Johnson Matthey warns on first half

Operationally, the group experienced a strong first half with both the environmental technologies and precious metals products divisions having achieved double-digit sales and operating profit growth. But the impact of the credit crunch eventually hit the global car industry in the second half and auto-catalyst sales plunged more than 30 per cent. For the core environmental technologies division, full-year sales (excluding precious metals) fell £4.4m to £1.135bn, but underlying operating profit there dropped 16 per cent to £124.3m. The group's auto-catalyst emissions control technology (ECT) segment of this division has trimmed headcount by 13 per cent to reflect this weakened demand.

But the auto-catalyst outlook beyond 2009-10 remains encouraging. New vehicle emissions regulations come into force for heavy diesel vehicles in the US from January 2010, and for all new diesel cars in the European Union from January 2011. Accordingly, the group proceeded with the construction of two new ECT facilities during the year - one in the US and the other in Macedonia - to meet the increased demand that's due to come from these regulations. Elsewhere, in the environmental technologies operation, methanol catalyst demand was particularly strong - the company is set to take advantage of increasing interest in methanol fuel constituents, particularly in China, with a new world-class methanol synthesis catalyst facility in the UK; that's almost completed.

In the precious metal products division, the collapse in platinum group metals (PGM) prices means that, while the PGM refining and recycling business contributed 15 per cent of divisional operating profit last year, it will be much weaker this year.

Cazenove anticipates EPS of 70.9p for 2010.