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Johnson Matthey half year results

Hydrocarbon Engineering,

Johnson Matthey has released half year results for the six months ended 30 September 2014, indicating that the firm continues to make good progress:

  • Sales excluding precious metals (sales) increased by 2% to £ 1.5 billion; at constant exchange rates and adjusting for loss of commission income from Anglo American Platinum Limited (Anglo Platinum) the group’s sales grew by 10%.
  • Profit before tax increased by 3%; underlying profit before tax increased by 2%, and 10% at constant rate.
  • Earning per share (EPS) flat; underlying EPS increased by 4%.
  • Investment in R&D of £ 80 million, up 10%.
  • Cash flow conversion of 50% (1H 2013/14 68%).
  • Strong balance sheet; net debt (including post tax pension deficits)/EBITDA of 1.4 times.
  • Return on invested capital (ROIC) 20.3%.
  • Interim dividend up 9% to 18.5 pence.
  • Performance for the full year expected to be slightly ahead of 2013/14.

Divisional overview

Emissions Control Technologies performed strongly with sales up 7% and underlying operating profit 25% higher, benefitting from:

  • Tighter legislation in Europe and Asia.
  • Increased demand for heavy duty trucks in the US.
  • Process efficiency improvements and higher plant utilisation.

Process Technologies’ sales were 2% but underlying operating profit was 2% ahead due to:

  • A good performance in the oil and gas business.
  • A weaker first half in its chemicals businesses as a result of the timing of catalyst orders and slower licensing activity.

Precious Metal Products’ sales and underlying operating profit were down 10% and 30% respectively, impacted, as expected, by the loss of commission revenue from Anglo Platinum.

Fine Chemicals’ sales reduced by 4% but underlying profit was 3% ahead mainly as a result of positive product mix in its API Manufacturing business.

New businesses made further progress with sales up 5% supported by growth in Battery Technologies. Continued investment led to a modest increase in the underlying operating cost.

Commenting on the results, Robert MacLeod, Chief Executive of Johnson Matthey said: “I am pleased to report that Johnson Matthey continued to make good progress in the first half of 2014/15, particularly in Emissions Control Technologies. The group’s sales were up by 2% and were 10% ahead if the impact in the change in our contracts with Anglo Platinum and foreign currency translation are excluded. Underlying earning per share grew 4% and the interim dividend of 18.5 pence is 9% ahead of last year. We have also taken further steps in our strategy to establish new businesses in areas that align with our technology competences.

“The group’s results in the first half of 2014/15 were in line with our expectations. In the second half we expect good underlying growth compared to the same period last year. However, this will be partly offset by the impact of the loss of commission income from Anglo Platinum in the third quarter. If current exchange rates prevail, foreign currency translation will not materially impact results in the second half. The group’s performance in 2014/15 is expected to be slightly ahead of 2013/14”.

Adapted from a press release by Emma McAleavey.

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