Car scrappage boosts Johnson Matthey

Profits were still down in the catalyst division as a whole, however - albeit by only 3 per cent. Worst hit was the group's heavy-duty diesel catalyst business, which was dragged into the red as the boom years for truck production came to an end.

The issue now is whether global car production will falter as government stimulus is withdrawn. Johnson Matthey is confident that auto-catalyst sales will remain strong in the first half of this year, but is more sparing with medium-term predictions. Still, the group does boast commanding positions in the emerging world, particularly China where it has a 30 per cent share of the vehicle catalyst market - up from 17 per cent five years ago. "This is one of the few growth industries where the Chinese are not a major low-tech threat," says analyst Adam Collins of Liberum Capital.

The group's longer-term outlook is brightened by the increasingly global phenomenon of tightening regulation on vehicle emissions - with even China now joining the ranks. But most of the new restrictions kick in next year, so won't affect earnings until the year to March 2012.

Meanwhile, the group's precious metals division proved less resilient than the catalyst side, with operating profits down 18 per cent to £117m. This was partly offset by a modest gain in the less cyclical chemicals business, and the blow of the recession was softened by sterling's decline - without which the 9 per cent drop in group underlying operating profits would have been well into double digits.

Citigroup expects pre-tax profit of £299m for 2011 and adjusted EPS of 102p (£250m and 86.4p for 2010).

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