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Johnson Matthey releases preliminary results for 2014 - 2015

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Hydrocarbon Engineering,

Performance highlights

  • Sales were up 8% and underlying profit before tax (PBT) was 7% ahead at constant rates.
  • Underlying PBT at constant rates and adjusted for revised Anglo Platinum contracts were up 15%.
  • Underlying earnings per share (EPS) was up 6%.
  • PBT was up 22% to £495.8 million and EPS up 26% to 211.2p due to profit on the sale of Gold and Silver Refining.
  • Strong balance sheet: net debt (including post tax pension deficits)/EBITDA up to 1.7 times.
  • Working capital increased due to business growth and higher precious metal inventories at year end.
  • Return on invested capital (ROIC) was at 18.8%, down 2.0% due to loss of income from Anglo Platinum and higher working capital.
  • Final dividend of 49.5p recommended, resulting in full year dividend up 9% at 68.0p.

Segment breakdown

Emission control technologies

  • Strong year; sales up 12% and underlying operating profit up 21%.
  • Strong growth in Europe driven by tighter legislation for both cars and trucks.
  • Continued growth in Asia, especially in China, driven by strong car sales and further enforcement of truck legislation.
  • Good performance in North America in heavy duty diesel catalysts due to strong demand for large (Class 8) trucks.

Process technologies

  • Sales up 7% and underlying operating profit up 7%.
  • Good growth in the Oil and Gas businesses.
  • Mixed performance in the Chemicals businesses. Good demand for catalysts offset by reduced income from technology licensing.

Precious metal products

  • Sales fell by 9% and underlying operating profit was 21% lower.
  • Lower commission revenue resulting from revision of the Anglo Platinum contracts.
  • Continued weakness in some Manufacturing markets.
  • Sale of our Gold and Silver Refining business.

Fine chemicals

  • Sales up 3% and underlying operating profit 7% ahead.
  • Steady sales growth in Active Pharmaceutical Ingredient (API) Manufacturing.
  • Process efficiency improvements.
  • In advanced negotiations on the sale of the Research Chemicals business.

New businesses

  • Good progress; sales up 27%.
  • Good growth in Battery Technologies’ sales and completion of two bolt on acquisitions.
  • Continued investment resulting in a small increase in division’s underlying operating loss.

Commenting on the results, Robert MacLeod, Chief Executive of Johnson Matthey said:

“Johnson Matthey performed in line with our expectations in 2014 - 2015, delivering good growth in many areas of our business. Underlying EPS grew by 6% but on a constant currency basis, and adjusting for the loss of commission income from Anglo Platinum, our sales were up 9% and underlying PBT was 15% ahead.

“We have continued to focus on health and safety this year and I am pleased to report that this has had a positive impact with a 25% reduction in our lost time injury and illness rate.

“In 2015 - 2016, Johnson Matthey’s continuing businesses are expected to deliver good underlying growth. A strong performance in Emission Control Technologies and good progress in Fine Chemicals is likely to be partially offset by a weaker year for Precious Metal Products. We anticipate that Process Technologies’ performance will be broadly stable and that the operating loss in New Businesses will reduce modestly.

“In line with our strategy, we have divested our Gold and Silver Refining business and are in advanced negotiations on the sale of Research Chemicals. Given the absence of these two businesses, we expect the group’s performance in 2015/16 to be slightly ahead of 2014 - 2015.

“Johnson Matthey remains well placed to benefit from major global sustainability drivers and we continue to invest in R&D, our infrastructure and our people, working closely with customers to provide them with innovative and improved solutions. Supported by a clear purpose and strategy, Johnson Matthey is well positioned to deliver growth for our shareholders through the creation of value adding sustainable technologies.”

Adapted from press release by Rosalie Starling

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