BAKU, Azerbaijan () -- Umicore [Euronext:UMI], the Belgian diversified metals and minerals producer, established a beachhead of sorts on North American shores with the Dec. 17 announcement that it had reached an agreement to acquire privately held Imperial Smelting & Refining Co. of Canada Ltd.
Flush with its share of the capital proceeds from the Oct. 29 flotation of Nyrstar on Euronext, "the acquisition of Imperial will provide our group with a market entry into the North American jewellery industry," commented Dr. J"org Beuers, head of Umicore's Jewelry and Electroplating business unit and CEO and Chairman of Allgemeine (Allgemeine Gold-und Silberscheideanstalt AG), of which Umicore owns 90.8%. "In addition to the local production platform we will be able to supply this market with products and services from our Pforzheim plant."
A family business founded in Toronto in 1914, Imperial generated revenues of EUR5.8 million (US$8.535 million), excluding metal value, in 2006 and is considered the leading supplier of precious metals products and recycling services for the Canadian jewellery industry. It also supplies the U.S. market.
Entr'ee to the North American Jewellery Market
Umicore's Jewelry and Electroplating business unit, into which Imperial will be subsumed, is headquartered in Europe and has operations in Thailand, as well as Germany, the Netherlands and Austria. The acquisition of Imperial adds an established, profitable complement to these businesses, as well as the potential to expand in the US market.
In a Q3 2007 Trading Update Umicore reported that positive trends exhibited in the first half of this year for its Jewelry and Industrial Metals business were continuing in the second half.
"Demand for silver products in Europe remains buoyant and sales, particularly of silver coin blanks, were well up year-on-year. Sales of gold products for jewellery applications continued to grow steadily," management reported.
Its electroplating business produced solid revenue growth. "Sales of gold and platinum electrolytes for industrial use, as well as rhodium products for decorative applications developed positively. The capacity expansion investment for high temperature electrolysis products based on platinum remains on course for completion in 2008," according to an Oct. 30 media release.
Jewellery and electroplating is part of Umicore's Precious Metals Products & Catalysts group, which also includes Catalyst Technologies, Automotive Catalysts, Platinum Engineered Materials, Thin Film Products and Technical Materials.
Nyrstar Flotation; Share Buyback and Stock Split
Umicore and Australia's Zinifex on Oct. 29 announced the completion of Nyrstar's flotation on Euronext Brussels. Nearly 87 million shares were sold at a final offer price of EUR20 (US$29.43) per share.
Nyrstar is the world's largest zinc producer. Umicore expects to net some EUR680 million (US$1 billion) as a result. A greenshoe over-allotment option was not exercised by the underwriters, leaving Umicore and Zinifex with 5.25% and 7.79% shares of the company, respectively.
Umicore's management and Board of Directors decided that most of the proceeds from the flotation can best be put to use by enlarging a recently completed EUR150 million (US$220.725 million) share buyback program. On Nov. 21, they announced that an additional EUR400 million (US$588.6 million) will be repurchased pending approval at an Extraordinary General Meeting of shareholders to be held in early 2008.
The Board will also put up for shareholder approval a proposal for a one-for-five stock split, which would bring the total number of shares to 125 million. All new shares would be delivered dematerialized - digital as opposed to physical - as per Belgian legislation.
Results through Q3
With diversified downstream metals operations, Umicore continues to hit on almost every cylinder. Overall revenues increased 9% year-over-year through Q3 2007. Precious Metals Products and Catalysts group revenues were up 12% year-over-year.
While it isn't directly involved in mining, the company's downstream production and recycling operations supply a host of precious, specialty and industrial metals and minerals to a broad range of industries. Precious Metals Services, Zinc Specialties and Advanced Materials round out Umicore's core groups, with Element Six Abrasives and the residual holding in Nyrstar completing its current structure.
Production of germanium semiconductor substrates, for instance, was the fastest growing business line, growing 3% through Q3, in its Advanced Materials group, which also includes Cobalt & Specialty Minerals, Electronic Materials and Electro-Optic Materials.
Umicore's Precious Metals unit, part of its Catalyst Technologies unit, continues to grow revenues as the company invests in growing the business further in Argentina in 2008. The group's Fuel Cells unit is similarly ramping up investment in its SolviCore joint venture, which is working to develop fuel cells with major automotive industry customers.
Substrates, part of the Electro-Optic Materials group, continue to benefit from the ongoing substitution by satellite manufacturers of silicon for germanium as substrates for solar cells, as well as rising prices for geranium, management reported.
Umicore on Sept. 29 completed the acquisition of bankrupt automotive parts supplier Delphi automotive catalyst operations for US$66 million, down from an original US$ 75 million price as a result of working capital and other closing adjustments. The integration of Delphi into Umicore's Automotive Catalyst unit is proceeding smoothly, according to management.
Precious Metals Services
Umicore's Precious Metals Refining unit continued to benefit from buoyant market conditions through Q3.
"The prices of the metals recovered by the Hoboken operation generally remained strong. The price of platinum increased, driven by a reduced supply of primary concentrates linked to mining issues in South-Africa," management noted.
In addition, high demand for recycled precious metals through the treatment of secondary materials continues to increase, leading management to invest in a new precious metals concentration operation.
"The intake of electronic scrap remained at a very high level. The supply of spent automotive catalysts continued to grow and additional leverage was obtained from Umicore's own collection network for this type of end-of-life material."
Umicore sells and leases physical metal through its Precious Metals Management unit. Sales and leases of physical metal also increased year-on-year, reflective of ongoing strong precious metals demand from industry and continuing market prices during Q3. Price volatility continued to favour the unit's trading business, though not to the extent seen during Q3 2006.
