TIDMJMAT
RNS Number : 6638E
Johnson Matthey PLC
20 July 2016
Q1 Trading Update
20(th) July 2016
Unless otherwise stated, figures and commentary quoted in this
statement are based on the quarter ended 30(th) June 2016 and
compare this quarter to Q1 2015/16 at actual rates
Q1 Highlights
-- Solid start to the year, group sales for continuing
businesses(1) up 6% (up 2% at constant rates(2) )
-- Strong sales growth in Emission Control Technologies and further progress in New Businesses
-- Overall demand stable in quarter for Process Technologies,
Precious Metal Products and Fine Chemicals(1)
-- Underlying(3) profit before tax on a continuing basis(1)
broadly in line with last year at constant rates(2)
-- Full year outlook at constant rates remains in line with our previous expectations
Q1 Q1 Q1 on Q1 % change
2016/17 2015/16 continuing businesses(1)
GBP million GBP actual actual constant
million rates(2)
Sales excluding precious
metals (sales)
Emission Control
Technologies 521 478 +9 +9 +5
Process Technologies 134 130 +3 +3 -1
Precious Metal Products 91 85 +6 +6 +1
Fine Chemicals 59 78 -25 - -5
New Businesses 43 38 +14 +14 +11
Eliminations (26) (12)
------------ ---------
Group sales 822 797 +3 +6 +2
Overview of Trading
Group sales for the continuing businesses increased by 6% to
GBP822 million (up 2% at constant rates), supported by continued
good demand in Emission Control Technologies and an increasing
contribution from New Businesses. Sales in both Process
Technologies and Precious Metal Products were stable although
markets in both divisions remained challenging. Demand in Fine
Chemicals' continuing businesses(1) was steady.
Underlying(3) profit before tax for the quarter was supported by
actions taken to reduce costs in the last financial year. Our
outlook for the full year at constant rates is unchanged. If
current exchange rates prevail for the remainder of 2016/17, the
group's reported results will further benefit from a positive
translational impact.
Emission Control Technologies (ECT)
ECT continued to perform well, with sales up 9% to GBP521
million (5% ahead at constant rates).
Sales in our light duty vehicle catalyst business were up 14% to
GBP331 million (12% ahead at constant rates), continuing to outpace
global car production which grew by 2%. The business saw growth
across all regions with particularly strong growth in Europe,
helped in part by robust car production growth in the region's key
markets.
Our heavy duty catalyst business' sales were up 1% to GBP190
million (down 5% at constant rates). As expected, the slowdown in
demand for Class 8 trucks in North America held back growth in our
sales. Production of Class 8 trucks has continued to weaken during
our first quarter although we still expect production levels to
stabilise later in the year. Our sales in Europe were strong,
helped by the good growth in Western European truck production.
Underlying operating profit in ECT was broadly in line with the
same period last year.
Process Technologies
Sales in Process Technologies grew by 3% to GBP134 million (down
1% at constant rates) with sales growth in Chemicals offsetting
reduced demand in our Oil and Gas businesses.
Our Chemicals businesses' sales increased in the quarter with
good demand for speciality products for petrochemical applications
offsetting ongoing weakness in licensing activity. No new licences
were signed in the period and we expect low levels of licensing
activity to continue over the year.
Sales in our Oil and Gas businesses were lower partly as a
result of reduced demand in our Gas Processing business after a
strong 2015/16. Tough market conditions due to the low oil price
continued to adversely impact demand in Diagnostic Services from
customers in upstream oil and gas markets. On the other hand,
demand for hydrogen catalysts was strong in the quarter.
Underlying operating profit for the division improved
substantially as a result of the actions taken in the second half
of 2015/16 to reduce costs, but market conditions remain
challenging.
Precious Metal Products
Precious Metal Products' sales increased by 6% to GBP91 million
(up 1% at constant rates).
In Services, Precious Metals Management's sales increased as the
business benefited from the volatility in platinum group metal
(pgm) prices during the period. Intake volumes in our Pgm Refining
and Recycling business were stable, albeit at relatively low
levels. Sales in our Manufacturing businesses were slightly down as
a weaker first quarter for Noble Metals was partly offset by good
demand across all regions in Advanced Glass Technologies.
The division's underlying operating profit was down, principally
due to lower average pgm prices (platinum averaged $1,010/oz, down
11% on the same period last year, and palladium average $573/oz,
down 25%).
Fine Chemicals
As expected, sales in Fine Chemicals' continuing businesses(1)
were flat at GBP59 million (5% down at constant rates). Our Active
Pharmaceutical Ingredient (API) Manufacturing business' sales were
slightly down due to timing of orders. Catalysis and Chiral
Technologies had a good start to the year with strong demand for
homogeneous catalysts.
Underlying operating profit for the division was lower, partly
due to the absence of income from Research Chemicals which was sold
on 30(th) September 2015.
New Businesses
New Businesses continued to make further progress with sales
increasing 14% to GBP43 million (11% ahead at constant rates), with
good demand for battery materials and an early contribution from
the recent Water Technologies acquisitions made in April and
May.
The operating loss for the division continued to be in line with
our expectations for the full year.
Outlook
In line with our preliminary results announcement on 2(nd) June
2016, we continue to expect the group's performance in 2016/17 to
be ahead of 2015/16, albeit weighted towards the second half.
The underlying performance of the group for 2016/17 at constant
rates remains in line with our previous expectations. However, the
full year positive translational impact from exchange rates at
2(nd) June 2016 of approximately GBP15 million has increased
substantially recently. If exchange rates remain at current levels
for the remainder of 2016/17, the positive translational impact to
full year underlying operating profit would increase by around a
further GBP25 million to a total of approximately GBP40
million.
It is too early to predict the exact consequences of the UK's
vote to leave the EU. However, the board currently believes that
this will not have a long term material impact on Johnson Matthey
and we continue to focus on executing our strategy for the group.
We will continue to grow the business by investing in R&D, our
manufacturing facilities and our employees, whilst improving our
health and safety performance and delivering the very best products
and service for our customers.
Notes:
Call for Analysts and Investors
Robert MacLeod, Chief Executive, will host a conference call at
8.00 am today, Wednesday 20(th) July 2016, to discuss this trading
update. The dial-in number for UK callers is 0203 139 4830; for
overseas callers please see
http://events.arkadin.com/ev/docs/NE_FEL_Events_International_Access_List.pdf.
The passcode is 89159815#. Please dial in approximately 15 minutes
prior to the start of the conference call to allow time for
registration.
Enquiries:
Director, IR and Corporate 020 7269
Sally Jones Communications 8407
020 7269
Simon McGough Head of Investor Relations 8235
020 7353
David Allchurch Tulchan Communications 4200
www.matthey.com
(1) 2015/16 adjusted to exclude contribution of the Research
Chemicals business.
(2) at constant rates (if Q1 2015/16 results are converted at
average exchange rates for Q1 2016/17).
(3) before amortisation of acquired intangibles, major
impairment and restructuring charges, profit or loss on disposal of
businesses.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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