Good afternoon, everyone, and welcome to this conference call. On March 26th, we provided you with the first view of the impact of the COVID-19 pandemic on Umicore. The purpose of the call today is to provide an update of what we have seen and done since our last communication at the end of March, as we have explained it in the press release, which was issued this morning, and the purpose is also to answer any questions you may have. For these unprecedented circumstances, the coronavirus is having a huge impact on our society, and my thoughts go first of all to all those most affected by the crisis. I also wish to pay my deep respect to everyone who is fighting this pandemic in the front line, and who is selflessly committed to the well-being of all of us every day.
I would also like to say a special word of thanks to all Umicore employees. I am deeply impressed by their discipline and the hard work they have put in to ensure that our working environment can remain safe and healthy. It is through their dedication that we can continue our business and continue to serve our customers. I therefore wish to expressly thank them for their engagement. Since the COVID-19 outbreak, our top priority at Umicore has been the health and safety of our employees. As of the end of January, we introduced strict hygiene and other precautionary measures, starting with our facilities in Asia, which were the first to be affected, then later in the rest of the world. Measures include social distancing, home working wherever possible, and systematic disinfection of workplaces.
Strict medical protocols were also introduced in case of suspected contamination and our health professionals are providing invaluable assistance to those who need it. A dedicated task force is working to monitor operations on a daily basis to protect our employees' health and contain further spread of the virus. Thanks to the early implementation of such measures, the number of infected employees at Umicore has so far remained extremely limited. In addition to protecting our employees, we are committed to mitigating the impact of COVID-19 on Umicore's results as much as possible, and to taking measures needed to limit our expenditures. For example, where necessary, we quickly adjusted our production, which also meant, unfortunately, that we placed some of our employees on temporary unemployment with 10% approximately today on furlough.
We continue to support all colleagues, including those who are temporarily out of work, and hope to welcome everyone back again very soon. We have also re-examined our investments across the various activities and postponed them where possible. We now expect our capital expenditures in 2020 to be around EUR 400 million-EUR 450 million, which is well below the 2019 level and also well below the spending we had initially planned for 2020. The board of directors has proposed to reduce the dividend for the full year 2019 to EUR 0.375 per share, which actually corresponds to the amount of the interim dividend that was already paid out in August 2019. Umicore is financially healthy and has a strong balance sheet with no less than EUR 1.2 billion in readily available cash, providing a strong buffer in the current uncertain times.
Umicore's debt also has a balanced and well-spread maturity profile, with no major maturity before 2023. Nevertheless, in this uncertain market context, it is important that we take these precautions to maintain the financial strength of our company. Before the full effect of COVID-19 was felt, Umicore produced a strong performance in the first quarter of the year, well ahead of the equivalent period in 2019. This performance primarily reflects a strong contribution from the Recycling business group, where all business units contributed to the results. Precious Metals Refining benefited from supportive supply conditions and favorable metal prices. Trading conditions for precious metals and certain platinum group metals were favorable in our Precious Metals Management unit, while Jewelry & Industrial Metals benefited from strong demand for gold investment products and gold recycling services.
Both Catalysis and Energy & Surface Technologies also made a good start to the year, with the Automotive Catalysts and Rechargeable Battery Materials businesses outperforming the car market in the first quarter. Unfortunately, the outbreak and further spread of the virus first led to a significant contraction of the car market in China in February, then in other key regions such as Europe and the U.S. from mid-March. That impact was also felt in Umicore's Automotive Catalysts and battery materials businesses. I suppose that it has by now become evident to all observers that the automotive industry has been severely hit by the COVID-19 crisis, with car production down by 25% year-on-year in the first quarter, for example. The impact differs from region to region, depending on the phase of the pandemic.
In China, where car production fell drastically by 80% in February at the time of the corona peak, the situation has improved somewhat in the meantime, but car production in March was still 45% below the 2019 level. This decrease was even more pronounced in the electric vehicle segment, which was 57% below 2019 levels. Car demand in the world's larger markets remains weak, and high stocks in dealerships mean that a rapid recovery of production in China seems unlikely today. In other key regions such as Europe and North America, where the virus is currently spreading or peaking, automakers have been forced to shut down assembly lines in recent weeks under lockdown measures imposed by national governments. As a result, in March, the number of cars produced in Europe fell by 45% and in the U.S. by 30% compared with 2019.
For April, we assumed that there was hardly any production in either region. Demand also fell considerably as end users do not immediately buy new cars in times of recession, and especially, and that will be fairly obvious, when car dealerships are temporarily closed. In Europe, car production is restarting, albeit cautiously, at some manufacturers, and we expect a similar trend in mid-May in the United States. Even if car production is resumed on a larger scale and the lockdown measures are lifted, we do not expect consumer demand for cars to recover quickly as the purchasing power of end users may be affected by COVID-19 and the ensuing recession. Umicore therefore currently expects car production for 2020 to be about a quarter lower than 2019 levels.
Looking now at the impact of COVID-19 on our various businesses, it is clear that in the Catalysis segment, the Automotive Catalysts business, and in the Energy & Surface Technologies segment, the Rechargeable Battery Materials business, are most affected by the impact of COVID-19. After being affected in China around the Lunar New Year period, Umicore has had to temporarily shut down its catalyst manufacturing plants in regions outside China, Japan, and Korea since late March, since our vehicle manufacturer customers shut down their own production. The full global impact of the crisis on production levels and consumer demand is only expected to be felt from the second quarter. Other business units, including Precious Metals Chemistry and Cobalt & Specialty Materials, are also significantly affected by the economic recession and lower market demand as a result of COVID-19.
By contrast, in the Recycling business group, the factory in Hoboken and Umicore's other recycling plants have continued to operate, subject, of course, to strict precautionary and hygiene measures. The management business unit continues to benefit from favorable trading conditions for certain precious and platinum group metals, while the Jewelry & Industrial Metals business unit is benefiting from strong demand for recycling services and gold investment products as customers seek out a safe haven and invest in gold. Let me now turn to the year 2020 outlook. Despite our strong start to the year, the impact of COVID-19 on the automotive industry, and therefore on Umicore's Automotive Catalysts and Rechargeable Battery Materials businesses, will have a significant impact on our results in 2020.
Based on our current assumption that global car production may decrease by about 25% in 2020 compared to last year, we expect recurring EBIT in Catalysis and Energy & Surface Technologies to be well below 2019 levels. This impact will be partially offset by the Recycling business group based on a strong performance in the first quarter and the assumption of continued favorable supply conditions. Recurring EBIT for Recycling into 2020 is expected to be well above 2019 levels, assuming metal prices remain at current levels. It is now clear that COVID-19 has a huge impact on the world economy, in particular the car sector. However, it remains difficult to estimate the duration of the crisis, and the visibility on market demand is today extremely low. It is therefore impossible to provide a reliable quantified outlook for the group in 2020 at this time.
Nevertheless, we expect Umicore's recurring EBIT to be well below 2019 levels. Umicore has demonstrated in the past that it can adapt quickly and flexibly to changing market conditions. I'm convinced that even now, we have taken the right precautions and set the right priorities to get through these uncertain times without compromising our long-term strategic success. I'm therefore looking forward to continuing our superior growth trajectory once this crisis is overcome. In the meantime, we will continue to closely monitor the impact of COVID-19 on our end markets, and we undertake to inform our shareholders, according to visibility, about the impact on our activities and the measures taken at appropriate times. With this, I would now like to open the floor to your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel the request, please press the hash key. That is star and one if you wish to ask a question. Your first question comes from the line of Mubasher Chaudhry. Please ask your question.
Hi. Thank you for taking my questions. How should we think about the margins given the expected drop in volume, and how should we think about the EBIT drop from these lost volumes? That's the first question. The second question, from a cash flow perspective, the press release talked about managing the working capital. Could you please provide some color on how we should think about that for 2020 in light of some parts being wrapped up? What kind of working capital outflow should we be anticipating? Thank you.
Hi, Mubasher. Let me start with the first question, and then I will hand over to Filip to speak about the working capital. Obviously, there will be an impact on margins as such a significant drop in volume with our customers means a significant drop of volumes in our businesses as well. Given the level of fixed cost that we have in these high-tech businesses, I mean, in particular, the Automotive Catalysts and the Rechargeable Battery Materials businesses, the volume drop will have a significant impact on margin indeed.
Maybe just to add to that, because I've seen there's been some questions on operating levers and on fixed costs indeed. I would refer maybe if you want to have some indication to the annual report. If you look at notes nine and 10 there, you have some cost details on the group in general. That was for 2019, obviously, so be careful with it. It gives you some indications. You know that we have ore yield on the D&A side. We had last year EUR 244 million of depreciation. This year, clearly that will increase again by I think 10%. That's also in the fixed cost side. Maybe that's helpful for you. On the working capital, extremely difficult to look to the future.
If we look today, remember when we came out with the full-year results, we gave a bit of a guidance for a higher working capital, really driven by higher metal prices and especially the PGM prices. Clearly, we've seen in the first quarter higher PGM prices, also higher, I would say, in general, precious metal prices. That has played a role. We had somewhat of an increase in our working capital base, again, driven by those metal prices. Your question going forward is very difficult to address because, as you can imagine, all is related to volumes, to timing, and that is very uncertain.
You can also imagine that in the supply chains, everybody is in a way faced with similar challenges, and so everybody is trying to optimize working capital. I would say, unfortunately, you have to bear with us because we don't have the visibility today to make any reasonable assessments on working capital going forward. So far, we've had some increase, but driven by metal prices.
Thank you. If I may, just one more on Hoboken. You said that Hoboken is currently operational. If I was to think about it from a year-on-year perspective, from a utilization perspective, there was some extended shutdown last year. Is Hoboken at similar sort of utilizations compared to last year, or is it at lower levels given the demand and impact from social distancing? Just some comments around at what rates it is currently operational at.
No, actually, Hoboken is working at a high level of utilization. Despite the hygiene measures that have been introduced, we managed to realize the improvement that we said we would realize indeed. It's a very high utilization rate and a very high contribution to our performance so far in the group.
Thank you very much.
Thank you. Your next question comes from the line of Mutlu Gundogan. Please ask your question.
Yes. Good afternoon, Marc and Filip. Two questions, if I may. First is on your expansion program in battery materials. Do you still think you can reach the 60 GW of cathode materials [surge] capacity by mid-2021? That's the first question. Secondly, obviously not you yourself, but also other players have been expanding capacity. Demand for EVs has come down, there's probably some overcapacity right now in the market. What are you seeing in terms of price development? Is there price pressure? If so, how significant is that? Thank you.
I can start, Mutlu, with the second question because it's pretty straightforward. Our sales are already priced. It's based on long-term contracts. The current situation has no impact on prices. The impact on margins that I referred to earlier is coming from the volume and the leverage effect only. In terms of capacity expansion, I think we should probably reserve that for a later occasion because let's see first how the market develops. The visibility today is so poor that I would probably not want to venture there. We continuously adjust to market conditions, and I think it would be somewhat premature to confirm or not confirm any such targets.
Okay. Thank you.
Thank you. Your next question comes from the line of Gunther Zechmann of Bernstein. Please ask your question.
Hi, good afternoon, everyone. First one is on one of your competitors reported 15% volume growth in Q1. Are you able to say if you are holding your market share in the catalysis market, at least in the first quarter? Second question is on the CapEx side, how much of this reduced CapEx, now EUR 400 million-EUR 450 million, would you say is still growth CapEx and how much is maintenance CapEx? Thirdly, just a small technical question. The furloughed staff, are you paying any top-ups in terms of wages towards them that would still be a cost to you, or is that all covered by the government? Thank you.
Hi, Gunther. Let me start with the third question. Yes, we're topping up some of the government allowances because I want to make sure that those of our colleagues who are hardest hit by the crisis because they are on temporary unemployment still make a decent income and stay engaged with the company. Indeed, we do that. I have to say, and again, the reason I started off by thanking the Umicore employees for their engagement is that I see an amazing level of engagement in the company and hard work to go through the crisis. I'm really grateful to our employees for keeping up the morale and keeping up the operations in the manner they do today. In terms of CapEx, t he custom-
It's growth. The vast majority of what we have now in the expectation is indeed a growth CapEx. Of course, some maintenance CapEx is still there. It's not always easy to make a clear cut between maintenance CapEx and growth CapEx because every time we do, I would say, replacement CapEx, we seek improvements or expansion as part of that. But the vast majority is growth. There is one category of CapEx expenditures on which we're not making any cuts.
That's all the CapEx related to environment, health, and safety. This being said, the vast majority is growth. Last, in reverse order, let me go to your first question. I haven't seen any of our competitors in catalysis publishing any figures for Q1. As far as I know, Umicore is first in line to come with publications, whether it is now at Q1 or half year or full year, always, and this time was no exception. I'm not sure I understand where the 15% reference comes from.
Maybe just to clarify, Marc, the 15% comes from BASF's results this morning in the catalysis division. On the call, they commented that the equivalent of the Automotive Catalysts business performed very well.
Their catalyst division is in no way comparable to ours because it includes many things that are unrelated to emission control catalysis for the automotive industry. I'm afraid that this is not a benchmark that we can use, and I cannot make any comments on that. Suffice to say that, as we mentioned it in the press release, that we were off to a very good start in Automotive Catalysts and that we outperformed the car market in the first quarter of the year.
Okay. Thank you.
Thank you. Your next question comes from the line of Charles Bentley. Please ask your question.
Hi, Marc. Hi, Filip. Thanks for taking my questions. Firstly, when you reported Q4, it seems that completing the Poland plant this year rested on a CapEx level at least equal to, if not in excess of the EUR 550 million spent last year. Does that mean that Poland essentially can't complete this year? Secondly, if I look at the release today versus a month ago, you have a cash position that's EUR 200 million more favorable. Is this essentially a working capital inflow between those two points in time? I guess if pricing has been a negative, that would mean the volume has been a strong positive inflow.
Therefore, from here, as your customers start to ramp back up, you would expect a working capital outflow like I'm not asking for a year-end number. I'm just trying to understand that basically this is the point where you've seen a significant inflow or not on a volume basis. Finally, what are your current budgeting expectations around cathode volumes for this year? Are you assuming they're up, they're flat, they're down? Whether you can give any indication of year-to-date. China's obviously been more challenging. Europe's been quite strong. Thanks.
Hi, Charles. Let me start with the third question. No, we're not giving any detailed guidance. Again, I have to repeat and insist on the fact that market visibility today is absolutely inexistent, and I don't think it would be wise to venture into a precise guidance. If I had to put it in another way, if our automotive customers do not know what to expect for the rest of 2020, how could I venture into making this kind of detailed forecast? Market visibility is not there.
I'll let Filip answer your second question, but I would like to come back to the first question about CapEx. The construction in Poland is ongoing. Remember, we're building the plant on the back of existing contracts, so we'll have to deliver on time. The construction is ongoing. The CapEx cuts are spread across units, across activities, again, with the only exception being for environmental health and safety capital expenditures. If I can reassure you, the construction of the plant in Poland is ongoing. Filip, sorry for the cash.
Charles, the EUR 200 million increase versus the last release really was not referring to any underlying cash flow. It was more to say that the immediate cash availability, so I would say the short-term liquidity of the group, has further improved, increased versus that release. That increase came basically from additional committed credit lines that we have been able to secure. It's really a message of comfort that the short-term liquidity has increased, that in general from our broad banking relationship group, that we receive full support.
It was not so much referring to underlying cash flow growth. On working capital, as I mentioned, compared to the end of last year, we've seen an increase driven by the metal prices. To answer your question, do we now already see a major inflow of cash from that? No. That is not the case. It's more to reinforce the message that in terms of short-term liquidity, we're very comfortable and have increased our position.
Great. Thank you very much, guys.
Thank you. Your next question comes from the line of Chetan Udeshi. Please ask your question.
Yeah. Hi, thank you. Just maybe a couple of questions. If it's easier, Marc, if you can give us color at all on how to think about, say, if you have a one-month shutdown in catalysis or across the group in automotive, any sort of view on what is the earnings hit that you are taking on EBIT basis, that would be useful? Any some quantification. Second question was, are you seeing any slowdown in terms of customer activity on qualification or roadmaps into the next few years because of what's happening right now? This is, of course, related to more on Rechargeable Battery Materials business.
Hi, Chetan. No, I'm not ready to give any details about the earnings impact of a month shutdown. Obviously, it is sizable because this is a relatively high fixed cost business, it's painful, I'm not going to quantify that. Do we see delays in qualification in the Rechargeable Battery Materials? I have to say, to a certain extent, yes, for practical reasons of, I would say, travel restrictions. Customers, during a certain period of time, not being allowed to come to the plant or not being allowed to interact with our team, et cetera, whether it's on the research side, on the testing side, on the line qualification side.
The mobility restrictions have meant a certain practical difficulty to keep all the qualification programs on the original schedule. The roadmap, in a way, is unchanged in terms of the programs for which we are in the process of qualifying. It is just indeed some practical delays due to restrictions. Yeah, we see that.
Thank you.
Thank you. Your next question comes from the line of Sebastian Bray. Please ask your question.
Good afternoon, everyone, and thank you for taking my questions. I would have two, please. One on the Recycling segment, one on automotive cathodes. The first one on Recycling. Could you provide an update on how much of gold and palladium prices you have locked in for 2021? I imagine that particularly at current gold prices, that's an attractive thing to do. Second question on automotive cathodes. Can I just check a comment on the pricing? If I'm understanding correctly, Marc, the pricing looks as if it will be flat year-over-year. Do you have the same level of certainty around volumes? Am I right in saying that the vast majority of Umicore's volumes as produced in 2020 are covered by take or pay? Does this include ones not disclosed, like the LG and Samsung contracts were? Thank you.
Hi, Sebastian. Filip, you want to start with the hedges?
The update of the hedges, remember in February, we already mentioned that, and we're really talking precious metals hedging, that we had significant hedges already in place for 2020 and partly for 2021. We have since then, and that was beginning of February, increased some of these hedges indeed. Also by now, obviously for this year, we have three months behind us. The message on the hedging is that for the precious metals, indeed, certainly for this year and partly for next year, we have the large majority. We're talking about gold, we're talking about palladium, and partly also platinum. We have that indeed locked in. The only exception, I want to repeat it because it's important, is obviously the rhodium price because rhodium is not hedgeable or efficiently hedgeable. Yes, we have increased somewhat our positions for the large majority.
Sebastian, could you put yourself on mute because we hear a lot of background noise.
One more. Yes, thanks.
Let me go to your other question that was to the cathodes. Maybe I've misunderstood your comment, and if that's the case, please forgive me. I didn't say that the prices were flat. I said that prices are unaffected for us, are unaffected by the COVID-19 crisis and the possibility that there would be idle capacity in the market because the prices at which we're selling today and next year, et cetera, were defined by contracts entered into in prior periods. They are not subject to, I would say, short-term fluctuations in the supply and demand balance in the marketplace.
Beyond that, again, I think it would be premature to comment on where it would be this year. That's why I think it makes sense at this point in time to share with you where we see the automotive market in general going. We'll have to fine tune these assumptions over the course of the next few weeks and few months when the visibility becomes better.
Do you have any comment in particular on expected market share, or is it too early at this stage?
Again, for the same reason, I think I would find it difficult to make comments on market share. I don't see any reason why market shares would move in a material manner either way, as I would say the qualification programs and qualification roadmaps are pretty much unaffected by the current situation, save for the temporary effect that I mentioned previously of the practical impossibility sometimes of meeting and interacting [audio distortion] .
All right. Thank you for taking my question.
Thank you. Your next question comes from the line of Geoff Haire of UBS. Please ask your question.
Good afternoon Marc and Filip, and thank you for the update. Just have got two questions. First one on the Catalysis business. What is the risk that the Catalysis business could be loss-making at the EBIT level in Q2? Secondly, I was just wondering if we get back to a more normal economic environment in 2021 or 2022, would the implication be that the CapEx level goes back to what you were expecting at the beginning of this year?
Hi, Geoff. Since we're not publishing quarterly results, I don't think it would make sense for us to provide a quarterly guidance on what the Catalysis results could be in Q2. I don't want to do that.
I'm trying to gauge what the probability would be, not what the guidance is. That's what I'm trying to understand, given the comments you've made on fixed cost.
Yeah. Actually, I'm not going to answer that question. This is not the-
Okay.
information we're willing to give. I think it's also quite sensitive from a commercial and competitive point of view, so I don't think it would serve us to do that. Yeah, the question about future CapEx is really a tough one in the current circumstances because as we speak today, I have a hard time conceiving what the new normal will be. If you say when things will get back to normal either in 2021 or 2022. I still have to figure out what normal will mean at that point in time. I think there is a good chance that the CapEx would go back up again.
I cannot actually quantify by how much, or by which margin it would go back up again, because most of the savings that we have today or the avoidance that we have now this year in terms of CapEx, are things that we're pushing out. There are not many things that we are canceling. There are a lot of projects that we are rescheduling instead. I would say, without being able to give any idea or indication of by which margin, I would say, yes, there would be a great chance that the CapEx would go back up again once things get back to normal or closer to normal. Of course, subject to being able to define what normal is.
Okay. Thank you.
Thank you. Your next question comes from Christophe van der Gheynst. Please ask your question.
Hi. Good afternoon. Thank you for taking my questions. You stated in the statements that you said that the EBIT for Catalysis and Energy & Surface Technologies is going to be well below the EBIT level of last year. Would you dare say that they would still be positive, or would that be too bold a statement? The second question would be on the supply chain. Have you had any discussions with your clients and suppliers, noticed that there would be some shifts in the supply chain that they would like to bring these closer to home, reschedule or rearrange these in any way? I'm not sure how your supply chains look like. I guess they're already close to customers, but have there been any such discussions that you've noticed of some kind of de-globalization or double lines in your supply chains? Thank you.
Yeah. I think you will need to help us and clarify what you mean with your second question. In the meantime, let me answer that. Yeah. At this stage, we only want to say that well below the year 2019 levels. Again, I think the visibility is such that there is no point in trying to quantify the guidance. On the second question, Christophe, can you repeat the question? Maybe try to clarify what you want to get at.
As we see now, I guess your supply chains are now, for instance, that some of the products that you make in Europe or come from supply chains in Korea and other places. Do you see that there's a tendency that your customers are asking to have them closer to home, and that they sort of want to have, because if they lock up Asia again and there's no ports flying and things like that? We've also seen with a couple of companies that supply chains are more disrupted because it's difficult to find space on the shipping planes. To have in that way to have some supply closer to home, a second batch of supply closer to home. I think Melexis alluded in a way.
I know it's a very different sector, but they alluded in a way that car companies want to have a bit of a double lineup of supply and have some batches, have a bit more inventory closer to home than they have had in the past. Have you had any discussion on the just-in-time supply chains that might be in place today?
No, for the simple reason that we already have it in place. Whether you look at our catalyst business or our other businesses, we produce where the customers need us to produce. It's not like we have huge production hubs in one or two countries serving the entire world. We produce in China for China, we produce in Europe for Europe, we produce in North America for North America, we produce in Brazil for South America, and in India for India, in Southeast Asia for Southeast Asia, et cetera. We're not so much affected by this type of request or trend because in a way, we have always made the choice. It's part of our business philosophy to produce in a close proximity, in a close vicinity of where our customers are, where our markets are.
If you look at, for instance, for catalyst, it's quite a well-established element. If you look at battery materials, we'll be the first player in the industry to have production capabilities in three key regions for EVs, while all of our competitors in that space have manufacturing capabilities in a single region. Not a topic for us, a topic for probably several of our customers. This being said, it will not be easy for automotive supply chains to adjust completely to what you describe, which I think is legitimate. I think it will be complicated because a car is made of more than 10,000 components. I think it would be an illusion to think that all 10,000 components can be made in 20 different locations around the world to serve 20 different big production centers.
Thank you.
Thank you. Your next question comes from the line of Jean-Baptiste [of] Rolland . Please ask your question.
Good afternoon, Marc. Good afternoon, Filip, and thank you for taking my questions. I would have two, please. You were saying that visibility on volumes in cathode material is pretty much inexistent. At the same time, you stated that you have to deliver volumes from your Polish plant on time. I thought your contracts were meant to start pretty soon, however, with LG Chem and Samsung, and that pretty much the majority of the portion of these contracts were actually stemming from your Polish plant. I was just wondering if you could clarify if I misunderstood anything here. Second question on the competitive markets in Asia, for cathode materials and also catalysts.
I know you talked about market share not being affected currently, but would you expect some competitors, which are not necessarily as well funded as you are, with a weaker balance sheet, to actually potentially be forced out of the market simply by issues related to leverage balance sheet and et cetera? Thank you.
Hi, Jean-Baptiste . For now, I don't see many changes in the competitive landscape. It's probably too early days for that to happen. I cannot totally rule it out, especially in the battery space where we have a number of companies that may not have a very, I would say, strong balance sheet indeed, but again, too early to tell.
In terms of the cathode material production, let me clarify that our plant in Poland is due to come on stream towards the end of the year, and to start commissioning at that point in time. There is no change to that. The contracts that you refer to are indeed in place already this year, and for deliveries out of other locations than Poland, because Poland is only coming on stream at the end of the year. There is no change there to the contractual configuration.
Okay. Thank you very much.
Thank you. Your next question comes from the line of Georgina Iwamoto of Goldman Sachs. Please ask your que-.
Hi. Good afternoon, Marc. Good afternoon, Filip. Thanks for taking my questions.
Okay.
My first question is on your expectations for EV penetration rates. You've been very clear that you expect a materially lower overall auto production number for this year. How do you think about the kind of relative volume in terms of combustion engines versus electric vehicles? Do you think that actually you'll see materially negative volume in both catalysts versus electric vehicles, but one might be more pronounced than the other? I have a question, just in terms of your customers in RBM.
The two kind of very well-known ones have recently lowered their revenue growth forecast for EV batteries, but they still expect high double-digit growth this year. Is there a particular reason for the discrepancy in the kind of growth outlooks from Umicore versus its customers? Final question is, just quickly on recycling. I'm just wondering if you could give some idea if you've seen a change in mix in the first quarter versus the end of last year? Thanks very much.
Hi, Georgina. Let me start with your questions in reverse order. No, there is no major change in the mix compared to what we processed towards the end of last year. The mix is very supportive. We have a high proportion of very complex materials, end-of-life materials, spent catalyst, electronic scrap, and other complex materials rich in precious metals. No, the mix continues to be good and continues to be in line with the comments we made towards the end of last year. About the statements made by one of our customers and/or statements about the outlook. I've only made an outlook about the automotive industry, in a way. Today, I'm answering both your first and your second question at the same time, in a way.
I don't have granularity in terms of the market outlook and what the engine mix may look like for this year. I think it's a really complicated situation in the sense that our customers themselves, our automotive customers themselves have no view. For the time being, consumers are simply not buying cars or not in the mood to think about buying cars. It's difficult for car companies to make out what the overall volumes and what the mix may look like going forward. This has repercussions on the value chains, whether it's the catalyst or the EV batteries value chains. I cannot make a lot of comments about my customers' comments. I can only repeat that visibility today is at its lowest, and I find it impossible to make any sensible forecast about the mix for the time being.
Okay. Thank you very much.
Thank you. At this stage, we'll take two further questions. Your next question comes from the line of [Wim Hoste]. Please ask your question.
Yes, good afternoon. Also two questions from my side. First, on Recycling and Hoboken. Can you offer us a little bit additional clarity on how much visibility you have for that business? How much material, for example, is already on site? How many months can you work with that? How sure are you that the material is on its way and will come in? That's the first question. The second one is on the dividends policy. You canceled the final dividends. What does that mean for the dividend outlook? Is it a temporary cancellation? Do you expect to resume very shortly with EUR 0.75 once a bit more visibility on the economy emerges? Any clarity on that will also be appreciated. Thank you.
Hi, Wim. Typically, we have approximately six months of visibility for the, I would say the supply in Hoboken, taking into account a combination of materials that is already at the plant site, materials that is on its way, and I would say supply contracts that are confirmed. It's an approximation, but just to give you a rough idea, we have quite a good visibility there. The second question is difficult because I think it would be, again, premature to make any pronouncements about the dividend, the next steps in terms of dividends. It's not like we absolutely had to cancel the, w hat do you call it? The balance of the dividend, the final dividend of EUR 0.375. We have the financial strength, and it's not like we had liquidity issues or we were stretched and could not pay it out.
It's just a matter of precaution, because the visibility is low, the uncertainty is high, and we are quite highly exposed to a sector which is hard hit by the crisis, the automotive sector. We thought that this was the right precaution to take. In addition, because we have such a painful impact on employment, we also wanted to show that there is a degree of solidarity and social cohesion that is required for the company to navigate these trying times.
That's why we thought that the shareholders should share the efforts together with the employees and management. Unfortunately, in the current circumstances, I cannot provide a view of what the board's position will be on the next steps in that respect. You will have to bear with us, most likely until the end of July, when the board meets again and will have to make a pronouncement about the dividends or an interim.
Okay. Understood. Thank you.
Thank you. Your last question comes from the line of Edward Donahue. Please ask your question.
Gentlemen, good afternoon. A couple my side. It's just to get an idea on the production sites. Are all your production sites up and running, or are any of them actually closed? Then just with regard to the 10% of employees who are on government schemes, where are they actually sitting on those government schemes, which geographies, and how long do they run for?
Hi, Edward. We have, as we mentioned, we have temporarily closed production capacity and in Automotive Catalysts, we have closed some of our plants outside of, in Automotive Catalysts again, outside of China, Korea, and Japan. For the simple reason that the automotive industry, so our customers, have shut down their assembly lines outside of China, Korea, and Japan. This is, with a few exceptions, I would say these are the areas where we have people on the government schemes for temporary unemployment. This is in countries like, in regions like Europe, North America, in some other regions like India, et cetera, South Africa, in South America. Where basically the Automotive Catalysts plants are not running because the customers have shut down their assembly lines. It's fully aligned.
Okay. How long do you actually have the support on the government schemes for? Because a number of them are actually sort of quite tight at this particular juncture with regard to their runoffs.
Actually, where we do have them, they are not strictly limited in time. Of course, governments and companies alike hope that this will be for a very limited period of time, and there are signs of hope. There is light at the end of the tunnel. We see some European car makers restarting or starting to resume production gradually in certain countries in Europe. We may expect the same to occur in some other regions once these regions will be past the pandemic peak. Hopefully it will be for a limited period of time. In most places, we don't have a strict limit.
Right. Okay. Just with regard to the region that has opened up, the Asiatic region, what level of utilization are you seeing in your plants as of now, as of in April, as we've moved on from the closed off period?
Well, you have to look at the market statistics about the car production in these regions and then you will figure out, I would say, you will have an indication of where we are. We are basically moving in line with the market, in these regions as well.
If I take those statistics...
As I mentioned, the recovery is not that quick in countries that are past the peak, because there is still a degree of fragility in the economy and in consumer behaviors. You should expect that it will take a bit of time for demand to recover in those countries, which are on the way to normalization past the peak.
Okay. Last point. I take your statements at the beginning with regard to the employee base and the support and flexibility. I'm also thinking that if I take those statistics in the regions that are now reopened, the utilization of your plant is significantly sub-optimal. You also won't be getting the government support programs that might have existed in those areas if they were. What do you do with regard to the cost structure there?
What do you mean?
Well, yeah, the under-recovery that you'll be getting as you're actually ramping up.
Yeah.
It's trying to get an idea of the flexibility you have now on that cost side.
Well, again, as I mentioned when answering previous questions, we have a certain level of fixed cost, and Filip also gave some indications of where to look for quantified indications in our annual report. It's not because we have a temporary shutdown that we don't have these fixed costs. I mean, depreciation charges continue to run, and some of the overheads continue to be there. We cannot decide not to pay the people, obviously, because the utilization is less than optimal. The flexibility is as what I described it. It's where we have placed people on a temporary deployment. The flexibility is on the CapEx side, where we can decide to cancel or postpone a project, but we cannot decide not to pay our bills.
No, I appreciate that. Okay. Thank you very much. A good presentation. Appreciate it.
Okay.
Thank you. That answers the question.
Sorry, I was anticipating already a little bit your comment. Sorry about that. With this, I would like to close the call for today and thank you for your participation and invite you to raise further questions that you may have directly to our investor relations team. Despite the very peculiar circumstances, I would like to wish you a good long weekend for those who will have the possibility to somewhat enjoy the Labor Day public holiday tomorrow. Of course, I wish everyone to stay healthy and to keep well. Thank you for now, and bye-bye.