Johnson Matthey buoyed by car legislation

Stricter EU and Chinese regulations for vehicle emissions boosted ECT sales, and strong demand for heavy duty diesel trucks in North America also helped. Underlying operating profit at the division rose by a quarter to £118m. Management are confident that legislators will continue to view the benefits of higher air quality as outweighing the fairly small installation costs.

Johnson Matthey has spent heavily on making its catalyst business more efficient, while ramping up production in anticipation of the Euro 6b diesel-engine emission legislation in Europe. This should continue to buoy ECT in the second half - though the company did warn that the European truck market has quietened since last year’s build-up to Euro VI legislation.

Revenue across most other divisions was flat. The exception was the Precious Metal Products unit, where sales and underlying operating profit fell 10 and 30 per cent respectively. That's mainly because Johnson's contract with Anglo Platinum - usually known as Amplats, the world's largest platinum miner - was unfavourably renegotiated; Mr MacLeod ruled out the possibility of a similar bumper-sized deal in the future. And weak metal prices made matters worse.

Nonetheless, Mr MacLeod reaffirmed his confidence that profits would grow this year, as currency headwinds ease. He's also bullish about Johnson Matthey's growing battery technology segment, where revenue was up 5 per cent to £37m. The group has acquired two businesses in this industry niche over the past two months in response to growing demand for batteries in hybrid and electric vehicles.

Broker Bank of America Merrill Lynch expects adjusted EPS of 176p in the current financial year and 199p in 2016 (up from 171p last year).