Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2013 Earnings Presentation
44 slides from Johnson Matthey's earnings presentation, Jun 6, 2013
Slide 1: Presentation of Results for the year ended 31st March 2013
Presentation of Results for the year ended 31st March 2013 6th June 2013 Scan to download our IR app Follow us on Twitter: or visit www.matthey.com/app @johnson_matthey
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: Key Messages
Key Messages Sales in line with last year but underlying EPS down 2% Further growth in ETD offset by disappointing year for PMPD Acquisition of Axeon and Formox provide additional growth opportunities 2013/14 a year of transition but steady progress expected Well positioned for future growth 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Year to 31st March 2013 2012 £m £m % change Revenue 10,729 12,023 ‐11% Sales excluding precious metals 2,676 2,679 – Operating profit 414.8 450.1 ‐8% Interest (25.6) (24.1) +6% Profit before tax 389.2 426.0 ‐9% Tax (81.7) (100.0) Profit after tax 307.5 326.0 ‐6% Earnings per share
Slide 7: Cash Flow from Operations
Cash Flow from Operations Year to 31st March 2013 2012 £m £m Operating profit 381 433 Depreciation and amortisation 150 147 Tax paid (61) (69) Working capital / other (74) (47) Cash flow from operations 396 464 • Good performance on managing working capital • Net debt £835m, up by £381m • 2013 worki
Slide 8: Cash Flow Conversion
Cash Flow Conversion Year to 31st March 2013 2012 £m £m Operating cash flow 396 464 Add back: Tax paid 61 69 Pension deficit contributions 28 23 Net capital expenditure (183) (142) Cash flow before adjustment 302 414 Movement in precious metal working capital 84 (61) Net cash flow 386 353 Underlying
Slide 9: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) 24% 20% 16% 12% Cost of capital 8% 2009 2010 2011 2012 2013 • ROIC increased in ETD • Remain committed to 20% ROIC target • More than offset by large reduction in PMPD 9
Slide 10: Capital Expenditure
Capital Expenditure £ million Capex / depn (times) 225 2.0 203.5 200 192.0 175 1.5 150 149.6 134.4 137.9 125 1.0 100 75 0.5 50 25 0 0.0 2008/09 2009/10 2010/11 2011/12 2012/13 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects: • Expect capex of >£200m p.a. for next thr
Slide 11: Pension Schemes
Pension Schemes Year to 31st March 2013 2012 £m £m UK: Scheme deficit 116 85 Assets in SPV (50) ‐ 66 85 US Schemes 55 26 Others 23 18 144 129 • Deficits increased substantially due to lower • Deficit funding cash contributions totalled £28m discount rates • Ongoing deficit funding cash contributions
Slide 12: Post Employment Benefit Accounting
Post Employment Benefit Accounting Year to 31st March 2013 2012 £ million Published Revised Published Revised Charge to operating profit 40.2 38.9 25.4 31.2 Net interest ‐ 7.6 ‐ 6.7 Total charge 40.2 46.5 25.4 37.9 Increase 6.3 12.5 • Charge for the year increases sharply due to • Required to restat
Slide 13: Operating Review
Operating Review Neil Carson Chief Executive
Slide 14: Environmental Technologies Division
Environmental Technologies Division
Slide 15: Environmental Technologies Division
Environmental Technologies Division Year to 31st March % % at £m 2013 2012 change constant rates Revenue 3,001 3,255 ‐8 ‐6 Sales (excluding precious metals) 1,904 1,876 +2 +2 Underlying operating profit 226.0 211.8 +7 +7 Return on sales 11.9% 11.3% Return on invested capital (ROIC) 14.5% 14.2% Sales
Slide 16: Emission Control Technologies
Emission Control Technologies Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 1H 2013 2012 % 2012/13 2012/13 % millions millions change millions millions change Sales 17.3 15.7 +10.2 8.5 8.7 ‐2.3 North America Production 15.0 13.7 +9.5 7.6 7.4 +2.7 Sales 17.9 19.0 ‐5.8 8.6 9.
Slide 17: Emission Control Technologies £938m down 3%
Emission Control Technologies Total sales JM’s Light Duty Catalyst Sales – 2011‐2013 £938m down 3% £ million 1200 1000 £969m £938m £879m ‐3% 800 600 £544m £588m £543m ‐8% 400 £214m 200 £167m £180m £181m £168m £201m 0% +7% 0 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 North America Eu
Slide 18: Emission Control Technologies
Emission Control Technologies Light Duty Vehicle Production Outlook – 2012‐2020 (calendar years) million 120 CAGR 5.4% 116.1 (2012 – 2017) 105.9 100.7 100 95.0 88.5 81.6 83.4 80 CAGR 7.0% (2012 – 2017) 64.5 60 57.1 54.0 50.4 46.6 43.0 CAGR 3.0% 40.8 40 CAGR 3.6% (2012 – 2017) (2012 – 2017) 22.5 24.1
Slide 19: Light Duty: Looking Ahead
Emission Control Technologies Light Duty: Looking Ahead 2014/15 will benefit from new Euro 6c provides further Positive outlook for car demand Euro 6b legislation opportunities from 2017/18 in North America and Asia • 20 – 25% increase in catalyst • Fitment of filters to direct Concerns over demand
Slide 20: Emission Control Technologies
Emission Control Technologies Estimated HDD Truck Sales and Production Year to 31st March 2H 1H 2013 2012 % 2012/13 2012/13 % thousands thousands change thousands thousands change Sales 434.2 404.8 +7.3 210.9 223.2 ‐5.5 North America Production 448.9 456.8 ‐1.7 213.3 235.6 ‐9.5 Sales 266.0 299.0 ‐11
Slide 21: Emission Control Technologies £477m up 9%
Emission Control Technologies Total sales JM’s Heavy Duty Diesel Sales – 2011 ‐ 2013 £477m up 9% £ million 350 £331m JM’s market share 300 £295m remains >65% 250 £194m +12% 200 150 £116m £118m 100 £91m 50 +2% 0 2011 2012 2013 2011 2012 2013 North America Europe • Pick up in US economy improved truck
Slide 22: Heavy Duty Diesel: Looking Ahead
Emission Control Technologies Heavy Duty Diesel: Looking Ahead Developed markets: Developing markets: • Improving US economy supports further • Euro IV implementation in China from July 2013 market growth in 2013/14 • Fitment likely to be phased in • Euro VI and non‐road legislation will • Higher co
Slide 23: Process Technologies
Process Technologies 2012/13 Results Formox • Sales slightly ahead at £406m • Acquired at year end for £108m (net of cash) • Return on sales well up – lower raw material prices, • Catalysts and process technology licensing for operational efficiencies and good result from DPT formaldehyde manufactur
Slide 24: Process Technologies
Process Technologies Catalyst Businesses (AMOG) Davy Process Technology • Sales slightly lower at £246m • Good result, sales up 7% to £100m • As expected, demand for ammonia catalysts ahead but • A total of 7 new projects won, 6 in China sales of methanol and hydrogen catalysts down • Continued stro
Slide 25: Process Technologies Looking Ahead
Process Technologies Looking Ahead • Normal catalyst replacement cycles expected in • Licences available from new oxo alcohols 2013/14 projects expected to reduce • Lower ammonia catalyst sales but growth in • Unconventional gas and new technologies methanol and hydrogen provide future licence oppor
Slide 26: Battery Technologies
Battery Technologies • Formed in 2012/13, sales of £31m primarily • Axeon’s applications engineering fits well with from acquired Axeon business JM’s materials science expertise • Current sales mainly to power tool and e‐bike • Increased investment in R&D for next generation markets battery material
Slide 27: Precious Metal Products Division
Precious Metal Products Division
Slide 28: Precious Metal Products Division
Precious Metal Products Division Year to 31st March % % at £m 2013 2012 change constant rates Revenue 8,491 9,841 ‐14 ‐14 Sales (excluding precious metals) 548 582 ‐6 ‐5 Underlying operating profit 147.1 200.8 ‐27 ‐26 Return on sales 26.8% 34.5% Return on invested capital (ROIC) 39.2% 58.9% Sales Se
Slide 29: Precious Metal Products Division: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Refining Businesses (down 7% to £110m) (down 28% to £58m) • Lower intake volumes impacted Pgm Refining and Recycling but operational improvements boosted results • Lower average prices: Pt $1,560/oz, down 7% • V
Slide 30: Precious Metal Products Division: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales down 1% to £380m Sales • Noble Metals (down 2% to £122m) Noble Metals – Industrial Products • Medical sales up 6%, ahead of market growth rates 22% • Industrial products 6% lower reflecting reduced Catalysts and European demand Chemic
Slide 31: Precious Metal Products Division: Looking Ahead
Precious Metal Products Division Looking Ahead • Higher refining intakes in Q4 2012/13 will • Manufacturing businesses expected to make benefit first half steady progress • Current lower metal prices, if maintained, likely • Collapse in carbon price will impact demand for to reduce intake volumes N2
Slide 32: Fine Chemicals Division
Fine Chemicals Division UME) Johnson Matthey
Slide 33: Fine Chemicals Division
Fine Chemicals Division Year to 31st March % % at £m 2013 2012 change constant rates Revenue 286 292 ‐2 ‐2 Sales (excluding precious metals) 277 285 ‐3 ‐3 Underlying operating profit 71.1 69.7 +2 +2 Return on sales 25.6% 24.5% Return on invested capital (ROIC) 16.9% 16.7% • Performance impacted by i
Slide 34: Fine Chemicals Business Performance
Fine Chemicals Business Performance API Manufacturing Businesses Research Chemicals • Sales 4% lower at £198m • Sales in line at £79m • Continued growth in US business, especially for • Growth in Europe and Asia offset by decline in US ADHD treatments • Over 8,000 new products added • Results impact
Slide 35: Fine Chemicals Looking Ahead
Fine Chemicals Looking Ahead • Cost savings of circa £5m p.a. from restructuring • Expansion in Shanghai, China and Nevada, USA from 2H 2013/14 will be completed in 1H 2013/14 • UK business unlikely to fully recover within next • Strengths in synthetic chemistry and two years manufacturing across di
Slide 36: Non-Financial Performance
Non‐Financial Performance Year to 31st March 2013 2012 % change Energy use (GJ ‘000) 4,648 4,726 ‐2 Global warming potential (’000 tonnes CO2 equivalent) 413 417 ‐1 Annual rate of >3 day accidents per 1,000 employees 2.68 2.38* +13 Annual incidence of occupational illness per 1,000 employees 2.7 3.5
Slide 37: Outlook (1)
Outlook (1) Pt Environmental Technologies: Precious Metal Products: • Medium term outlook for division is positive • Refining businesses have started year well – lower metal prices, if maintained, likely to • In short term ECT’s growth strongly influenced by impact volumes European economic environm
Slide 38: Outlook (2)
Outlook (2) Fine Chemicals: Group: • Long term drivers remain sound • Steady progress in 2013/14 anticipated notwithstanding loss of Anglo revenue • Retrenchment in first half but expect a return to growth in second half • In medium term, growth expected to accelerate in 2014/15 and beyond • Long te
Slide 39: Reorganisation
Reorganisation Five Divisions from 1st April 2013 Emission Control Process Precious Metal Fine New Technologies Technologies Products Chemicals Businesses • Light Duty Catalysts Chemicals Services • Active Pharmaceutical • New Business Development Ingredient (API) • Heavy Duty Catalysts • Chemical T
Slide 40: Key Messages
Key Messages Sales in line with last year but underlying EPS down 2% Further growth in ETD offset by disappointing year for PMPD Acquisition of Axeon and Formox provide additional growth opportunities 2013/14 a year of transition but steady progress expected Well positioned for future growth 40
Slide 41: Questions and Answers
Questions and Answers Neil Carson Robert MacLeod Larry Pentz Chief Executive Group Finance Director Executive Director, Environmental Technologies Bill Sandford John Fowler Nick Garner Executive Director, Division Director, Fine Chemicals Group Director, Corporate and Precious Metal Products Strateg
Slide 42: JME
JME Johnson Matthey
Slide 43: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 USA Tier II USA (CARB) LEV II LEV III EU Euro 5 Euro 6b Euro 6c Russia Euro 3 Euro 4 Euro 5 Japan Japan 2009 China Euro 4 Euro 5 (exact date uncertain) India ‐ National BS II BS III BS
Slide 44: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ON ROAD Europe EU V EU VI EU VII? North America EPA10 GHG Regulation Japan JP 09 JP 16 South Korea EU V EU VI EU VII? Brazil EU III EU V EU VI? Russia EU III EU IV EU V? India (Main Cit