Johnson Matthey anticipates flat year

City expectations for a 5 per cent increase at the bottom line for the year to March 2015 make downgrades more likely than upgrades. JPMorgan Cazenove trimmed its adjusted EPS forecast by 3 per cent to 172p (from 171p last year), but even then the broker calculates that Matthey must generate underlying EPS growth of 18 per cent.

Much of that must come from vehicle catalyst sales. Last year, the division made underlying operating profit of almost £204m - 39 per cent of the total. New, tighter Euro VI legislation drove sales of (European) heavy duty diesel (HDD) catalysts up by nearly a half. Euro VI trucks are worth almost three times more to Matthey than trucks under the previous regime, and made up 60 per cent of its European HDD sales. A rush to buy cheaper trucks before the 1 January deadline was worth £10m. Expect "further progress" here this year, says Matthey, driven by stricter legislation both here and in China, as well as rising European car sales.

Elsewhere, the acquisition of Formox flattered the industrial catalysts unit, called process technologies. Sales rose by a tenth, but without the purchase of the formaldehyde producer that would have been just 2 per cent. The timing of a few big projects could make for some volatility, although Chinese coal and North American shale should be good for Matthey. Having taken the brunt of the Amplats decision, and with metal prices weaker, growth at the precious metals division was modest, although the outlook is "steady".