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The increase in Johnson Matthey’s full-year profit shows that it is benefiting from the global trend towards reducing emissions.
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Pre-tax profits were at the top end of analysts’ estimates. The figure was boosted by the Environmental Technologies division, which produces catalytic converters used to reduce emissions in the automotive industry. Sales in this division, excluding precious metals, grew 27 per cent to £1.1bn and underlying operating profit improved 20 per cent to £147.3m.
| JOHNSON MATTHEY (JMAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,008p | MARKET VALUE: | £4,310.7m | |
| TOUCH: | 2,008-2,009p | 12-MONTH HIGH: | 2,115p | LOW: 1,516p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 23 | |
| NET ASSET VALUE:* | 540p | NET DEBT: | 54% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 4.49 | 178 | 56.0 | 26.4 |
| 2005 | 4.63 | 167 | 56.1 | 27.7 |
| 2006** | 4.57 | 192 | 64.2 | 30.1 |
| 2007 | 6.15 | 227 | 76.5 | 33.6 |
| 2008 | 7.50 | 262 | 88.3 | 36.6 |
| % change | +22 | +16 | +15 | +9 |
Ex-div: 11 Jun Payment: 5 Aug *Includes intangible assets of £593m, or 276p a share **Restated |
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The company’s performance was impressive in the face of a weakening US car market and was driven by regulatory requirements and increasing consumer-led demand for lower-emitting cars.
Chief financial officer John Sheldrick says one of the key drivers of growth in the next two years will be the conversion of half of Europe’s cars to diesel catalytic converters, which will generate strong profit margins for Johnson Matthey.
Cazenove is forecasting adjusted EPS of 100p in 2009, increasing to 112p the following year.
Johnson Matthey is forecast to produce above-average growth as it benefits from growing environmental concerns. Trading on 20 times 2009 earnings, the shares remain good value.
Last IC view: Good value, 1,815p, 30 Jan 2008.
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