Umicore's (UMICF) CEO Marc Grynberg on Q1 2016 Trading Update Call (Transcript)

| About: Umicore SA (UMICF)

Umicore SA (OTCPK:UMICF) Q1 2016 Trading Update Conference Call April 26, 2016 3:00 AM ET

Executives

Marc Grynberg - Chief Executive Officer

Filip Platteeuw - Chief Financial Officer

Analysts

Tony Jones - Redburn Partners

Simon Fickling - Exane BNP Paribas

Edward Donohue - One Invest

Peter Olofsen - Kepler Cheuvreux

Stephanie Bothwell - Bank of America Merrill Lynch

Adam Collins - Liberum Capital Limited

Mutlu Gundogan - ABN AMRO

Matthew Waugh - Credit Suisse

Charlie Webb - Morgan Stanley

Philip Scholte - Kempen & Co

Andrew Benson - Citigroup

Marc Grynberg

Thank you. Good morning everybody and welcome to the call. I will run you through the highlights of the First Quarter. I will elaborate on the earnings guidance for the full-year and then I will hand over to Filip, who will dive into more detail about the business developments in each segments. I will then wrap up and hand the call over to you for questions.

As you will have seen from that he publication early this morning, revenues were up 1% compared to the first quarter of last year. The overall revenue progress is actually marking a contrasted evolution with automotive catalyst and rechargeable battery materials on the one hand recording strong volume and revenue growth, while the recycling activities on the other hand were affected by substantially lower metal prices.

Catalysis showed revenue growth of 12% year-on-year with Umicore performing better than the automotive market globally and in most regions. In Europe in particular the further rollout of Euro 6b compliant platforms is proving very supportive to both volumes and mix. In the energy and surface technology, revenues were down 4% year-on-year and this reflect the impact of lower metal prices on cobalt and nickel recycling and distribution activities.

The good news is rechargeable battery materials continues to thrive on the back of growing demand from the automotive industry and the multiplication of electrified models hitting the roads is a factor in this developments. The growth in rechargeable battery materials helped us compensate to a large extent for the metal price effect in other units of the segments.

Recycling revenues were down 8%, compared to the first quarter of 2015 due to lower metal prices in particular secondary metals. It is also worth noting that the comparison between the two quarters is not perfect due to the timing of maintenance shutdowns. The good news is that the throughput rates have increased following the investments made in Hoboken last year and in addition, supply availability remained supporting both in terms of mix and volumes.

As far as investments are concerned, sufficed to say for now that our growth investment programs are on-track and more importantly that we are currently revising the capacity expansion plan for rechargeable battery materials as we see an acceleration in demand coming on us sooner than we indicated to you during the Capital Market Day back in September last year.

Looking forward to the full-year 2016, I see strong growth continuing in automotive catalysts and rechargeable battery materials and this should more than offset the negative impact that lower metal prices have on recycling revenues and margin assuming of course that metal prices stay more less where they are today for the balances of the year.

In recycling, supply conditions remain supportive and the additional capacity that is coming on-stream in Hoboken will enable us to process more volume than in 2016. Based on that and considering the actual performance of the first quarter, I now expect full-year recurring EBIT to be in the range of €335 million to €360 million.

And with this, I would like to hand over to Filip, who will cover the main business developments.

Filip Platteeuw

Thank you Marc and very good morning to everyone. Starting with catalysis, this segment continued strong performance of last year, generating 12% more revenues year-on-year, primarily driven by automotive catalysts. It substantially outgrew car production globally and in most regions.

This was the case in Europe where next to the recovering card demand, we continue to benefits from the rollout of Euro 6b compliant platforms that increased the share of diesel catalysts in our product mix. This notwithstanding also higher volumes in gasoline catalysts were direct injection technology to which we are well exposed continues to gain traction.

Also in China, we continue to outpace the market, in part due to our strong presence with international car producers who are still taking market share from local brands. Conversely, in North America, our regional customer mix resulted in less revenues as most of the car market expansion was captured by Asian car OEMs.

Our heavy-duty diesel catalyst revenues were also higher reflecting the ongoing ramp up of our production in Europe and in Asia. This strong volume growth is accommodated by the completion and subsequent ramp up of a number of our key expansion projects such as the new plants in Poland and in India. The new plant in Thailand set to be commissioned in the third quarter and our new technology development center in South Korea will allow to accommodate future expansion in the region.

Switching to energy and surface technologies. This segment recorded 4% lower revenues year-on-year. Revenues and rechargeable battery materials saw double-digit growth with strong demand in the automotive segments and despite lower seasonal sales in the high-end portable electronics applications.

A wide range of NMC cathode materials addresses our customer’s requirements as electrification is picking up speed, requiring larger and more performing batteries. In view of this demand acceleration additional investments on top of the ongoing capacity expansions in South Korea and in China are currently being reviewed.

Growth in battery materials launched EBIT not fully offset the impact of lower metal prices of cobalt and specialty materials. With average nickel and cobalt market prices being down respectively some 40% and 20% year-on-year. Sales recorded significantly lower revenues despite goods overall volumes. The other segment units also saw a diverging revenues trend with electro optic materials generating high revenues versus a decrease for electro plating and thin film products.

thin film products new ideal production and recycling plant in China is on-track for commissioning mid this year. In recycling, revenue were 8% lower largely as a result of lower metal prices. As you will recall the metal price environment deteriorated sharply in the second half of last year impacting the quarterly year-on-year comparison. And while some metals be it to have regained some stability at the last few months, specialty metals price in particular remains depressed.

As a result revenues, for precious metal refining were lower year-on-year. Our Hoboken operations focused at high throughput rates following last year's expansion investments. Year-on-year quarterly volumes however were slightly down as the plant maintenance shutdown starts in March of this year.

Feed availability remains solid with a somewhat lower proportion of end of life materials in a mix through the benefit of byproducts, as you know our largest resource platform. The auxiliary investments in Hoboken as part of the overall capacity program are on-track and are expected to be completed by the end of 2016. The metal price had [indiscernible] in addition to lower demand in certain products and lower trading activity also resulted in lower revenue year-on-year in the recycling units.

Turning now to the discontinued operations. Revenue in zinc chemicals were lower due to the impact of the lower zinc price on the units recycling activities. And some destocking effect in fine zinc powders used for corrosion protection of marine containers. Building products revenues were stable with a sub one positive volume and product mix evolution in Europe set against a lower level of projects in other markets.

Also for building products, the hearing in respect of the French competition case took place at the end of March, during which we contested all these sergeants made by the French Competition Authority. In basic terms, our position is that the authority has created a two narrow definition of the market, which is been clear contradiction with other cases ruled out by the European Commission and the German Competition Authority. We expected the decision by the authorities to be issued in the coming weeks and until this time it is impossible to gauge the impact this decision might have.

In the corporate segment, the Element Six abrasive joint venture continued to suffer from difficult trading conditions, particularly in the markets for oil and gas related products. If current conditions wouldn’t persist this is expected to have the meaningful impact on this year's contribution despite further cost containment measures.

Finally, with regard to the battery materials patent case in the U.S., end of March we submitted the petition asking the ITC Commission to review the judge's initial determination. This was based on what we believe were fundamental flaws in the scientific reasoning and legal errors. The International Trade Commission will issue its decision on the review process at the end of this week and make a final determination in the case by the end of June.

And with that I hand back over to Marc.

Marc Grynberg

Thank you, Filip. Let me briefly recap the key messages of today before we open the floor to your questions. Revenue during the first quarter were up 1% year-on-year with two contrasting trends on one hand a strong growth in the automotive catalysts and rechargeable battery materials, and on the other hand the impact of lower metal prices specialty metals more positively.

Our growth investments are on-track the capacity expansion investments that were carried out in the Hoboken last year are producing visibility types in the form of increased throughput rates. Volume growth on a full-year basis is confirmed and we will become more significant next year once the auxiliary investments will have been completed.

In catalysts, we see the benefits already of the new capacity in Poland which enables us to cope with the higher demand levels in Europe following the roll out of Euro 6b and we are on-track to thought of the new plant in Thailand in the second part of quarter of this year. In energy and surface technologies, we see the demand for electrified vehicles gaining traction faster than anticipated which leads us to revisit the capacity expansion plans for rechargeable battery materials.

Finally the audit for this year is very much building on a trend that we have observed so far that is growth in catalysts and rechargeable battery materials should continue to more than offset the softness in metal prices. And this should enable us to generate a recurring EBIT for the full-year in the range of €335 million to €360 million, an improvement compared to 2016 which in the current adverse metal price environment would be very good showing.

With this, I would now like to hand over the call to you for questions.

Question-and-Answer Session

Operator

Thank you [Operator Instructions] And we will take our first question from Tony Jones of Redburn. Please go ahead. Your line is open.

Tony Jones

Good morning, everybody. Question on recycling, could you clarify what the sales growth on an underlying basis would have been excluding the impacts from the maintenance shutdowns in this quarter? Thank you.

Marc Grynberg

Tony, good morning. It’s I would say somewhat difficult to make out and I would say, at this stage that the volume growth for the full-year is confirmed and that indeed the timing of the shutdown was somewhat of a distorting factor in the comparison from one-year to the other and that distortion will phase out gradually during the rest of the year. And indeed the volume would have been positive, the volume evolution would have positive had we had similar situation in terms of the timing of the shutdowns. But how much, I don’t want to go into that level of detail now.

Tony Jones

Thanks Marc.

Operator

We will take our next question from Stephanie Bothwell of Bank of America. Apologies Stephanie’s question appears to have been removed [Operator Instructions] We will take our next question from Simon Fickling of Exane. Please go ahead. Your line is open.

Simon Fickling

Hi. Good morning, Marc, good morning everyone. Could I ask about hedging please in recycling? You flagged obviously that you are still benefiting from some of those hedging contracts you entered into at the beginning of 2015. How much of those are still in place? I imagine a lot for, worth 12-months, but can you just confirm somewhere for longer periods and we should still get some advantage in the second quarter and potentially beyond? Thanks.

Filip Platteeuw

Simon, its Filip. We still have some hedges in place indeed. As we mentioned previously these are mostly in the specialty metals, but I would say by far, in the precious metals, sorry indeed. In the precious metals, I was going to say is that the impact in terms of metal prices is in the minor metals. So the unhedgeable part of the metals. So yes, we do still have some effects of hedges, obviously indeed much less than in previous period, but the main impact in terms of metal prices is in the minor metals, the specialty metals.

Simon Fickling

But there are still some hedging contracts in place on the precious metals from the PGM?

Filip Platteeuw

Some, but I would certainly not to overestimate the impact also in, if you will, the evolution of the metal prices.

Marc Grynberg

And let’s bear in mind Simon that the hedges that are in place today have been entered into, mostly in early 2015, so at prices which are different than the hedges which had an effect in 2015 and which were entered into in prior periods.

Simon Fickling

Yes. Thank you.

Operator

[Operator Instructions] Our next question comes from Edward Donohue of One Invest. Please go ahead. Your line is open.

Edward Donohue

Good morning. A question from my side. Can you just, given some thinking behind the various elements that will go into the decision to expand the capacity in energy and the surface technologies, what is actually required, what would that capacity be relative to what you’ve got in place at the moment, and the phasing of that capacity as it would arrive?

Filip Platteeuw

Good morning, Edward. It’s a bit early for us to enter into that level of detail, because we are currently actually disusing these elements, the element that you are raising. We are reviewing the plans as we speak. And so you will hear more about that fairly shortly I would say.

Sufficed to say that, for now that there is indeed and acceleration in demand that is materializing and also you have to bear in mind that things can go relatively quickly in that space, because if you have I would say an increase of less than 1% of increase production gathering electric or electrified this while this is relatively minor in the overall scheme of things, it requires a lot of materials to make the batteries and battery cells for that 1% of additional vehicle.

So things can go far and the good news is that with the investments that we have made in the past and all the efforts that we have made in the past we are actually prepared already well prepared to take advantage of an acceleration in demand and we are prepared to add investments and capacity fairly and fairly revenue. [Multiple Speakers].

Edward Donohue

Right, so just I get this over my head.

Filip Platteeuw

- once we would have actually or come to a conclusion on that subject internally.

Edward Donohue

Right, but there is no risk of bottlenecking in the sense of capacity growing faster than you the demand growing faster than you expected, so you could risk a bottleneck?

Filip Platteeuw

The typically in the automotive space we have a fairly good visibility about the SOP dates about the EBIT model launches and about - I mean between qualification of the product and model launches there was typically a two to three year time gap that enables us to plan for capacity in appropriate manner. So I think this is - I cannot totally rule out indeed that capacity could be DSI that [indiscernible] this is not the assumption that I would retain today, because we have sufficient interactions with our customers to be able to act fast.

Edward Donohue

Am I allowed a second question?

Filip Platteeuw

Well I would ask you to if you don’t mind to go back into the queue. Because we have fairly limited time on the call today, sorry Edward.

Operator

We will take our next question from Peter Olofsen of Kepler Cheuvreux. Please go ahead. Your line is open.

Peter Olofsen

I have a question regarding the energy and surface technologies business. Looking back to the last year we saw that the margin declined in the second half of the year compared with first half, and I think the lower nickel and cobalt prices played a key role there. It seems to have affected the cobalt and specialty metals this quarter as well. Could we see the margin in energy and surface technology decline further compared to the level we saw in the second half of last year?

Filip Platteeuw

No I do not expect the something along those lines Peter and of course I cannot predict what metal prices will be for the year, the rest of the year. So I'm in the assumption that they will be stable but that’s only an assumption I would say, they could increase or decrease. I mean they will of course move to a certain extent, but if metal prices stay more less where they are today, there is no reason for a margin decrease on a comparable basis. Here you should look at Q1 versus Q1 of last year, the reality in these is that that the price effect is playing out fully and if metal prices stay where they are today this should be less of an issue going into the second half of this year, because the second half comparables will be a different too.

Peter Olofsen

Okay. That's helpful. Thank you.

Operator

We will take our next question from Stephanie Bothwell of Bank of America. Please go ahead. Your line is open.

Stephanie Bothwell

But just going back to my question on the guidance. In terms of the full-year guidance range of 335 to 360 in EBIT, perhaps you could give us some color in terms of what are the key moving parts in terms of the lower and upper end of that range, and which divisions that relates to? Thanks.

Marc Grynberg

Good morning, Stephanie. I would say as usual it depends on the number of the macro and micro factors and as I mentioned earlier during the call, I expect to continue the strong growth in automotive catalyst expanding the rechargeable battery materials and this should more than offset the impact of metal prices or the softness in metal prices and in the recycling activity in some of the distribution activities.

This being said at this time of the year visibility is far from perfect and that older parts are still moving whether it's related to the price environment or to the demands from end customers in automotive catalyst or in energy and surface technologies. there is still quite a bit of volatility in terms of the macro factors and this is probably one of the major factors of uncertainty at these stage, because if I look at what is fully under our control things look rather goods and the trend that we have observed so far this year are set to continue.

Stephanie Bothwell

Okay. And just to clarify, how is your guidance being set based on spot metal prices as of now?

Marc Grynberg

Yes, we assume indeed that the current price environment would more or less continue to prevail, more or less give or take a few percentage points for each metal, because they do not necessarily move in sync or sometimes they do. So we need to have a little margin there. But it’s more or less in line with the current spot prices indeed.

Stephanie Bothwell

Okay, great. Thank you very much.

Marc Grynberg

And, sorry, and currency exchange rate as well.

Stephanie Bothwell

Okay. Thank you.

Operator

We will take our next question from Adam Collins of Liberum. Please go ahead. Your line is open.

Adam Collins

Yes. Hello. Good morning. I had a question on the working capital increase that you allude to on the front page of the press release. Is that the usual seasonal pattern or there is some additional factors this year. I’m thinking perhaps if the impact of the higher PGM price on AutoCat inventory. And then on also a related note, could you tell us what you think the working capital profile will be of the new businesses coming on-stream on Hoboken? Will it be much different from the existing base?

Filip Platteeuw

Hi Adam. So working capital I would say if you look at the quarter, indeed we had an increase, which I guess is linked to the growth that you see in automotive catalysts and the growth that you see in battery materials. Metal prices and lower metal prices had not so much of an effect I would say benefit, because you know that for example in recycling we have business model, which his in any case low in capital. So I would say indeed, we have working capital increase based on that growth. And looking forward and linked to the battery materials indeed the growth in battery materials will especially as we see an acceleration in demand will also lead to an increase in working capital.

Adam Collins

And the profile of the new business in recycling compared to the existing base which is negative working cap?

Filip Platteeuw

In recycling as we said before there should be no structural change in the working capital profile of the recycling business. So it should remain a business which is low in working capital.

Adam Collins

Okay. Thank you.

Operator

We will take our next question from Mutlu Gundogan of ABN AMRO. Please go ahead. Your line is open.

Mutlu Gundogan

Yes. Good morning, just one. Apologies, I joined the call late, so maybe this question was already asked, but can you talk about the shutdown in Hoboken? I understand it started at the end of the quarter, so how much of, what’s the split between Q1, Q2? That’s let’s say the first part of question. And the second question is, are we done then for the year or should we expect more maybe small shutdowns throughout the year?

Marc Grynberg

Okay. Mutlu I will consider that as one question, so that you don’t have to go back into the queue for the second part of the question. Good morning. And I would say that the effect of the struggle between Q1 and Q2 is sufficient for us to highlight that as a distortion factor. So I’m not going to exactly tell you how much is Q1, how much is Q2. Sufficed to say that indeed there was an impacting the Q1 compared to last year that is material enough to the highlighted.

And we plan only one maintenance shutdown this year. As you will possibly recall from previous discussions, there are should be two next year, but only one indeed this year and that’s why I also wanted to remind you that earlier in the call that the volume growth for the full-year is being confirm and will gradually become visible once this shutdown is completed in production resumes.

Adam Collins

Okay. Thank you.

Operator

We will take our next question Simon Fickling of Exane. Please go ahead. Your line is open.

Simon Fickling

Hi friends. Thank you for follow-up. It's on battery materials and it’s on the competitive environment. I think at the moment in automotive batteries it’s still quite consolidated market in terms of yourself and the competition. But I’m presuming these kind of growth rates and the general attractiveness to the market is attracting other competitors. Can you just comment a bit on if you’re seeing any change in the competitive landscape, if you’re seeing some of the other portable electronic suppliers trying to make a step up to automotive, and if you expect any further change in that going forward? Thanks.

Marc Grynberg

Simon, what we see actually is that the changes in the competitive landscape are extremely slow in the automotive segment and like what you may have absorbed in the observed in the portable electronic over the past 15-years. And that is because of the qualification cycles and the qualification requirements of the automotive industry are so demanding that it is, you cannot improvise yourself as a supplier to battery cell makers for automotive applications. It takes years to develop the right product offering. It takes years to get positioned and to get qualified and positioned.

So you should not expect overnight changes in that space. There is an evolution indeed and so it’s probably the number of significant players in that space will likely increase overtime and please bear in mind that the it's really very time consuming to penetrate that segment and get it established. So that's I would say in a nutshell what we see today and off course we are pretty happy with these positioning that we have and let's bear in mind that this is an effort that we started more than 10-years ago.

Simon Fickling

Is it possible to sort of help us understand what kind of market share you think you may have in NMC in particular?

Marc Grynberg

No. We typically do not comment on market shares and that would be no exception. That segment would be no exception.

Simon Fickling

Understood, thank you.

Operator

We will take our next question from Tony Jones of Redburn. Please go ahead. Your line is open.

Tony Jones

Thanks for taking follow-up. It's also on battery materials and there is a line in the release explaining that the LCO shipments were a bit low due to seasonal stock adjustments. Could you just explain a bit more what's going on there and whether that's just a Q1 phasing issue or something we should be thinking about for Q2, Q3? Thank you.

Marc Grynberg

Well thought the Q1 seasonal slowdown is fairly the typical we have that most of the time with - few exceptions that are couple of year in the past - couple of times in the past seven or eight years where we have not seen it or where it was less pronounced than usual. But typically we have indeed a seasonal slowdown in demand, because there are high levels of production before the end of the year typically, in preparation for the year-end sales season that's for the Chinese New Year. And then you see mostly a production levels of or customers are decreasing and stocks being adjusted before demand is typically in the second quarter. so that's indeed the typical season, again with only few exceptions that observed in the past few years.

Now you look at the overall LCO demand or when you look at there is a portable electronic segment, you have a very different structural trends than in the automotive application where the emergence of the application and leads to a fast growth potential. In portable electronics that we see today no new blockbuster in terms of new device that would enable the industry to make a step in terms of demand for LCO or high energy density LCO. So that's a different I would say a profile that compares to the automotive segment so I think you should take into account both factors.

Tony Jones

Thanks very much.

Operator

We will take our next question from Edward Donohue of One Invest. Please go ahead. Your line is open.

Edward Donohue

Just going back on catalysis, can you talk about in Europe with regard to the platforms and programs that you're involved in on the €6 billion and also on the petrol engines, are you actually seeing those platforms fully ramped up or are they still in early stages so you would actually see a growing acceleration all things being equal as you went through the rest of the year?

Filip Platteeuw

No. I do not expect to further acceleration I think that considering strong demand along the same pattern as we have seen thus so far, but no further acceleration so I think that it's a probably fair to say and fair to expect that the ramp up is extremely where it stands.

Edward Donohue

Excellent. Thank you very much.

Operator

We will take our next question from Matthew Waugh of Credit Suisse. Please go ahead. Your line is open.

Matthew Waugh

Just in the commentary around catalysis, you mentioned increasing popularity of gasoline direct injection engines. Can you give us an idea of the relative value of the catalyst on that engine versus basic gasoline and can you give us an idea of how big a part of the overall gasoline market that could become? Thank you.

Filip Platteeuw

Hi Matthew today it’s still a fairly a limited portion of the market for the most fuel efficient and gasoline engines, so it's a growing technology, it's a growing platform indeed because of the tightening CO2 emission norms in a number of regions, but today it's still relatively small. In terms of value, it is indeed more attractive than standard gasoline engines, it's more sophisticated catalyst technology that is required to address the emissions from the engines and in the future there would be also a possibility a higher rate of utilization of filters to capture the particulate matter the very fine particulate matter that direct injection gasoline engines do in it.

Operator

We will take our next question from Mutlu Gundogan of ABN AMRO. Please go ahead. Your line is open.

Mutlu Gundogan

Yes, thanks. Also question on the direct injection gasoline engines. Can you explain what your share is compared to your peers? I mean, you mentioned that you have a strong position there, can you talk us through why that is and how much, I mean, I know you don’t want to give numbers, but how significantly more is it than your average share over the, let’s say the, within the European market?

Filip Platteeuw

No, indeed, as you had rightfully expected I’m not going to comment on shares. And the point is that we are one of the early players in that space of the particular treatment of gasoline engines. So we have worked early on with the car OEMs, with selected car OEMs to develop the appropriate technology, so I think we’re well position. But again, as I mentioned previously, this is not a very large segment today and so it’s nice, I would say it’s a nice addition to our margin and margin potential. But it’s not I would say compared to the overall size of our gasoline catalyst business it is not huge.

Mutlu Gundogan

Understood. Thank you.

Operator

We will take our next question from Charlie Webb of Morgan Stanley. Please go ahead. Your line is open.

Charlie Webb

Good morning, guys. I was just wondering if you could give us a little bit more color around the demand environment for specialty metals and how we should think about that as we move through the year.

Marc Grynberg

Hi Charlie. Unfortunately there isn’t much thought I can provide at this stage, because we don’t see a lot of movement in the specialty metals space in terms of physical demand and therefore prices are also staying relatively flat at low level. Of course things can change relatively faster in that space as you will also possibly recall from previous times, because the, there is little supply elasticity and so it takes once in a while only a limited move in demand for one application for the demand for one specialty metals to take off.

This being said, I do not expect that to take place anytime soon, because there is still a glut of specialty metals in certain countries, in China in particular, where there has been excessive stocking in prior year and these excess inventories have yet to be I would say utilize before you could see an up-tick in physical demand.

Charlie Webb

And how long do you think their supplies could last for or that capacity to be kept put back into the market?

Marc Grynberg

Sorry, I didn’t get the question.

Charlie Webb

Of that stockpiling in China, how long do you think that would take to unwind?

Marc Grynberg

It depends from one metal to the other, it can take weeks for certain of them two years for others.

Charlie Webb

Okay. Thank you very much.

Operator

We will take our next question from Adam Collins from Liberum. Please go ahead. Your line is open.

Adam Collins

Yes. Hello. It’s about the bus side of the rechargeable battery materials business. And obviously very strong growth in the China e-bus business last year and we’re aware of course of the removal from the subsidy list of NMC for buses. I wonder, Marc, if you could say where the bus was a significant part of the growth in RBM last year and if so what are your expectations this year for the development of that business given the subsidy change?

Marc Grynberg

So yes, it was material, a material part of the growth of last year. And this being said you have to also bear in mind that the removal of subsidy while first of all may be temporary, we don’t know, we’ll see how it’s plays out. But more importantly is only affecting a third segment of the NMC buses, because you have a number of sub-segments in e-buses in China depending on the range, the type of utilization et cetera. And so you should not assume that the demand for NMC for utilization in e-buses in China has disappeared. It’s only for one of the sub-segments of e-buses that the subsidies have been temporary lifted and for others things continue as usual.

Adam Collins

Okay. Thank you, Marc.

Operator

We will take our next question from Philip Scholte of Kempen. Please go ahead. Your line is open.

Philip Scholte

Yes. Good morning, everybody. Can you also already give us some more guidance on your total CapEx budget for the full-year?

Filip Platteeuw

Yes. Phillip, so CapEx should be higher than last year. That’s the guidance I would give. So last year, we had €240 million and so CapEx this year should be higher.

Philip Scholte

Right. And is the plans you are currently developing for the rechargeable battery materials, is that going to be additional to that or does that already include some of that?

Marc Grynberg

It's a premature, I mean sufficed to say for now that CapEx should be higher this year and we will talk about the other plans for rechargeable battery materials and their impact in due course.

Philip Scholte

Okay, cool. Thank you.

Operator

We will take our next question from Andrew Benson of Citigroup. Please go ahead. Your line is open.

Andrew Benson

I wasn't able to listen to all of this call, but the strong growth in automotive catalysts, up 12%, you talked about revenues being up considerably. Can you just put more color on that in terms of market development, market share, and the trends you see for this year because on the face of it I thought the change in legislation was relatively modest at the moment. So this looks a very, very good performance.

Filip Platteeuw

Good morning Andrew. The change in this inflation took place and zeroed in Europe in two steps at the end of 2014 for all new models and at the end of 2015 for old models. So to move to Euro 6b or the two stage approach and this is why you continue to see a strong growth and any in the change in the mix in our portfolio in the European part of the business since 2014 to 2015 and now.

And as I mentioned as our response to a previous question the ramp up is pretty much I would say advanced or very much advanced now and you shouldn’t expect the further acceleration. So it is right, we are pretty happy with the performance and indeed it looks like we are well positioned in terms of our customer and platform mix and that we benefit from models that are setting well in the marketplace.

And so there have been quarters in the past where we wouldn’t not as favorably positioned and our competitors were positioned on models that were selling better and we were not growing as fast as the market and for the past few quarters, it's been the other way around. So nothing to complain about, but let's also bear in mind that the market share in that business tends to be relatively stable over a long period of time. So I would not extrapolate too much and just consider that as a strong performance indeed.

Andrew Benson

Thank you very much.

Marc Grynberg

Thank you and with this question, I would like to actually close the call. So I would like to thank you for joining us early this morning for this quarter one update and also thank you very much for the discipline in keeping to one question and allowing everyone on the line actually to raise a question. And of course if you have follow-on questions, please feel free to get in touch with our Investor Relations team today or in the coming days. So thank you for now and wish everyone a very nice day. Bye-bye.

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