Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — H1 2014/15 Earnings Presentation
30 slides from Johnson Matthey's earnings presentation, Nov 20, 2014
Slide 1: Presentation of Results for the half year ended 30th September 2014
Presentation of Results for the half year ended 30th September 2014 20th November 2014 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 Robert MacLeod Chief Executive
Slide 4: Key Messages
Key Messages Business performed well; sales up 10% excl. FX and Anglo Strong performance from ECT in both LDV and HDD catalysts Underlying EPS up 4% and dividend 9% ahead 2014/15 expected to be slightly ahead of last year 4
Slide 5: Financial Review
Financial Review Den Jones Group Finance Director
Slide 6: Underlying Results
Underlying Results Half year to 30th September 1H 2014 1H 2013 % at constant £m £m % change rates (cr) Revenue 4,800 6,411 -25 -22 Sales excluding precious metals 1,514 1,486 +2 +8 Operating profit 234.1 234.2 - +7 Interest and share of JV profit (17.7) (21.3) Profit before tax 216.4 212.9 +2 +10 Ta
Slide 7: Capital Expenditure
Capital Expenditure First half capex £71.3m Divisional Capex New Businesses 3% Key projects to: Fine Chemicals 14% • Extend European ECT facilities to meet Emission Control demand from new legislation Technologies 33% • Expand PT’s chemical catalyst Precious Metal manufacturing capacity in China and
Slide 8: Cash Flow from Operations
Cash Flow from Operations Half year to 30th September 1H 2014 1H 2013 £m £m Underlying operating profit 234 234 Depreciation and amortisation 74 75 Tax paid (46) (19) Working capital / other (99) (43) Cash flow from operations 163 247 • At 30th September 2014, working capital days • Net debt at 30th
Slide 9: Cash Flow Conversion
Cash Flow Conversion Half year to 30th September 1H 2014 1H 2013 £m £m Cash flow from operations 163 247 Add back: Tax paid 46 19 Pension deficit contributions 13 12 Net capital expenditure (80) (101) 142 177 Movement in precious metal working capital (24) (16) Cash flow (excluding precious metals)
Slide 10: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) 24% 22% 20% 18% 16% 2010/11 2011/12 2012/13 2013/14 1H 2014/15 • Continued improvement in ECT • Group ROIC 20.3% • Slight decline in PMP following change in Anglo • Expect to remain above 20% target for full year contracts 10
Slide 11: Operating Review
Operating Review Robert MacLeod Chief Executive
Slide 12: Emission Control Technologies
Emission Control Technologies Half year to 30th September 1H 1H % at constant £m 2014 2013 % change rates (cr) Sales (excluding precious metals) 869 815 +7 +15 Underlying operating profit 118.1 94.2 +25 +37 Return on sales 13.6% 11.6% Return on invested capital (ROIC) 23.4% 18.7% • Strong first half
Slide 13: Emission Control Technologies: Light Duty Catalyst Sales
Emission Control Technologies Total sales 1H 2014/15 Johnson Matthey’s Light Duty Catalyst Sales up 3% at £517m £m +10% at cr 600 £503m £517m 500 £464m +13% +3% at cr 400 £287m £305m 300 £264m +12% +8% +8% +1% +6% at cr 200 at cr +9% +9% £123m £93m £96m £89m £107m £120m 100 +12% +2% +12% -7% 0 1H 1H
Slide 14: Emission Control Technologies: Heavy Duty Diesel Catalyst Sales
Emission Control Technologies Total sales 1H 2014/15 Johnson Matthey’s Heavy Duty Diesel Catalyst Sales £352m up 13% £m +23% at cr 400 £352m 350 +20% £312m 300 at cr +13% £256m 250 £206m +21% 200 £172m £187m at cr 150 +10% £116m +59% £103m at cr 100 £70m +13% 50 £14m £22m £30m 0 +42% 1H 1H 1H 1H 1H
Slide 15: Process Technologies
Process Technologies Half year to 30th September 1H 1H % at constant £m 2014 2013 % change rates (cr) Sales (excluding precious metals) 283 288 -2 +2 Underlying operating profit 49.7 48.9 +2 +8 Return on sales 17.6% 17.0% Return on invested capital (ROIC) 15.0% 17.2% • Performance broadly in line Sa
Slide 16: Process Technologies: Chemicals Businesses
Process Technologies Sales (£159m) Chemicals Businesses Petrochemicals Ammonia 27% 14% • Sales 9% lower at £159m (6% down at cr) Methanol Syngas • Licensing sales of £40m (1H 2013/14 £44m) 16% 51% • Syngas (down 4% to £81m, flat at cr) Formaldehyde 11% • Sales of catalysts slightly lower due to timi
Slide 17: Process Technologies: Oil and Gas Businesses
Process Technologies Oil and Gas Businesses • Sales up 10% to £124m (up 15% at cr) Sales (£124m) • Refineries (up 17% to £66m, 23% ahead at cr) Diagnostic Services • Sales of hydrogen catalysts boosted by a number 30% Hydrogen of new plant builds 27% • Additives demand good Refineries 53% • Gas Proc
Slide 18: Precious Metal Products
Precious Metal Products Half year to 30th September 1H 1H % at constant £m 2014 2013 % change rates (cr) Sales (excluding precious metals) 193 214 -10 -5 Underlying operating profit 52.0 74.3 -30 -27 Return on sales 26.9% 34.7% Return on invested capital (ROIC) 32.9% 40.6% Sales • Excluding Anglo, o
Slide 19: Precious Metal Products: Services Businesses
Precious Metal Products Services Businesses (sales down 32% at £61m, down 28% at cr) Precious Metals Management Business Refining Businesses • Sales £9m, impacted by loss of Anglo Platinum contract • Sales down 9% at £52m (2% down at cr) • Average prices impact demand • Steady performance in pgm ref
Slide 20: Precious Metal Products: Manufacturing Businesses
Precious Metal Products Manufacturing Businesses • Sales up 6% to £132m (12% ahead at cr) Sales • Noble Metals Chemical (up 17% to £69m, 25% up at cr) Products 17% Noble Metals – • Improved demand for nitric acid catalysts Industrial Products 36% • Steady sales of medical device components • Sales i
Slide 21: Fine Chemicals
Fine Chemicals Half year to 30th September 1H 1H % at constant £m 2014 2013 % change rates (cr) Sales (excluding precious metals) 155 161 -4 +1 Underlying operating profit 41.8 40.7 +3 +9 Return on sales 26.9% 25.2% Return on invested capital (ROIC) 18.4% 17.2% Catalysis Sales and Chiral • Steady st
Slide 22: Fine Chemicals: API Manufacturing and Research Chemicals
Fine Chemicals API Manufacturing Research Chemicals • Sales of £100m, down 5% (flat at cr) • Sales down 8% at £37m (down 2% at cr) • Demand for bulk opiates and ADHD APIs • Some increased competition in China increased • New warehouses to support future growth in • Sales of speciality opiates down A
Slide 23: New Businesses
New Businesses Half year to 30th September 1H 1H % at constant £m 2014 2013 % change rates (cr) Sales (excluding precious metals) 37 35 +5 +9 Underlying operating profit / (loss) (12.0) (9.2) -30 -29 • Battery Technologies (sales up 10% at £35m) Sales • Good demand from power tools and e-bikes secto
Slide 24: Group Outlook
Group Outlook • Underlying business performed well in the first half, benefiting from strong performance in ECT • In second half : • Good underlying growth expected • Partly offset by loss of commission income from Anglo in Q3 • No further material impact from foreign currency translation, if today’
Slide 25: Questions and Answers
Questions and Answers Robert MacLeod Den Jones Larry Pentz Chief Executive Group Finance Director Executive Director John Walker John Fowler Nick Garner Executive Director, Emission Division Director, Fine Chemicals Division Director, New Businesses Control Technologies and Corporate Development Ala
Slide 26: Appendix
JME) Johnson Matthey
Slide 27: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 1H 1H 2H 2014/15 2013/14 % 2014/15 2013/14 % millions millions change millions millions change Sales 10.2 9.6 +6 10.2 8.9 +15 North America Production 8.4 8.1 +3 8.4 8.2 +2 Sales 9.0 9.1 -1 9.0 8.7 +3 Europe Production 9.7 9.8 - 9.7 9.8 - Sales 18
Slide 28: Emission Control Technologies: 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 Tier III (expected) USA (CARB) LEV II LEV III EU Euro 5 Euro 6b Euro 6c Russia Euro 3 Euro 4 Euro 5 (proposed) Japan Japan 2009 China National Euro 4 Euro 5 India - Nationa
Slide 29: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H 2014/15 2013/14 % 2014/15 2013/14 % thousands thousands change thousands thousands change North Sales 255.2 225.1 +13 255.2 221.2 +15 America Production 260.1 236.3 +10 260.1 230.0 +13 Sales 128.9 134.6 -4 128.9 163.6 -21 EU Production 186.9 207.2
Slide 30: Emission Control Technologies: 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 North America EPA10 EPA10 + Greenhouse Gas Regulation Japan JP 09 JP 16 South Korea EU V EU VI Brazil EU III EU V EU VI? Russia EU III EU IV EU V India (Main C