Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2005 Earnings Presentation
42 slides from Johnson Matthey's earnings presentation, Jun 2, 2005
Slide 1: Presentation of Results for the year ended 31st March 2005
E Johnson Matthey Presentation of Results for the year ended 31st March 2005 2nd June 2005
Slide 2: Introduction
E Johnson Matthey Introduction Neil Carson Chief Executive
Slide 3: 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 4: Update on Strategic Initiatives
Update on Strategic Initiatives • Focus on delivery of organic growth • Major opportunity in HDD catalysts • Good growth prospects elsewhere in Catalysts and in Pharmaceutical Materials • Improve ROA from current 16%. Target 20% • Rationalise underperforming assets • Use cash from disposals / ration
Slide 5: Financial Review
E Johnson Matthey Financial Review John Sheldrick Group Finance Director
Slide 6: Summary Results
Summary Results 2005 2004 £m £m % Statutory Basis: Turnover 4,639 4,493 +3 Profit before tax 131.0 178.0 -26 Earnings per share 40.6p 56.0p -28 Before Exceptional Items and Goodwill Amortisation: Profit before tax 204.0 195.7 +4 Earnings per share 67.1 64.0 +5 Dividend per share 27.7p 26.4p +5 E
Slide 7: Operating Profit
Operating Profit 2005 2004 2005 at 2004 exchange rates* £m £m % £m % Catalysts 111.5 109.2 +2 115.8 +6 Precious Metal Products 45.4 44.2 +3 46.8 +6 Pharmaceutical Materials 40.0 42.3 -5 41.5 -2 Colours & Coatings 27.4 24.2 +13 28.4 +17 Corporate (16.6) (16.4) (16.8) Continuing operations 207.7 203.5
Slide 8: Geographical Split
Geographical Split Operating Profit 2005 2004 £208.1m £206.0m 17% 16% 9% 44% 9% 40% 35% 30% Europe Asia North America Rest of World E
Slide 9: Return on Sales
Return on Sales Excluding Precious Metals Sales excl. PM’s ROS 2005 2004 Growth 2005 2004 £m £m % % % Catalysts 698 720 -3 16.0 15.2 Precious Metal Products 124 121 +3 36.6 36.7 Pharmaceutical Materials 125 131 -5 32.1 32.2 Colours & Coatings 241 222 +8 11.4 10.9 1,188 1,194 -1 17.5 17.0 Discontinue
Slide 10: Exceptional Items
Exceptional Items 2005 £m Included in operating profit: AMC integration costs 1.0 Lancaster integration costs 2.0 Closure of Colours sites 10.3 Rationalisation of UK refining 10.2 23.5 Other exceptionals: Loss on disposal of Pigments & Dispersions 15.2 Loss on closure of UK gold & silver refinery 13
Slide 11: Interest
Interest 2005 2004 £m £m Net interest (13.3) (16.3) Net return on retirement 9.2 6.0 benefits assets & liabilities (4.1) (10.3) E
Slide 12: Taxation
Taxation 2005 2004 £m £m Underlying tax 59.6 58.3 Tax on exceptionals (13.7) 1.6 Tax on goodwill amortisation (1.9) (2.0) 44.0 57.9 Underlying tax rate 29.2% 29.8% E
Slide 13: Return on Investment
Return on Investment 2005 2004 £m £m Operating profit 208 206 Average assets: Equity and minorities 870 835 Cumulative goodwill w/o 38 41 Net borrowings 382 398 Total investment 1,290 1,274 Pre-tax ROA 16.1% 16.2% Return on invested capital 11.4% 11.4% WACC 8% 8% E
Slide 14: Net Cash Flow
Net Cash Flow 2005 2004 £m £m Operating profit 163 188 Depreciation and amortisation 86 84 Working capital / other (18) (12) Cash flow from operations 231 260 Interest / tax / dividends (124) (116) Capex (87) (114) Free cash flow 20 30 Acquisitions / disposals 19 (18) Shares bought (16) (9) Net cash
Slide 15: Capital
Capital Mar 05 Mar 04 £m £m Net debt 370 395 Shareholders’ funds 861 862 Minorities 7 9 Capital employed 1,238 1,266 Gearing 43% 45% (debt / shareholders’ funds + minorities) E
Slide 16: IFRS: Overview of Impact
IFRS Overview of Impact UK GAAP IFRS % change Profit before tax £131.0m £167.4m +28 Earnings per share 40.6p 53.0p +31 Net assets £868.7m £929.1m +7 Major changes to PBT • Goodwill amortisation, discontinued Major changes to balance sheet • Goodwill amortisation, capitalised development, deferred ta
Slide 17: IFRS: Impact on profit before tax
IFRS Impact on profit before tax, exceptional items and goodwill amortisation: 2005 £m Capitalised development 5.4 Amortisation of capitalised development (1.1) Share options (4.1) Employee benefits 0.3 Discontinued businesses (0.4) 0.1 E
Slide 18: Operating Review
E Johnson Matthey Operating Review Neil Carson Chief Executive
Slide 19: Catalysts Division
Catalysts Division • Profits up 6% on constant currency basis • Good demand for autocatalysts and process catalysts £m Growth at actual exchange rates £m +4% +2% 1,280 120 1,184 109.2 111.5 1,143 960 90 640 60 320 30 0 0 2004 2005 2004 2005 Sales Operating Profit E
Slide 20: Light Vehicle Sales and Production
Light Vehicle Sales and Production Year to 31st March 2005 2004 change millions millions % North America Sales 19.46 19.35 0.6% Production 15.56 15.85 -1.8% Europe Sales 17.98 17.68 1.7% Production 20.30 19.90 2.0% Asia Sales 13.68 13.14 4.1% Production 21.10 19.70 7.1% Global Sales 62.09 60.36 2.9%
Slide 21: Environmental Catalysts and Technologies: Light Duty Trends
Environmental Catalysts and Technologies Light Duty Trends • Growth in Europe driven by increase in diesel sales • Catalysed soot filters (CSFs) • Profits lower in North America • Expansion in Asia • Emissions standards continue to tighten worldwide E
Slide 22: Light Duty Petrol NOx Emission Standards
Environmental Catalysts and g/mile Technologies Light Duty Petrol NOx Emission Standards 0.75 Current Standards 0.5 0.25 0 1992 1997 2002 2005 2007 2010 California US Federal Japan Europe China E
Slide 23: HDD on-road regulation development
Environmental Catalysts and Technologies HDD on-road regulation development New Models All Models 0.2 Japan 2003 Europe 0.18 Euro 4 01-Oct-05 01-Oct-06 Euro 5 01-Oct-08 01-Oct-09 0.16 United States 0.14 US2007 01-Jan-07 01-Jan-07 US 2002 3/4 US2010 01-Jan-10 01-Jan-10 PM (g/kW-hr) 0.12 Japan EU III
Slide 24: Environmental Catalysts and Technologies: Heavy Duty Diesel
Environmental Catalysts and Technologies Heavy Duty Diesel • Commercial arrangements with OEs secured. Pre-production sales have commenced • Expect gradual growth in demand from October 05 • $600 million per annum market (ex pms) by end of calendar 08 • Our rate of sales expected to exceed $200 mill
Slide 25: Environmental Catalysts and Technologies: Summary
Environmental Catalysts and Technologies Summary • Good growth in European LDD products including CSFs • Good growth in Asia continues • US autocatalysts market remains dull • Increasing contribution from heavy duty diesel OE market • Double digit top line growth in second half of 2005/06 E
Slide 26: Process Catalysts and Technologies
Process Catalysts and Technologies • Good growth in catalysts sales • Strong performance from gas processing and purification catalysts • Increasing demand for hydrogen • Recovery in catalysts for edible oils E
Slide 27: Process Catalysts and Technologies: Developments
Process Catalysts and Technologies Developments • Good contribution from AMC acquisition • Integration of Lancaster Synthesis going very well • Restructuring of UK platinum group metals refining • Increased investment in gas to liquids and methanol catalysts E
Slide 28: Fuel Cells
Fuel Cells • Outlook for automotive remains encouraging • Opportunities in nearer term applications • Net expense down E
Slide 29: Precious Metal Products
Precious Metal Products • Profits up 6% on constant currency basis • Trading conditions remain good £m Growth at actual exchange rates £m +4% +3% 3,200 3,069 60 2,956 44.2 45.4 2,400 45 1,600 30 800 15 0 0 2004 2005 2004 2005 Sales Operating Profit E
Slide 30: Platinum, Palladium and Rhodium Prices
Platinum, Palladium and Rhodium Prices US$/oz 1,500 1,200 900 600 300 0 March 2003 March 2004 March 2005 Platinum Palladium Rhodium E
Slide 31: Precious Metal Products
Precious Metal Products • Platinum demand robust. Palladium demand up 22% on prior year • PGM basket price up on last year • Good trading conditions continue • Impact of Anglo Platinum contract renewal more than offset by improved pgm market and volume growth E
Slide 32: Precious Metal Products
Precious Metal Products • Continued growth in fabricated products • Strong demand for medical parts • UK gold refinery closed • Significant proportion of UK business transferred to US and Canada refineries E
Slide 33: Pharmaceutical Materials
Pharmaceutical Materials • Profits down 2% on constant currency basis following expiry of carboplatin patent • Good growth in opiates £m Growth at actual exchange rates £m -6% -5% 150 140 50 132 42.3 120 40.0 40 90 30 60 20 30 10 0 0 2004 2005 2004 2005 Sales Operating Profit E
Slide 34: Pharmaceutical Materials: US Operations
Pharmaceutical Materials US Operations • Carboplatin patent expired in October 04 • Impact on contribution • Volatility in contract research • Development of US opiate market encouraging E
Slide 35: Pharmaceutical Materials: European Operations
Pharmaceutical Materials European Operations • Good growth at Macfarlan Smith • Increased sales of specialist opiates • High potency facility performing well • Expanding capacity for specialist opiates E
Slide 36: Pharmaceutical Materials: Future Growth
Pharmaceutical Materials Future Growth • Launch of new generic drugs to benefit calendar 06 • Filing of new generic products using our prostaglandin APIs • Product pipeline strong with over 80 APIs in development E
Slide 37: Colours & Coatings
Colours & Coatings • Profits 17% up on constant currency basis • Sale of Pigments & Dispersions £m Growth at actual exchange rates £m +8% +13% 250 242 30 224 27.4 200 24.2 25 20 150 15 100 10 50 5 0 0 2004 2005 2004 2005 Continuing businesses Sales Operating Profit
Slide 38: Colours & Coatings: Restructuring
Colours & Coatings Restructuring • Pigments & Dispersions business sold • Closure of surplus sites • Colour Technologies to be transferred to Precious Metal Products Division • Ceramics to be shown as stand alone division E
Slide 39: Colours & Coatings: Business Performance
Colours & Coatings Business Performance • Good growth in Colour Technologies • Continued recovery in Ceramics • Return on assets improved to 16% • Both businesses highly cash generative E
Slide 40: Outlook
Outlook • First half 2005/06 comparatives affected by − Currency translation − Carboplatin contribution • Increased earnings growth expected in second half of 2005/06 • Further £25 million share buy-back in first half will benefit earnings growth E
Slide 41: Outlook
Outlook • HDD starts to impact results from October 2005 − Europe all models from October 06 − US all models from January 07 • CSFs will provide additional growth • New product introductions to benefit Pharmaceutical Materials in calendar 06 E
Slide 42: Johnson Matthey
UME) Johnson Matthey