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UPDATE 2-Belgium's Umicore sees 2021 core profit beating expectations

* FY core profit seen approaching 1 bln euros

* Guidance beat, driven by recycling and catalysis

* 2021 volume rise in battery business confirmed

* Shares hit two-and-a-half-year high (Adds details from call, analyst comment)

April 22 (Reuters) - Belgian materials technology and recycling group Umicore beat full-year guidance expectations on Thursday, spurred by high precious metal prices and strong demand, sending its shares 7% higher.

The group sees adjusted earnings before interest and tax (EBIT) for the year approaching 1 billion euros ($1.2 billion), significantly higher than expected for 2021 and reported last year.

“We’re in very good shape to sustain these levels of margins and profitability for awhile,” Umicore’s Chief Executive, Marc Grynberg said on a call with analysts.

Umicore’s recycling business has benefited the most from higher prices, particularly for rhodium, with the new outlook incorporating on a like-for-like basis an exceptional additional contribution of roughly 250 million euros compared to 2020.

Driven by increased market share in the Chinese and European light-duty gasoline market and the evolution of the sales mix in Europe, where diesel has declined relative to gasoline engines, the catalysis unit is expected to more than double adjusted earnings, the company said.

Grynberg also anticipated volume growth in the rechargeable battery materials business as the automotive industry recovers in Europe.

Umicore, which competes with Britain’s Johnson Matthey and Germany’s BASF, said adjusted earnings would be higher in the first half of the year than in the second and added that the new guidance assumes no deterioration in demand in the automotive industry.

Output will be affected in the second half by planned maintenance at Hoboken in Belgium, one of the world’s largest precious metals refining sites, Umicore said.

Analysts also said precious metals price volatility could have a bearing on earnings.

“It would not be wise to extrapolate the current precious metals pricing bonanza into the longer term future,” KBC said in a note.

Umicore, which is due to publish first quarter results on April 29, reported EBIT at 536 million euros in 2020.

$1 = 0.8310 euros Reporting by Pawel Goraj. Editing by Himani Sarkar, Mark Potter and Barbara Lewis

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