Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2009 Earnings Presentation
45 slides from Johnson Matthey's earnings presentation, Jun 4, 2009
Slide 1: Presentation of Results for the year ended 31st March 2009
Presentation of Results for the year ended 31st March 2009 4th June 2009
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries and sectors in which Johnson Matthey operates. It is believed that t
Slide 3: Introduction
Introduction Neil Carson Chief Executive
Slide 4: Highlights
Highlights • Strong first half • Second half hit by credit crunch and recession. Global car production down 26% • Non-automotive businesses perform well. Overall, group sales (ex pms) up 3%, underlying profit before tax up 1% • Strong cash generation • No signs of improvement in market conditions, b
Slide 5: Financial Review
Financial Review John Sheldrick Group Finance Director
Slide 6: Summary Results
Summary Results Year to 31st March 2009 2008 % £m £m change Revenue 7,848 7,499 +5 Sales excluding precious metals 1,797 1,750 +3 Profit before tax 249.4 262.3 -5 Total earnings per share 82.6p 88.5p -7 Underlying*: Profit before tax 267.9 265.4 +1 Earnings per share 89.6p 89.5p - Dividend per share
Slide 7: Operating Profit / Exchange
Operating Profit / Exchange Year to 31st March 2008 at 2009 Growth at exchange constant 2009 2008 Change rates rates £m £m % £m % Environmental 124.3* 147.3* -16 158.7* -22 Technologies Precious Metal 119.7 102.1 +17 109.7 +9 Products Fine Chemicals & 72.8+ 67.1 +8 73.6 -1 Catalysts Corporate (18.3)
Slide 8: Exchange Rates
Exchange Rates $/£ 2.3 • Average rate for 2008/09 was $1.719/£ 2.1 1.9 Average Average Average Average $2.00/£ $2.01/£ $1.93/£ $1.50/£ • Each 1 cent change in the average US 1.7 dollar / sterling rate affects operating 1.5 profit by £0.4m in a full year 1.3 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 €/£ 1.6
Slide 9: Pgm Prices
Pgm Prices US$/oz Platinum 2,400 • At current prices (Pt $1,250/oz, 2,000 1,600 Pd $250/oz) a 10% change in the 1,200 basket of pgms can impact 800 commission / distribution income by 400 Average Average Average Average $1,293 $1,655 $1,795 $952 approx £2.5m p.a. (but volatility also 0 a significant
Slide 10: Return on Sales
Return on Sales Excluding Precious Metals Sales ex pms ROS Year to 31st March Year to 31st March 2009 2008 Growth 2009 2008 £m £m % % % Environmental 1,135 1,140 - 10.9 12.9 Technologies Precious Metal Products 314 307 +2 38.1 33.2 Fine Chemicals & Catalysts 347 303 +15 21.0 22.1 Group 1,797 1,750 +
Slide 11: Sales Excluding Precious Metals
Sales Excluding Precious Metals Environmental Technologies £m 1,500 1,140 +34 1,135 1,250 +11 +79 +9 1,000 -138 750 500 2007/08 ECT 1H ECT 2H Process Process Exchange 2008/09 Technologies / Technologies / Fuel Cells 1H Fuel Cells 2H 11
Slide 12: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Year to 31st March 2009 2008 £m £m Operating profit* 298.5 296.8 Average invested capital: Equity 1,169 1,119 Net debt 572 488 Total investment 1,741 1,607 Pre-tax ROIC 17.1% 18.5% Pre-tax cost of capital 11.5% 11.3% * Before amortisation of acquired intangibles and
Slide 13: Interest and Taxation
Interest and Taxation Year to 31st March 2009 2008 £m £m Net finance costs (interest) 32.6 30.3 Income tax expense 76.7 77.2 Tax on amortisation / restructuring 2.5 0.9 Underlying tax 79.2 78.1 Underlying tax rate 29.6% 29.4% (underlying tax / underlying pbt) 13
Slide 14: Net Cash Flow
Net Cash Flow Year to 31st March 2009 2008 £m £m Operating profit 280 294 Depreciation and amortisation 110 82 Tax paid (85) (72) Working capital / other 196 (74) Cash flow from operations 501 230 Interest / dividends (112) (102) Net investment hedges (94) (19) Net capital investment (209) (144) Acq
Slide 15: Capital
Capital 31st March 09 31st March 08 £m £m Net debt 534 610 Equity 1,176 1,160 Capital employed 1,710 1,770 Gearing (net debt / equity) 45% 53% Net debt / EBITDA 1.3 x 1.6 x 15
Slide 16: Maturity Profile of Debt Facilities
Maturity Profile of Debt Facilities £m 1,000 900 800 700 600 Net borrowings as at 31st March 2009 500 400 300 200 100 0 'Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Bonds EIB Loans Bank Facilities 16
Slide 17: Operating Review
Operating Review Neil Carson Chief Executive
Slide 18: Environmental Technologies Division
Environmental Technologies Division
Slide 19: Environmental Technologies Division
Environmental Technologies Division Year to 31st March % % at £m 2009 2008 change constant rates Revenue 2,226 2,290 -3 -9 Sales excluding precious metals 1,135 1,140 - -7 Operating profit* 124.3 147.3 -16 -22 * Before amortisation of acquired intangibles PT + Fuel Cells • Emission Control Technolog
Slide 20: Estimated Light Vehicle Sales and Production Year to 31st March
Estimated Light Vehicle Sales and Production Year to 31st March Year to 31st March 2009 2008 Change millions millions % Sales 14.4 18.6 -22.6 North America Production 10.8 14.7 -26.5 Sales 19.1 22.0 -13.2 Total Europe Production 18.9 22.5 -16.0 Sales 16.7 17.2 -2.9 Asia Production 25.8 27.4 -5.8 Sal
Slide 21: Estimated Light Vehicle Sales and Production Second half
Estimated Light Vehicle Sales and Production Second half Second half to 31st March 2009 2008 Change millions millions % Sales 5.7 8.6 -33.7 North America Production 4.4 7.1 -38.0 Sales 7.7 10.8 -28.7 Total Europe Production 7.8 11.7 -33.3 Sales 8.2 9.1 -9.9 Asia Production 12.4 14.5 -14.5 Sales 27.3
Slide 22: Emission Control Technologies
Emission Control Technologies Light Duty • Demand for autocatalysts down by more than 30% in the second half • North America and Europe hardest hit • China the one bright spot, market growth and JM gaining share 22
Slide 23: Emission Control Technologies
Emission Control Technologies Light Duty • Costs reduced in response to downturn. Headcount down by 13%. Production / distribution efficiencies reduce costs by £10m p.a. • Credit exposure to Chrysler less than $5m, some of which covered by insurance and indemnities from our suppliers. Exposure to GM
Slide 24: Emission Control Technologies Legislation Timeline
Emission Control Technologies Legislation Timeline 24
Slide 25: Heavy Duty Diesel Vehicle Sales Outlook (April 2009)
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (April 2009) Western European Truck Sales US Class 4-8 Truck Sales (Thousands of units) (Thousands of units) 400 600 350 500 300 250 400 200 300 150 200 100 50 100 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 20
Slide 26: Emission Control Technologies Heavy Duty Diesel
Emission Control Technologies Heavy Duty Diesel • HDD market for 2008 estimated to be US $600m Estimated market US$ (ex pms), JM share >45% value 2014 bn Developed markets 1.6 • In 2010 legislation in North America will substantially increase sales of HDD catalysts Developing markets 0.4 • JM’s new
Slide 27: Stationary Emissions Control (SEC) Markets
Stationary Emissions Control (SEC) Markets Current Markets Future Markets Power Marine Generation Industrial Locomotives Processes Coal Power Small Utility Plants Engines 27
Slide 28: SEC Future Growth
SEC Future Growth US$m Coal Power Plant SCR Catalyst Market 400 • NOx control for SEC applications should 350 300 grow significantly over next decade 250 200 150 100 • Currently the market is worth approximately 50 0 US $500m sales (ex pms) 2008 2009 2010 2011 2012 USA Europe China Taiwan / South Ko
Slide 29: Process Technologies
Process Technologies Ammonia, Methanol, Oil and Gas (AMOG) • Despite the fall in the oil price, demand for US$/BBL Crude Oil - WTI hydrogen catalysts strong, driven by 160 increased demand for low sulphur fuels 140 120 100 80 • Good demand for sulphur, chlorine and 60 mercury removal products 40 20
Slide 30: Process Technologies: Davy Process Technology
Process Technologies Davy Process Technology • Eight major licences in 2008/09 • Two oxo alcohol plants, one in China and one in South East Asia, a butanediol plant in China and a biodiesel plant in the USA licensed in year • Four new methanol plants in China 30
Slide 31: Process Technologies: Future Growth Prospects
Process Technologies Future Growth Prospects • Energy security remains a priority for many countries. Interest in utilising local hydrocarbon reserves supports continued project activity • Tightening of fuel specifications continues to drive demand for hydrogen catalysts • New methanol synthesis cat
Slide 32: Fuel Cells
Fuel Cells • Growing demand for our fuel cell products from wider customer base • Increasing sales of DMFC products to leisure and military applications. DMFC battery charger systems in late stages of development • US government support for stationary fuel cells will benefit natural gas powered fuel
Slide 33: Precious Metal Products Division
Precious Metal Products Division
Slide 34: Precious Metal Products Division
Precious Metal Products Division Year to 31st March % % at £m 2009 2008 change constant rates Revenue 5,016 4,688 +7 - Sales excluding precious metals 314 307 +2 -8 Operating profit 119.7 102.1 +17 +9 • High pgm prices in first quarter and volatility provided favourable trading conditions for our Pl
Slide 35: Precious Metal Products Division: Metal Prices
Precious Metal Products Division Metal Prices US$/oz Platinum 2,400 • Pt demand fell by 5% in calendar year 2,000 2008 1,600 1,200 • Supply fell by 9.5% 800 • Average price in 2008/09 $1,380/oz, 400 down 6% 0 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 US$/oz Palladium 700 • Pd demand slightly up 600 • Suppl
Slide 36: Precious Metal Products Division: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Results for the manufacturing businesses were mixed • Noble Metals achieved good growth in 2008/09. Sales of medical products and catalysts to control N2O emissions were well ahead • Pgm Refining and Recycling performed well but is expected
Slide 37: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division 37
Slide 38: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division Year to 31st March % % at £m 2009 2008 change constant rates Revenue 606 521 +16 +2 Sales excluding precious metals 347 303 +15 +3 Operating profit* 72.8 67.1 +8 -1 * Before restructuring charge Catalysts and Chemicals • Good growth in Fine Chemicals 38% • Catalys
Slide 39: Fine Chemicals
Fine Chemicals • Good sales growth at Macfarlan Smith. Codeine phosphate and oxycodone demand up • Pharmaceutical Materials and Services achieved good growth in product sales, particularly methylphenidate and opiates. Contract research revenue fell in second half as smaller customers affected by lac
Slide 40: Fine Chemicals Developments
Fine Chemicals Developments • Facility in Cork, Ireland to be closed at cost of £9.4m. Production of prostaglandins to be consolidated in the USA • Additional income in 2009/10 from generic version of ADDERALL XR® (launched by Barr Laboratories in April 2009) • In March 2009 we bought our partner’s
Slide 41: Catalysts and Chemicals
Catalysts and Chemicals • Good growth in the first half but demand • Results for 2008/09 were: down in the second Catalysts and Chemicals 1H 2H Year • Pgm chemicals for automotive catalysts £m £m £m well down Revenue 224 162 386 Sales ex pms 67 65 132 • Sales of catalysts to pharmaceutical Operating
Slide 42: Outlook: First Half 2009/10
Outlook First Half 2009/10 • In first half of 2009/10 Environmental Technologies’ profit will be lower than in 1H 2008/09. Autocatalyst demand and HDD sales remain well down • Precious Metal Products’ profit will also be below last year in the first half. Platinum price currently 30% lower than aver
Slide 43: Outlook: Second Half 2009/10
Outlook Second Half 2009/10 • Comparisons for second half of 2009/10 easier, as second half of 2008/09 was weaker than the first • New US HDD legislation starts on 1st January 2010 • If global market conditions improve the group should return to growth in the second half 43
Slide 44: Outlook: Medium Term
Outlook Medium Term • Tighter emissions legislation already in place - Full fitment of DPFs on diesel cars in Europe in 2011 - HDD market to quadruple by 2014 - SEC market to see significant growth • Energy security and environmental concerns continue to drive growth in Process Technologies • When g
Slide 45: Johnson Matthey
JME Johnson Matthey 45