms as we speak. Thank you. Thank you. Thank you. We will take the next question from line Ranulf Orr from Citi. The line is open now. Please go ahead. Hi there. Can you hear me now? Yes, yes. Welcome. Yeah, great. Thanks for the question. So firstly, just on IONWAY, I mean, I guess in light of the discussions today, I mean, what should we make of the recent press articles regarding IONWAY scoping new sites in Canada, talking to the government there, and in North Spain as well? I mean, does that sort of signal a shift to even more reliance on JVs and sort of partnership funding? Second question, given maybe now feels like the time for transparency, I mean, can you give more specifics on what the positive one-offs in Battery Materials were last year? And then thirdly, could you just talk about the mood across the employee base in the company given the struggles in Battery Materials and how you were sort of supporting that? Thank you. Yes. Thank you. Indeed, on IONWAY, I think you also saw the news article that came out yesterday with the CEO, Blome, from PowerCo. I mean, they still see a very strong trend going forward. They reconfirm their position and their belief in that path. And as you know, IONWAY is a joint venture that we have together with PowerCo. And our conversations are in a positive spirit. We continue on our path. What we have included in our base scenario is what we know today, the waves that we are building and basically committing to at this point in time. Anything that would come in the future would come on top, of course, of that base model, which is not included today. So we stand by our IONWAY joint venture. And of course, we're looking into different options and scenarios as any other joint venture would do together with the other shareholder. So yes, we're still very excited about this venture. Now, maybe on your question on the 2023 one, could you please take that one? Yep. So looking at transparency, looking at showing better the underlying performance, what we have decided today is to show 2024, to break up the business group into Battery Materials and specialty materials, and also to be explicit on 2024, what are any unusual elements. This is something we highlighted earlier in the course of June. Now, today, we are furthering setting that baseline, basically, looking at the baseline that led to the impairment. Also here, we try to create clarity. We try to create transparency on where we are. So going forward, we will focus on 2024, explaining what is driving the results, the underlying performance, and where we are. So 2024 is first, the baseline that we will work on. Yes. So thank you, Wannes. And regarding the mood of the employee base, well, I came a bit to it in my concluding slide or wrap-up slide. And of course, everybody recognizes that this situation where we are with Battery Materials is not where we want to be. Of course, this is not fun. We understand the seriousness. And yes, that impacts our colleagues. Now, what I've seen in the last two months is enormous resilience. I mean, when I walk through the corridors here in the office or I go into the plants, people come to me and say, "Bart, we're going to do this together." I mean, we know that in difficult times, we're at our best. So I feel a lot of resilience, a lot of passion, a lot of belief. And I truly feel that we are uniting throughout the group. The group together wants to win. The group together wants to get through these more difficult times. We'll have to make tough decisions. That's real. We're open to that. Our colleagues know that. But we are resilient. We have experience. We are strong. We have a basis to grow from with our conflict that we have. And throughout the group, I feel the support. And we'll get through this day by day, step by step. Great. Thank you very much. Maybe I could just try and clarify one more time. I mean, the positive one-off in 2023, was that bigger or smaller than the EUR 50 million positive one-off this year? It was substantially larger. Yes. Great. Thank you. And as we said at the time, it was driven by the lithium margin, but also looking at some of the valorization we did on the scraps containing lithium, that also helped. Thank you very much. Thank you. We will take the next question from Line Riya Kotecha from Bank of America. The line is open now. Please go ahead. Hi, good morning. This is Riya speaking. I've got a couple of questions, please. My first one is on the Battery Materials impairment. As I can see, the impairment is mainly on the Asia assets. Why do you think the European ones may be on the same at some point, given we're seeing similar trends in the European market in terms of shifts in battery technology? My second question is a bit more on the value creative nature of the business. So now you've pushed out when you think this business will make its cost of capital, which is the last years of the decade, versus just one year ago when that was expected to be closer to mid-decade. So how convinced are you internally in this projection and therefore whether this is a good business to play in when things can change so clearly? Just following up on that, over the past one month since you first addressed the market, EVs have arguably become worse. ICE may be a bit better. At your H1 result, we can see that the returns you're making in Catalysis and PGM Recycling are brilliant. It's over 40% in Catalysis and 70% in Recycling. You're essentially Recycling cash from that into a business that made a -5% ROIC at the first half, which obviously is underearning. But internally, what are the debates you're having as to why you think this is a good business to play in rather than an exit or a sale from the assets? Okay. Maybe let me start with the impairment exercise. So looking at the impairment exercise, what we did is we looked at the existing assets and the existing contracts. As you know, looking at the existing business, we have the China volume that did not take off this year. We have the legacy contracts that are tailing off. We also have the other contract where we expect a delay of 18 months. This is something we take into account when looking at our baseline. At the same time, we also assume that we will minimize the expenses going forward, that we will use the existing asset base. Basically, Europe, Korea, and China. Based on the current volume commitments and volume projections in line with the current investment base, we also reduced substantially those volume projections. Now, if you look at the final picture where you land and the impairment value you get to, I think this is driven by a couple of elements. First of all, there's the assets in China where we believe, or in the base case, we assume that those will remain underutilized. That is driving a large part or a large share of the impairment. That's why we also highlight it's mainly related to Asia. Also looking at the ramp-up, the ramp-up is somewhat slower in Europe. There also drives some of the overall impairment value, I would say. Looking at the value creation, yes, we continue to see in that base case scenario that there is a value creation towards the end of the decade. This is again driven by the existing assets that we have and by the contracts that we have, the strong contracts that we have. At the same time, this is a base case. This is a scenario based on what we have today, what we see today, but it's also a basis for future growth, I would say, for future, for the strategic review, which is still ongoing. Yeah. Indeed. That's right, Wannes. The way you have to see it, Riya, is that the base scenario that we're showing right now is showing what we know today, right? We're not saying anything else. We're showing what we have today. In the meantime, we're still performing our further strategic review. We're engaging with our stakeholders. We're talking to our customers. And the last weeks and months, besides, of course, working on all these things, I've been heavily engaging also with our customers. And I'm talking here battery makers, but also even further downstream OEMs. And I can tell you a bit what we were talking about in these meetings. Clearly, everybody was talking about the slowdown, electrification, and those growth rates. Everybody was talking about low capacity utilization. And we see this across, so battery makers, but also based on cathode materials, you can see that also other catalytic material makers are facing the same. The second part was then, okay, we now have this low capacity utilization. How long will it take to get back to a normal situation? That's where a lot of the discussion was revolving on. But every time and every meeting, and this is with potential as well as existing customers, Europeans or Asians, it always came back to Europe. And it said, "What's your view on Europe? You there have a strong asset in Europe. What's your view, for instance, on local content requirements?" So you clearly feel, you can clearly feel that these battery producers, that these downstream producers are really still eyeing local supply chains in Europe. And if I'm in this discussion with these customers, right, they're really also talking about NMC. And they're really saying, "Okay, we see that you have a plant. We see that you have contracts. Let's see where we can go." And therefore, as a critical or an important element in our further strategic review, which will take time because these conversations do take time, it will be reflecting, okay, how strong is now this differentiating asset that we have in Europe? And I do believe that we have a strong differentiation. We have the biggest operational plants in Europe. We have contracts underpinning. And I see that other potential customers, including Asians, are also clearly eyeing to Europe. Yes, there will be some LFP, but there's also going to be a big space of NMC. And that's why my customers tell me. And that's why I also have that conviction. And yes, if you look at the capacity available in Europe, this is way below the growth forecast that also our customers show today for NMC in Europe. So yes, I still see options beyond this. And this gives me the conviction, of course, that we can go to value creation. If that path will not be clear, of course, we're following a structured process. And this will ultimately lead to the good solution, right? That's on that part. Now, for the rest, I think you were talking about the great returns in our business. And maybe, Wannes, if you would like to speak to that further. So maybe coming to your question, Riya, on the capital allocation, you're right. I mean, looking at Catalysis, looking at Recycling, excellent, great business, world-class businesses, world-class performance. We allocated capital to Battery Materials as we also saw and still see a unique positioning and great return targets. Given the current performance, this is where we are clearly taking actions, where we are slowing down the CapEx in Battery Materials, where we are taking stock of where we are and looking how to further improve the shift. So at this very moment, we have that action of slowing down CapEx in Battery Materials because of the challenges. And we have the strategic review going on. Exactly, Wannes. So basically, any capital allocation that we now see to the Battery Materials business will be to finish off mainly our Korean and European assets to serve all the contracts that we have under the belt today because we have strong contracts under the belt. Any future excess or more capital allocation on top of what we do today is part of this strategic review. And we'll give you more insights in Q1. That's really clear. Thank you. I've just got two quick follow-up questions if you don't mind. First, can you help quantify how much of a drag the underutilized China plant is on your EBIT for Battery Materials? And if you were to just shut the plant down, any idea of what uplift you would get? And my second question is on the combustion engine outlook. Are you able to give us anything a bit more near-term into the third quarter about how the market has developed? Are you seeing any suppliers going into early summer shutdowns? And just some context around that would be really helpful. Thank you. Yeah. Now, of course, talking about specific operations that we typically don't do, of course, I understand that this could be interesting information, but probably it's also interesting information for more than just broader use. So this we cannot share. Now, right now, of course, this capacity is slowly utilized. That's also in the plan. But again, this is not the endpoint, right? We're still looking into options. How can we take use of this asset going forward? This is part of the strategic review. And this will lead then ultimately to the decisions that we take. But today, that's not where we are. Now, if you ask on the evolution in the car market, we do see some softness in the last months. And that is reflected in our forecast. And if you assume that the current softness prevails, yes, of course, our outlook will stand. And that's why we confirm. So that's where we are today. Okay. Thank you. That's really helpful. Thank you. Thank you. We will take the next question from the line of Charlie Bentley from Jefferies. The line is open now. Please go ahead. Hi. Can you hear me? Yes. Wonderful. Can I just ask on the impairment? Can you just give any detail on the split between CapEx and inventory adjustments? Because I remember two CEOs ago, there being an amount of permanently tied-up working capital that appeared to be capitalized at a very, very high cobalt price. So I'm just wondering how much of this is related to pure CapEx being taken down and how much is working capital. And as related to that is essentially how much CapEx is kind of in the remaining capital employed in the business, just so we have a good idea of a run rate, D&A rate. That would be my first question. And the second one is just in terms of the strategic review, I mean, are all options on the table? Is option I mean, obviously, you've got some very well-positioned assets in Europe. I guess if you think about how attractive some of those are potentially, is the idea that you could completely exit the business, you could divest of everything in some way, is that being considered? Or is that purely is that off the table? Thank you. Okay. Good. Let me maybe start with the impairment question, trying to break it down. So if you look at the impairment exercise and then look at the capital employed before and after, the capital employed in Battery Materials stood at EUR 3.1 billion. And we now impair EUR 1.6 billion non-cash. And that brings it down to EUR 1.5 billion. Now, looking at the impairment, out of the 1.6, EUR 1.5 billion is related to non-current assets. And then if you look at those non-current assets, we have property, plant, and equipment where we took a EUR 1 billion impairment. And looking at the property, plant, and equipment, before impairment at the end of June, we were at EUR 2 billion net book value. After the impairment, we are now at EUR 1 billion of net book value. And then talking to the non-current inventory, this is where the permanently tied-up inventory in the operations indeed is overvalued. If you look at today's metal prices, and we talk about cobalt, but we also talk about nickel, sorry, about lithium. So looking at cobalt and lithium, this is where the overvaluation basically and the mark-to-market led to an impairment of EUR 400 million on the permanent inventory. Yes. And to your broader question on the strategic review, well, in essence, of course, a strategic review looks at everything, right? I don't have any preconceived ideas today. So there's openness, right? Now, at the same time, I also said that we're looking at partnerships along the value chain. And you should not read too much in that as any conclusion on partnering of the business or selling of the business. No. My belief here is that this is a nascent industry. That means we have to bring visibility. And visibility you can only bring if you build supply chains. That starts all the way from raw materials all the way to the car OEMs. Yes, I'm open and probably more open than we were in the past because initially, Umicore fought to do a lot of things on their own. Now, if there are options in certain sections of the value chain that would trigger more value creation or would unlock more potential, we will look into those. We are open for these options. Again, we're looking at this thing holistically. We have a structured process. We have clear gates that we're going through. Ultimately, that will lead to good decisions on which we will share then the direction and the outcome in Q1. Thanks very much. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. It appears no further question at this time. I will hand it back over to your host. Thank you. All right. Well, once more, thank you, everyone. Thank you for attending. For us, this was an important update that you can understand. Some of you we will see still in the days to come. But for everybody online, thank you for being here. And I wish you all a wonderful day. Thank you for participating in today's call. 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