Interim Management Statement

RNS Number : 3512M

Johnson Matthey PLC

28 January 2009

 



For release at 7.00 am on Wednesday 28th January 2009

Johnson Matthey Plc

 Interim Management Statement

Johnson Matthey is hosting an analysts' visit today at its research centre in Sonning Common. At the meeting Neil Carson, Chief Executive of Johnson Matthey, will provide the following statement on trading in the company's third quarter ended 31st December 2008.  

'Johnson Matthey's sales excluding precious metals for the third quarter were slightly ahead of last year despite difficult market conditions. Operating profit before amortisation of acquired intangibles was 4% below the same period of 2007/08. Good sales of non-automotive products and favourable exchange translation largely offset the impact of reduced autocatalyst demand.  

Trading conditions deteriorated significantly in the third quarter of our financial year. Car sales fell sharply in Europe and North America and were also down in Asia. Overall, global car production fell by 19%* compared with the same quarter of 2007/08. Demand for autocatalysts was well down on last year.  

Underlying profit before tax (before amortisation of acquired intangibles) was 7% lower with a higher interest charge than last year as a result of increased borrowings following the acquisition of Argillon in February 2008. With interest rates coming down the interest charge for the fourth quarter will be lower than last year.  

Third quarter sales excluding precious metals for Environmental Technologies Division were 6% below last year. At constant exchange rates, sales excluding precious metals fell by 13%. Emission Control Technologies' sales fell sharply in October and November, particularly in Europe where demand had been good earlier in the year, as car companies cut production in the face of falling car sales. That process has continued through December and into January with most OEMs taking extended shutdowns over the Christmas holiday period. We took action in the first half of the year to reduce costs in North America where the recession had started earlier and similar action is underway in Europe. By contrast Process Technologies performed well in the third quarter. Although the oil price has fallen substantially from its peak, concerns over energy security and environmental issues continue to drive demand for syngas catalysts and purification products. Our Davy Process Technology business licensed two further methanol plants in China during the third quarter, one using natural gas and the other acetylene off-gas as feedstock.  

Precious Metal Products Division's sales and profits were higher than last year, despite lower platinum group metal (pgm) prices. The division benefited from volatility in pgm prices and good demand for fabricated products and gold refining. Fine Chemicals & Catalysts was also up, with sales of research chemicals and active pharmaceutical ingredients for controlled drugs ahead of last year. The results for all three divisions were helped by favourable exchange translation.  

On 26th November 2008 we completed the sale of the non-core Ceramic Insulators and Alumina businesses, acquired as part of the Argillon Group, for €21 million in cash plus a €2 million vendor loan note. The cash proceeds were used to reduce borrowings. Net cash flow from operations was also positive with cash released by Emission Control Technologies from inventories and receivables in response to lower sales. As a result of this cash inflow, net borrowings fell despite the impact of exchange translation on foreign currency debt. The group's balance sheet continues to be strong with no significant refinancing requirements in the next two years.  

In the fourth quarter of our last financial year the price of platinum reached record levels and Precious Metal Products Division made very good profits. This year, with much lower pgm prices the division's profits will be lower. The outlook for car sales is difficult to forecast but demand is expected to weaken in Asia and remain depressed in North America and Europe. As a consequence global car production in the final quarter could be 25% below last year. On that basis we would now expect Johnson Matthey's underlying earnings per share (before amortisation of acquired intangibles) for the year as a whole to be in the range 85p to 90p (compared with 89.5p in 2007/08).'  

*source: Global Insight January 2009  

Enquiries: Ian Godwin Director, IR and Corporate Communications 0118 924 2066 John Sheldrick Group Finance Director 020 7269 8408 Howard Lee The HeadLand Consultancy 020 7367 5225 www.matthey.com

 

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