TIDMJMAT
RNS Number : 7042T
Johnson Matthey PLC
22 July 2015
For release at 7.00 am on Wednesday 22(nd) July 2015
Johnson Matthey Plc - Q1 Trading Update
Group sales up 6%
Trading in line with our expectations
Johnson Matthey, a global leader in sustainable technologies,
today provides its first quarter trading update. Unless otherwise
stated, figures quoted in this statement are for the quarter ended
30(th) June 2015.
Q1 Q1 %
2015/16 2014/15 % at constant
GBP million GBP million change rates
Sales excluding precious metals
(sales)
Emission Control Technologies 478 444 +8 +6
Process Technologies 130 119 +9 +8
Precious Metal Products 85 101 -15 -16
Fine Chemicals 78 78 - -4
New Businesses 38 18 +107 +126
Eliminations (12) (11)
------------ ------------
Group sales 797 749 +6 +5
------------ ------------
Underlying operating profit(1) 103.6 103.6 - -1
Underlying profit before tax(1) 94.0 95.0 -1 -3
--------------------------------------------- --- ------------ ------------ ------- ------------
(1) before amortisation of acquired intangibles, major
impairment and restructuring charges, profit or loss on disposal of
businesses.
Overview of Trading
Johnson Matthey's sales excluding precious metals (sales) were
6% ahead at GBP797 million (2014/15 GBP749 million) and underlying
profit before tax in the quarter decreased only slightly to GBP94.0
million (2014/15 GBP95.0 million), despite the absence of income
from the Gold and Silver Refining business which was divested
towards the end of last year. Adjusting for this, the group's sales
were 8% ahead and underlying profit before tax grew by 1%. This
further progress was supported by robust demand for catalysts which
boosted sales in both Emission Control Technologies and Process
Technologies. However, the difficult market conditions in platinum
group metal refining and some parts of Process Technologies, which
we noted in our preliminary results announcement in June, impacted
operating profit in the quarter.
As anticipated, the group's total working capital improved by
over GBP110 million compared to 31(st) March 2015 and we continue
to expect working capital days excluding precious metals to be in
the 50 to 60 range by the year end. The group's balance sheet
improved with net debt of GBP834 million, GBP160 million below the
2014/15 year end level. Net debt (including post tax pension
deficits) to EBITDA for the 12 months to 30(th) June 2015 was 1.4
times and our target ratio remains at 1.5 to 2.0 times.
Capital Return
On 25(th) June 2015 we announced that we had reached an
agreement to divest the Research Chemicals business for GBP256
million in cash. The transaction is expected to be completed by the
end of the calendar year. We continue to invest in our business and
to maintain an efficient balance sheet. Post completion, in the
absence of any material acquisitions, it is our intention to return
excess capital from the sale of the Gold and Silver Refining and
Research Chemicals businesses to shareholders.
Emission Control Technologies (ECT)
ECT continued to perform well with sales 8% ahead at GBP478
million (2014/15 GBP444 million). Operating profit was also ahead.
Sales of light duty vehicle catalysts grew by 10% to GBP289
million, well ahead of flat global car production. This good result
was supported by increasing sales of higher value Euro 6b catalysts
as the legislation approaches full implementation and by continued
solid demand for cars in China. Our heavy duty diesel catalyst
sales also increased by 4% to GBP189 million, benefiting from the
ongoing robust demand for larger Class 8 trucks in the US which we
expect to continue for the remainder of 2015. The continued gradual
implementation of Euro IV standards in China and more encouraging
truck production in Western Europe also supported demand for our
products.
Process Technologies
Process Technologies' sales were up 9% at GBP130 million
(2014/15 GBP119 million) although operating profit was lower as a
result of a less favourable mix. Demand for catalysts in our
Chemicals businesses was robust but the pace of licensing activity,
particularly in China, remained sluggish. No new licences were
signed in the period but since the quarter end, agreement has been
reached for a new oxo alcohols plant in India. Our Oil and Gas
businesses continued to grow their sales, supported by increased
demand for purification products and additives. However, its
Diagnostic Services business felt the impact of the slowdown in
upstream oil and gas markets which will continue to weigh on its
performance throughout 2015/16.
Precious Metal Products
Sales in Precious Metal Products were 15% lower at GBP85 million
(2014/15 GBP101 million) and operating profit was also adversely
impacted, partly as a result of the disposal of the Gold and Silver
Refining business, but also due to the substantially lower average
platinum group metal (pgm) prices (platinum averaged $1,134/oz,
down 22% on the same period last year, and palladium averaged
$765/oz, down 7%). These lower prices also impacted revenue in our
Pgm Refining business, even though volumes remained relatively
stable. The performance of our Manufacturing businesses was broadly
in line with last year.
Fine Chemicals
Fine Chemicals' sales were flat at GBP78 million and operating
profit was unchanged. Sales in our Active Pharmaceutical Ingredient
(API) Manufacturing business were in line with last year as a good
contribution from APIs for the treatment of Attention Deficit
Hyperactivity Disorders was partly offset by lower demand for some
opiate APIs as a result of the timing of orders between the first
and second quarters. Catalysis and Chiral Technologies and Research
Chemicals were also similar to last year.
New Businesses
New Businesses had a good first quarter where sales of GBP38
million (2014/15 GBP18 million) benefited from an increased
contribution from Battery Technologies following the two battery
materials acquisitions made in 2014/15 and good demand for battery
systems. The operating loss for the division as a whole reduced
steadily, in line with our expectations for the full year.
Outlook
In line with our guidance from our preliminary results
announcement on 4(th) June 2015, we continue to anticipate that
Johnson Matthey's ongoing businesses will deliver good underlying
growth in 2015/16, particularly in the second half of the year. In
that announcement we reported that, taking into account an
increased pension charge of GBP15 million and the absence of both
the Gold and Silver Refining and Research Chemicals businesses, we
expected the group's overall performance in 2015/16 to be slightly
ahead of 2014/15.
However, since 4(th) June, sterling has strengthened against
both the US dollar and the euro and pgm prices have fallen
substantially. If exchange rates and pgm prices remain at current
levels throughout the rest of the year the group's reported results
will be adversely impacted by around a further GBP10 million.
Notes:
1 Call for Analysts and Investors
Den Jones, Group Finance Director, will host a conference call
at 8.00 am today, Wednesday 22(nd) July 2015, to discuss this
trading update. The dial-in number for UK callers is 0203 139 4830;
for overseas callers the number is +44 (0) 203 139 4830; and the
passcode is 92230965#. Please dial in approximately 15 minutes
prior to the start of the conference call to allow time for
registration.
2 Third Quarter Trading Update
Following the Financial Conduct Authority's removal of the
requirement to issue quarterly interim management statements,
Johnson Matthey has consulted with stakeholders and reviewed its
current disclosures. As a result, instead of issuing a third
quarter trading update in late January / early February 2016,
Johnson Matthey will issue a trading update in early March 2016.
The exact date of its issue will be communicated in our half year
results announcement in November. At this stage, we do not intend
to cease our first and third quarter trading updates but, in
consultation with our stakeholders, will keep this under
review.
Enquiries:
020 7269
Sally Jones Director, IR and Corporate Communications 8407
020 7353
David Allchurch / Tom Buchanan Tulchan Communications 4200
www.matthey.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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