Johnson Matthey a speciality chemicals company focussed on precious metals, catalysts and other fine chemicals, reported strong growth across all three operating divisions, Catalysts & Chemicals, Precious Metals and Colours & Coatings.
Commenting on the results, Chris Clark, Chief Executive of Johnson Matthey, said: "The group grew strongly last year and our businesses continue to perform well. As a result, we are investing significantly in the development of our technology and also in increased capacity, particularly for Catalysts & Chemicals. We are confident that the current year will again demonstrate the organic growth potential in Johnson Matthey. " Summary Results
Catalysts and Chemicals Division (Inc. Autocatalysts, Fuel Cells)
Precious Metals
Colours and Coatings Summary Results The summary results are detailed below
Results
· Profit before tax excluding exceptional items up 25% to £180.3 million
· Operating profit up 20% to £175.0 million. All three divisions delivering strong organic growth
· Earnings per share excluding exceptional items up 22% to 58.1 pence
· Dividend for the year increased by 15% to 23.3 pence
· Strong balance sheet with net cash of £139.9 million
Business developments
· Major investment programme continues in autocatalyst, chemicals, pharmaceutical materials and fuel cells
· Site identified for fuel cell manufacturing at Swindon
· Growth in Precious Metals supported by buoyant market demand for platinum group metals
· Investment in growth markets producing good results in Colours & Coatings
· Surplus cash to be used to buy back shares
· Pursuing acquisitions to add to core businesses Catalysts and Chemicals Division Catalysts & Chemicals Division increased sales by 76% over the previous financial year to £1,503 million. This growth reflected increased sales volume and the effect of higher precious metal prices particularly that of palladium. Sales excluding the value of precious metals rose by 14% to £565 million. The division’s operating profit rose by 17% to £98.9 million.
The Catalytic Systems business, which encompasses Johnson Matthey’s global autocatalyst, heavy duty diesel and stationary source emission control businesses, performed very well, despite the widely publicised fall in vehicle sales in North America in the last five months of the financial year. Overall, global vehicle sales advanced by 1% but the autocatalyst market grew by around 6% benefiting from tightening standards and the geographical spread of regulations to control emissions.
Continuously Regenerating Trap (CRT TM ) and other heavy duty diesel products were also well up on last year as the result of increased retrofit activity around the world. This strong progress underlines the future growth opportunity represented by heavy duty diesel as emission standards tighten.
In March 2001 a new £10 million European autocatalyst facility was opened in Royston, UK. The 6,000 square metre plant produces more advanced catalysts to the higher specifications required to meet current and future emissions standards. The new factory has initial capacity to produce 3.5 million units a year, which will be needed to meet the rapidly growing demand for catalysts in Europe.
During the year additional production capacity has been installed to meet rapidly growing demand for autocatalysts in Asia. In early November a new autocatalyst plant was opened in India’s Harayana State, which more than doubled Johnson Matthey’s production capacity in this important market. A new autocatalyst facility in China will be officially opened later this month.
There has been a great deal of activity in the Fuel Cells business, which during the period was organised into a stand alone business unit within the Catalysts & Chemicals Division. A major fuel cell testing and evaluation facility was installed at the Johnson Matthey Technology Centre at Sonning Common and is now fully operational. Good progress was also achieved in fuel cell product design and the development of robust manufacturing processes.
Investment in Fuel Cells continues apace. Permits are currently being sought for a new Membrane Electrode Assembly (MEA) manufacturing facility. This new facility will be built on a modular basis to allow the phased expansion of MEA production to meet market demand.
Johnson Matthey Fuel Cells has continued to work with target customers and has undertaken extensive market validation work to enable it to forecast demand for its products over the next three to five years.
The business is also expanding its fuel cell catalyst manufacturing capacity with a new production plant at West Deptford, USA. The move to a new fuel processor development and manufacturing facility at West Whiteland, USA will be completed in the next few months.
Chemicals also had an excellent year. All parts of the business achieved strong revenue growth. Platinum group metals refining activities experienced strong demand benefiting from both high metal prices and increased intake from primary producers. Catalyst sales to pharmaceutical and chemical customers increased significantly. Sales of precious metal salts and other fine chemicals also grew strongly.
In Chemicals the cornerstone of the investment programme is an investment of £13.5 million over the next two years to upgrade refineries at Brimsdown and Royston in the UK. This will increase capacity and enable the group to take on higher volumes of primary refining materials. A further major investment is planned in new technology to refine and recycle spent chemical catalysts.
A new process catalyst plant was opened at Royston in October 2000 to manufacture the latest generations of supported chemical process catalysts for the fine and speciality chemicals industries. Precious Metals Precious Metals Division’s (PMD’s) sales climbed by 55% to £4.1 billion, driven by strong demand for platinum group metals and higher prices. Operating profit rose 26% to £57.4 million.
Prices of platinum group metals rose sharply in 2000/01 with the average price for platinum up 42% and palladium 83% higher. For most of the year both metals were in short supply with overall demand for palladium continuing to exceed mine output and the shortfall largely being met from sales of Russian stocks. PMD’s marketing and trading operations benefited from strong physical demand and buoyant prices. Its platinum fabrication businesses also achieved good sales growth in the year with strong industrial demand and continued rapid expansion in sales of products for medical devices.
Trading profit from the Gold and Silver business was slightly down despite increased refining sales coming from Asia. The gold price was weak throughout the year and the refining market remains very competitive with pressure on margins.
The platinum fabrication businesses have grown steadily over the last few years with investment in new products and processes. One of the major growth areas has been the manufacture of specialised components for medical devices such as catheters and stents, which are extensively used in non-invasive surgery. In February 2001 Shape Memory Applications, Inc. (SMA) in the United States was acquired for £3.6 million. SMA is a manufacturer of components for medical applications made of Nitinol, a nickel titanium alloy that has shape memory and super elastic properties. Colours & Coatings Colours & Coatings Division increased its sales by 6% to £255 million. Sales of decorative products for the tile and glass industries grew strongly. Operating profit for the division increased by 15% to £32.2 million.
The Structural Ceramics sector, which sells mainly to the tile industry, achieved strong sales growth in Europe and Asia. Margins continue to improve reflecting the benefit of the major investment in modern manufacturing capacity in Spain. The Glass sector also had a successful year with good sales of automotive glass enamels and silver pastes.
Tableware continued to encounter difficult market conditions with sales to UK customers again declining. However operating profit increased as a result of the cost reduction programme undertaken during the year.