Johnson Matthey (JMAT) achieved its 2019 target of securing around a 65 per cent share of the European light duty diesel market for its clean air division. Clean air, which supplies catalytic converters, saw sales rise 11 per cent, ahead of the global 2 per cent decline in light duty vehicle production. Johnson Matthey’s new markets arm, meanwhile, saw operating profit drop 85 per cent owing to further investment in its eLNO battery material and weaker profitability in medical device components.
The pioneer of sustainable technologies and “complicated chemistry”, in the words of chief financial officer Anna Manz, is bullish in the face of dire car data. The Society of Motor Manufacturers & Traders (SMMT) cautioned that Brexit had forced UK car production down 45 per cent in April, which represented the 11th consecutive month of decline. But Ms Manz pointed to JM’s global reach. “A reduction in production in the UK doesn’t really impact our business,” she said. “If we see a slowdown in car purchase, that impacts our business slightly,” she added, “but very slightly because actually the bigger drivers are legislation and share gain”.
A £17m settlement, with no admission of fault, was made to a customer after JM was informed of failures in engine systems for which the group supplied a coated substrate. The group says “the reported failures have not been demonstrated to be due to the coated substrate supplied by Johnson Matthey”. The business is engaged in a dispute with another customer over the same issue, which Ms Manz declined to comment on.
Elsewhere, unscheduled downtime at one of its platinum group metal refineries in the first half precipitated a free cash outflow of £13m, pushing precious metal working capital and capital expenditure up.
Analysts at Citi forecast pre-tax profits and EPS of £551m and 241p, respectively, for the March 2020 year-end, rising to £604m and 264p in FY2021.
| JOHNSON MATTHEY (JMAT) | ||||
| ORD PRICE: | 3,087p | MARKET VALUE: | £5.97bn | |
| TOUCH: | 3,084-3,088p | 12-MONTH HIGH: | 3,873p | LOW: 2,574p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 1,349p* | NET DEBT: | 33% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 10.1 | 496 | 211 | 68.0 |
| 2016 | 10.7 | 386 | 166 | 71.5 |
| 2017 | 12.0 | 462 | 201 | 75.0 |
| 2018 | 10.3 | 320 | 155 | 80.0 |
| 2019 | 10.8 | 488 | 215 | 85.5 |
| % change | +5 | +53 | +39 | +7 |
| Ex-div: | 6 Jun | |||
| Payment: | 6 Aug | |||
| *Includes intangible assets of £914m, or 472p a share | ||||
