Report to Shareholders and Society Who We Are
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2009 Report to Shareholders and Society Who we are Umicore is a materials technology group. Its activities are centred on four business areas: Advanced Materials, Precious Metals Products and Catalysts, Precious Metals Services and Zinc Specialties. Each business area is divided into market-focused business units, be it in products that are essential to everyday life or those at the cutting edge of new technological developments. Umicore focuses on application areas where it knows its expertise in materials science, chemistry and metallurgy can make a real difference. Umicore generates approximately 50% of its revenues and spends approximately 80% of its R&D budget in the area of clean technology, such as emission control catalysts, materials for rechargeable batteries and photovoltaics, fuel cells, and recycling. application know-how chemistry metals material science material metallurgy solutions recycling The Umicore approach to materials technology We are a member of the World Business Council for Sustainable Development. We are part of the FTSE4Good Index, have been awarded a “best in class” rating by Storebrand Socially Responsible Investments and are part of the Kempen / SNS Smaller Europe SRI Index. 2009 Report to shareholders and society Economic Report p. 18 Environmental Report p. 36 Social Report p. 54 Financial statements p. 75 Governance Report p. 120 What we believe We believe that materials have been a key element in furthering the progress of mankind, that they are at the core of today’s life and will continue to be enablers for future wealth creation. We believe that metal related materials have a vital role, as they can be efficiently and infinitely recycled, which makes them the basis for sustainable products and services. We want Umicore to be a leader in providing and creating material based solutions which contribute to improvements in the quality of life. We are committed to the growth of our business through the competence of our people, excellence in operations and technological innovation. We recognize that our commitment to financial success must also take into account the broader economic, environmental and social impact of our operations. We subscribe to the following principles in our pursuit of sustainable development: • We integrate sustainable development considerations within the corporate decision- making process. • We implement risk management strategies based on valid data and sound science. • We seek continual improvement of our environmental performance. • We actively participate in the management and remediation of risks that are the result of historical operations. • We facilitate and encourage responsible design, use, re-use, recycling and disposal of our products. • We engage with our stakeholders and implement effective and transparent communication and independently verified reporting arrangements. • We strive to be a preferred employer of both current and potential employees. • We uphold fundamental human rights and respect those rights in conducting the Group’s operations throughout the world. We hold the values of openness, respect, innovation, teamwork and commitment to be crucial to its success. We promote these values and ensure that deficiencies in living up to these values are addressed in an appropriate way. Excerpt from “The Umicore Way” About this report This report covers Umicore’s operations for the financial / calendar year 2009. No major changes of scope took place in 2009 and the data in the report is readily comparable with that of 2008. Other additional information includes a summary of Umicore’s approach to economic, environmental and social management. These elements have been provided on Umicore’s website (www. sustainabledevelopment.umicore.com) and should be considered as part of this report. The economic scope of the report covers all fully consolidated operations. In addition, the contributions of all associate and joint venture companies are included in the financial reporting. Ownership details of fully consolidated companies, associates and joint ventures can be found in the notes to the financial statements. Dialogue with financial analysts and investors results in ongoing adaptations to the economic and financial metrics published. During 2005 we completed a process to set out our sustainable development approach. This process involved setting five group objectives for both environmental and social performance for the period 2006-2010 which, combined with our ‘traditional’ economic report, form the basis of this Report to Shareholders and Society and the previous reports for 2005, 2006, 2007 and 2008. The objectives were established through a process of broad internal and external consultation that included dialogue with external experts and managers from the different business segments, while also taking into consideration the views of other stakeholders such as environmental groups and various local, national and regional authorities. The data for the environmental and social performance indicators, which are linked to the various objectives, are collected through our environmental and social data management systems. The scope of the environmental and social objectives and indicators, along with a discussion of the progress made in 2009, are reported between pages 36 and 73. Based on the 2008 Assurance Statement from ERM Certification and Verification Services we have made efforts to further strengthen the communications with our sites and business units regarding sustainability reporting requirements and rendering the data collection and reporting systems even more robust. By way of preparation for future reporting cycles we have also embarked on a more systematic inclusion of internal and external stakeholder feedback (see page 134). Progress was made in extending management and monitoring of sustainability performance in our supply chain. The external engagement process in this regard started in 2010 (see page 134). The key social elements of the report are presented to the international trade unions during the joint monitoring committee in March, while the entire document is presented to shareholders at the Annual General Meeting in late April and to a more diverse group of stakeholders afterwards. The financial statements and notes have been audited by PriceWaterhouseCoopers while assurance regarding the sustainability elements has been provided by ERM Certification and Verification Services. The third-party statements can be found on page 118 to 119 of the report. The report was published on-line on 2 April 2010. The report has achieved the B+ level of application of the Global Reporting Initiative (GRI). The guiding document for our sustainable development approach is The Umicore Way. This sets out the Group vision and the values we seek to promote. We have also developed a comprehensive framework for ethical business practice through our Code of Conduct and a Corporate Governance Charter which set out our management philosophy and governance principles. These documents are available on our website www.umicore.com. Thomas Leysen Marc Grynberg Annual report 2009 I Umicore I 3 Message to shareholders and society Umicore’s financial performance in 2009 was well below that of 2008. We felt a strong negative impact from the economic crisis that gripped the world since the second part of 2008. This impact was most keenly felt in those businesses with the highest level of exposure to the automotive, construction and electronics industries. Given the magnitude of the economic downturn, however, we are pleased with the way in which Umicore has been able to adapt to the global situation, maintain a strong balance sheet, and generate significant cash flows. The performance in the second half of 2009 showed already a clear improvement compared to the deep trough of the first half of the year. Second half revenues were somewhat better than expected, bucking the negative seasonal trends that are usually experienced. The customer de-stocking that had been so much a feature of the last part of 2008 and of early 2009 was worked through the system and the inventory levels of most customers had returned to normal levels by the end of the year. The most significant reason for the improved performance in the second half of 2009 was the impact of the cost reduction measures undertaken through the year. At the outset of 2009 it was evident that in several of our businesses significant efforts would have to be made to adapt to new market realities. Automotive Catalysts and Technical Materials in particular had seen wholesale changes take place in their respective industries and customer base. While the measures taken were far-reaching we consciously chose to avoid any one-size-fits-all cost reduction programme instead empowering the business units to make those adjustments they deemed necessary and seeking temporary solutions wherever possible. We believe that this was the most sensible path not only from a longer-term business continuity point of view but also in terms of social responsibility. This approach was vindicated as we saw many colleagues who had previously been subject to temporary unemployment return to full time work by the end of the year. Furthermore, in those areas of our business that are expected to see the strongest growth in the coming years we were able to start creating new jobs. We are convinced that Umicore is emerging from the economic slump in a comparatively stronger position than many of its competitors. From a financial perspective