Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — Investor Presentation (May 2006)
42 slides from Johnson Matthey's investor presentation, May 15, 2006
Slide 1: Platinum 2006
ye Johnson Matthey Platinum 2006 7 ! eee | Ny Lol SAN 15th May 2006
Slide 2: Platinum Demand
Platinum Demand million oz 7 6.54 6.70 • Total demand up 2% to 6 6.70 million oz 5 • Record demand from the 4 autocatalyst sector 3 • Jewellery purchases fall to 2 less than 2 million oz 1 • Glass and electrical uses push 0 industrial demand to new high 2004 2005 Auto (net) Jlry Ind. www.platinum.ma
Slide 3: Platinum Demand: Autocatalyst
Platinum Demand: Autocatalyst Up 9% to 3.82 million oz million oz 4.0 3.82 3.49 3.5 RoW 3.0 N.America 2.5 2.0 Japan 1.5 1.0 Europe 0.5 0.0 2004 2005 www.platinum.matthey.com
Slide 4: Demand: Autocatalyst - Europe
Platinum Demand: Autocatalyst Europe: up 17% to 1.96 million oz Euro IV regulations Increasing fitment of CSF Sales of diesels continue to grow www.platinum.matthey.com
Slide 5: Demand: Autocatalyst - Europe 1997-2005
Platinum Demand: Autocatalyst Europe: 1997-2005 1997 = 100 '000 oz Euro IV 300 2,000 250 1,500 200 Euro III 150 1,000 100 500 50 0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 Diesel demand for Pt Av LDD loading www.platinum.matthey.com
Slide 6: Demand: Autocatalyst - Regions
Platinum Demand: Autocatalyst North America: up 2.5% to 820,000 oz HDD retrofit, changes in market share Japan: down 3% to 595,000 oz Higher HDD demand and increased vehicle output but no stock build China + RoW: up 13% to 445,000 oz Vehicle production up, tighter emissions limits www.platinum.matth
Slide 7: Platinum Demand: Jewellery
Platinum Demand: Jewellery Down 9% to 1.96 million oz million oz 2.16 1.96 2.0 RoW 1.5 Europe N.America 1.0 Japan 0.5 China 0.0 2004 2005 www.platinum.matthey.com
Slide 8: Jewellery Demand: China
Jewellery Demand: China Down 13% to 875,000 oz • High metal financing costs, price volatile • Destocking & recycling by the trade increases • Lower costs, greater margins on palladium & WG • Retail sales affected by less choice, higher prices • Inauspicious year for weddings: total bridal jewellery
Slide 9: Jewellery Demand: Elsewhere
Jewellery Demand: Elsewhere Platinum price affects demand Japan: down 9% to 510,000 oz Recycling up, stocks down Consumers trading in old jewellery North America: down 5% to 275,000 oz Europe: unchanged at 195,000 oz www.platinum.matthey.com
Slide 10: Platinum Demand: Industrial
Platinum Demand: Industrial Up 9% to 1.675 million oz million oz 1.8 1.675 1.6 1.535 Petroleum 1.4 1.2 Glass 1.0 Electrical 0.8 0.6 Chemical 0.4 0.2 Other 0.0 2004 2005 www.platinum.matthey.com
Slide 11: Demand: Industrial - LCD glass and hard disks
Platinum Demand: Industrial Driven by LCD glass and hard disks Glass demand up 22% to 355,000 oz Construction of LCD glass furnaces in Asia continued at rapid pace Electrical demand up 20% to 360,000 oz Soaring sales of consumer products containing hard disks www.platinum.matthey.com
Slide 12: Platinum Demand: 1996 vs. 2005
Platinum Demand: 1996 vs. 2005 Autocatalyst demand doubled million oz 7.0 6.70 Other 6.0 4.96 Glass 5.0 4.0 Electrical 3.0 Jewellery 2.0 1.0 Autocat (net) 0.0 1996 2005 www.platinum.matthey.com
Slide 13: Platinum Supply
Platinum Supply Up 2% to 6.63 million oz million oz 7 6.63 6.49 Other 6 5 N.America 4 Russia 3 2 S.Africa 1 0 www.platinum.matthey.com 2004 2005
Slide 14: Supply: South Africa
Platinum Supply: South Africa Up 2% to 5.11 million oz • Pipeline stocks increase at Anglo Platinum • More difficult conditions at some older Western Bushveld mines • Progress on Eastern Bushveld still slow www.platinum.matthey.com
Slide 15: Supply Elsewhere
Platinum Supply Elsewhere net change: +40,000 oz Russia: up 8% to 890,000 oz Pipeline release at Norilsk Nickel in H2 North America: down 6% to 360,000 oz Minor changes at Falco, NaPd, Inco Zimbabwe: up 6% to 155,000 oz Political/economic uncertainties increase www.platinum.matthey.com
Slide 16: Platinum Supply and Demand
Platinum Supply and Demand ’000 oz 2004 2005 % Demand 6,540 6,700 +2 Supply 6,490 6,630 +2 Movements in stocks (50) (70) www.platinum.matthey.com
Slide 17: Outlook: Jewellery
Platinum Outlook: Jewellery Trade discomfort growing as price rises million oz Jewellery Demand Av. Price $ per oz 3.0 1,100 1,000 2.5 900 800 2.0 700 ? 600 1.5 500 400 1.0 300 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 www.platinum.matthey.com
Slide 18: Outlook: Jewellery
Platinum Outlook: Jewellery Chinese purchases lagging last year '000 kg Cumulative year-to-date platinum sales on the SGE 8 7 6 5 4 3 2 1 0 Week Week 1 2005 2006 17 www.platinum.matthey.com
Slide 19: Outlook: Autocatalyst
Platinum Outlook: Autocatalyst Further growth certain • Diesels Euro IV plus CSF in Europe HDD regulations in North America • Asia Rising light vehicle output Tightening emissions limits www.platinum.matthey.com
Slide 20: Outlook: Supply
Platinum Outlook: Supply South Africa remains key to growth • Pipeline release due from Anglo Platinum • Higher output expected from both new and established mines • Only minor increases from Zimbabwe and N. America www.platinum.matthey.com
Slide 21: Outlook: Price
Platinum Outlook: Price Swimming with the commodities tide 4th Jan 2005 = 100 Indexed US$ commodity prices, Jan '05-May '06 300 Brent crude Zn Cu Au Pt 275 250 225 200 175 150 125 100 75 Jan Mar May Jul Sep Nov Jan Mar May www.platinum.matthey.com
Slide 22: Outlook: Price - Forecast For The Next Months
Platinum Outlook: Price Forecast For The Next 6 Months $ per oz 1,400 1,300 Forecast set 1,200 $1,025–$1,250 1,100 1,000 900 800 J M M J S N J M M J S N 2005 2006 www.platinum.matthey.com www.platinum.matthey.com
Slide 23: Outlook: Price - Forecast For The Next Months
Platinum Outlook: Price Forecast For The Next 6 Months $ per oz 1,400 1,300 Forecast set 1,200 $1,025–$1,250 1,100 1,000 900 800 J M M J S N J M M J S N 2005 2006 www.platinum.matthey.com www.platinum.matthey.com
Slide 24: Palladium Demand
Palladium Demand million oz 7.04 7 6.56 • Total demand grows 7% 6 to 7.04 million oz 5 • Autocatalyst demand mixed – up 4 in Asia, down in USA & Europe 3 • Jewellery becomes the 2 second largest application 1 • Industrial & investment 0 demand increases 2004 2005 Auto (net) Jlry Elec. Other www.plat
Slide 25: Palladium Demand: Autocatalyst
Palladium Demand: Autocatalyst Up marginally to 3.81 million oz million oz 4.0 3.79 3.81 3.5 RoW 3.0 2.5 Japan 2.0 1.5 N.America 1.0 0.5 Europe 0.0 2004 2005 www.platinum.matthey.com
Slide 26: Autocatalyst Demand for Palladium
Autocatalyst Demand for Palladium North America: down 1% to 1.43 million oz Thrifting, lower production of SUVs / light trucks Europe: down 10% to 990,000 oz Thrifting plus lower gasoline vehicle output Japan: up 4% to 660,000 oz Higher vehicle output, lower emissions China + RoW: up 21% to 705,000
Slide 27: Palladium Demand: Jewellery
Palladium Demand: Jewellery Up 54% to 1.43 million oz Pd jewellery in China WG & Pt Pd jewellery alloys elsewhere www.platinum.matthey.com
Slide 28: Palladium Demand: Jewellery - China
Palladium Demand: Jewellery Chinese purchases jump to 1.2 million oz • Wholesale and retail stocks continue to grow as Pd market penetration spreads • Pd 990 increasingly stocked alongside Pd 950 • Manufacturers like: – low metal funding costs, less volatile price – lower density = higher productivi
Slide 29: Palladium Demand: Chinese retail sales
Palladium Demand: Jewellery Chinese retail sales develop RMB / gram 400 • Consumers like: Typical Retail Price 350 Gross Margin –Purity: Pd 990 300 250 –Affordability 200 –Whiteness 150 –Association with Pt 100 50 –Good investment? 0 Pt Pd www.platinum.matthey.com
Slide 30: Palladium Demand: Other
Palladium Demand: Other Up 2.5% to 2.43 million oz million oz 2.43 2.5 2.37 Other 2.0 Chemical 1.5 1.0 Dental 0.5 Electronics 0.0 2004 2005 www.platinum.matthey.com
Slide 31: Palladium Demand: 1996 vs. 2005
Palladium Demand: 1996 vs. 2005 A market transformed million oz 7.04 Chemicals 7.0 6.15 & Other 6.0 Dental 5.0 4.0 Jewellery 3.0 Electronics 2.0 1.0 Autocat (net) 0.0 1996 2005 www.platinum.matthey.com
Slide 32: Palladium Supply
Palladium Supply Down 2% to 8.39 million oz million oz 9 8.58 8.39 Other 8 7 N. America 6 5 4 Russia 3 2 South Africa 1 0 2004 2005 www.platinum.matthey.com
Slide 33: Supply: Russia
Palladium Supply: Russia Down 4% to 4.62 million oz • Norilsk Nickel releases data: production of 3.13 million oz • Substantial sales from State stocks at the end of the year • Stillwater sells 439,000 oz of Russian metal www.platinum.matthey.com
Slide 34: Palladium Supply Elsewhere
Palladium Supply Elsewhere South Africa: up 4% to 2.59 million oz • Production increasing in line with platinum output North America: down 13% to 905,000 oz • Difficult year for North American Palladium: low grades, mill problems, recoveries drop www.platinum.matthey.com
Slide 35: Palladium Supply and Demand
Palladium Supply and Demand ’000 oz 2004 2005 % Demand 6,560 7,040 +7 Supply 8,580 8,390 -2 Movements in stocks 2,020 1,350 www.platinum.matthey.com
Slide 36: Outlook: Autocatalyst
Palladium Outlook: Autocatalyst Stronger growth forecast • Thrifting to have less impact • Further switching from Pt to Pd in gasoline vehicle catalysts • Rising light vehicle production and tightening emissions limits in Asia • Pd in diesel after-treatment to make a small contribution www.platinum.
Slide 37: Outlook: Jewellery
Palladium Outlook: Jewellery Retail sales vs. metal purchases • Potential for good retail sales growth in China: – first marketing campaign planned – price advantage over platinum widening • But existing inventories may restrain growth in metal demand • Several US & European manufacturers now lookin
Slide 38: Outlook: Supply
Palladium Outlook: Supply • Growth expected in South African & North American mine production • Substantial shipments from Russian state stocks in Q1 • Stillwater sales of Russian metal completed www.platinum.matthey.com
Slide 39: Outlook: Price
Palladium Outlook: Price Don’t look down… $ per oz '000 oz 400 1,200 NYMEX Net Spec. Average Price 350 1,000 300 800 250 600 200 400 150 200 J F M A M J J A S O N D J F M A 2005 2006 www.platinum.matthey.com
Slide 40: Outlook: Price - Forecast For The Next Months
Palladium Outlook: Price Forecast For The Next 6 Months $ per oz 450 Forecast set 400 350 $260 – $420 300 250 200 150 J M M J S N J M M J S N 2005 2006 www.platinum.matthey.com www.platinum.matthey.com
Slide 41: Outlook: Price - Forecast For The Next Months
Palladium Outlook: Price Forecast For The Next 6 Months $ per oz 450 Forecast set 400 350 $260 – $420 300 250 200 150 J M M J S N J M M J S N 2005 2006 www.platinum.matthey.com www.platinum.matthey.com
Slide 42: Platinum 2006
ye Johnson Matthey Platinum 2006 7 ! eee | Ny Lol SAN 15th May 2006