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Umicore keeps outlook, mum on new share buyback

BRUSSELS - Belgian metals and speciality materials maker Umicore stuck to its 2007 outlook as third-quarter sales rose 9 percent, but its stock price fell due to dashed hopes it would announce a further share buyback.

Analysts had expected information about how Umicore would use the proceeds from the spin-off and separate listing of its zinc operation Nyrstar, but Umicore said only that it would consider how to optimise its own capital structure.

‘I think there had been high expectations on the potential use of the proceeds of the IPO (initial public offering),’ KBC Securities analyst Wouter Vanderhaeghen said. ‘People had been hoping for an accelerated share buyback programme.’

Shares in Umicore opened lower and by 0930 GMT were down 3.23 percent. The DJ Stoxx European basic resources index was off a marginal 0.27 percent.

Umicore gave little away at a conference call, saying only that it would first continue looking at possible acquisitions and that as a ‘second stage’, would consider returning money to shareholders.

Chief Executive Thomas Leysen said it would be premature to give timings and numbers for a possible buyback.

Nyrstar, created by the merger of the zinc smelting assets of Umicore and Australia’s Zinifex, made its stock market debut on Monday, raising about 680 million euros ($980 million) for Umicore or potentially 780 million if a greenshoe option is fully exercised.

Umicore said it’s net capital gain would be 380 million euros without the greenshoe or more than 440 million euros if that option is fully exercised.

Nyrstar, the world’s biggest producer of zinc, listed on Euronext Brussels at 20 euros, the middle of its indicated range, valuing the firm at 2 billion euros.

Another reason given by traders for the share price fall was that some investors had hoped Umicore would raise its targets.

‘Normally they (Umicore) do this in their trading statement. I think there were many people who were at the top of the range already with their forecasts and so maybe there is some disappointment,’ said a Petercam trader in Brussels.

The company set its full-year outlook in August at a REBIT (recurring earnings before interest and tax) range of between 345 million and 365 million euros and said it was keeping this in the light of the sales rise.

No absolute figures for sales were given in the statement.

Umicore has moved away from its mining roots and traditional zinc and copper businesses towards recycling precious metals and advanced materials, such as germanium substrates used in the solar cells on NASA’s Exploration Rovers.