Strip out the £70m pocketed from the sale of Johnson Matthey's (JMAT) gold and silver refining business and pre-tax profits still rose 7 per cent at constant exchange rates. Tighter emission legislation for vehicles was a key source of that growth, as it spurred soaring demand for the group's catalytic converters.
Legislation to drive down pollution levels in Asia and Europe, coupled with a buoyant US truck market, sent underlying profits at the emission control arm up 21 per cent, excluding currency effects. Finance director Den Jones expects this regulation-driven growth trend to continue as motor franchises start offering diesel models across the pond. As the penetration rate in the US is currently about 5 per cent, any development there could be a game changer.
Performance at the precious metal products division was less impressive. Even after excluding the loss of about £30m of revenues from the renegotiated Anglo Platinum deal, sales still fell, mainly due to falling platinum and palladium prices and tepid manufacturing markets.
Another concern was the group's swelling net debt. Large working capital outflows linked to business growth and higher precious metal inventories sent net debt up 36 per cent to £994m.
The shares fell 5 per cent on the day of the results, and broker JPMorgan Cazenove trimmed its adjusted pre-tax profit forecasts by 4 per cent to £445m for the 2016 financial year, giving adjusted EPS of 187p.
| JOHNSON MATTHEY (JMAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,363p | MARKET VALUE: | £6.9bn | |
| TOUCH: | 3,361-3,364p | 12-MONTH HIGH: | 3,590p | LOW: 2,695p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 884p* | NET DEBT: | 55% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 10.0 | 261 | 86 | 46 |
| 2012 | 12.0 | 409 | 149 | 55† |
| 2013 | 10.7 | 349 | 132 | 57 |
| 2014 | 11.2 | 407 | 168 | 63 |
| 2015 | 10.1 | 496 | 211 | 68 |
| % change | -10 | +22 | +26 | +9 |
Ex-div: 11 Jun Payment: 4 Aug *Includes intangible assets of £736m, or 359p a share †Excludes 100p special dividend | ||||
