Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — Q2 2024 Earnings Presentation
39 slides from Johnson Matthey's earnings presentation, Nov 22, 2023
Slide 1: Presentation of results for the half year ended 30th September 2023
Presentation of results for the half year ended 30th September 2023 22nd November 2023
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. By their nature, forw
Slide 3: Agenda: Introduction
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Slide 4: Headwinds from PGM market prices – good underlying progress in the first half
01. Introduction 02. Financial results 03. Strategic update Headwinds from PGM market prices – good underlying progress in the first half Good underlying Transforming JM at Delivering strategic performance pace to drive growth milestones (operating profit +10%¹) Catalysing the net zero transition to
Slide 5: Transformation progressing at pace
01. Introduction 02. Financial results 03. Strategic update Transformation progressing at pace Commercial Capital projects Costs • Stronger pricing • Disciplined approach • Global business process • Margin improvement (CA • Improving operational outsourcing underway and CT) efficiency • Procurement
Slide 6: On track to deliver strategic milestones by end of 2023/24
01. Introduction 02. Financial results 03. Strategic update On track to deliver strategic milestones by end of 2023/24 Status Hydrogen Technologies: two strategic partnerships – Plug Power and Hystar Customers Clean Air: winning targeted Euro 7 business and deliver £4bn+ cash Won 9 additional large
Slide 7: Agenda: Financial results
Agenda 02 Financial results 7
Slide 8: Results impacted by lower precious metal prices
01. Introduction 02. Financial results 03. Strategic update Results impacted by lower precious metal prices Expect second half to be sequentially stronger Sales -1% Operating profit -15% Operating profit +10% adjusting for precious metal prices¹ Earnings per share Net debt of Interim dividend of 59.
Slide 9: Good momentum in growth businesses
01. Introduction 02. Financial results 03. Strategic update Good momentum in growth businesses Sales for half year 2023 2022 % change, ended 30th September £m £m constant FX rates Clean Air 1,286 1,278 +4 PGM Services 230 282 -16 Catalyst Technologies 282 275 +5 Hydrogen Technologies 37 23 +61 Value
Slide 10: Operating profit benefiting from pricing and transformation benefits
01. Introduction 02. Financial results 03. Strategic update Operating profit benefiting from pricing and transformation benefits Underlying operating profit +10% underlying growth¹ (£12m) £244m £25m £222m (£26m) £35m (£55m) (£9m) £180m 1. At constant FX and adjusting for c.£55m impact from precious
Slide 11: Benefits from our transformation programme
01. Introduction 02. Financial results 03. Strategic update Benefits from our transformation programme Cost savings 2024/25 annualised Initiative to date (£m) cost savings (£m) Management spans and layers 35 60 Procurement 25 40 Real estate 5 20 IT 5 15 Global Business Services - 15 Total 70 150 Del
Slide 12: Operating performance
01. Introduction 02. Financial results 03. Strategic update Operating performance Underlying results for half year 2023 2022 % % change, ended 30th September¹ £m £m change constant FX rates Sales excluding precious metals (sales) 1,967 2,045 -4 -1 Operating profit 180 222 -19 -15 Finance charges (41
Slide 13: Reported results
01. Introduction 02. Financial results 03. Strategic update Reported results 2023 2022 Half year ended 30th September £m £m Underlying operating profit 180 222 Major impairment and restructuring charges¹ (42) (9) Amortisation of acquired intangibles (2) (2) Profit / (loss) on disposal of businesses
Slide 14: Net debt
01. Introduction 02. Financial results 03. Strategic update Net debt 1.6 times 1.7 times net debt net debt to EBITDA¹ to EBITDA¹ £13m £44m Working capital £85m £1,044m £1,023m £101m £157m (£180m) (£95m) £169m (£39m) (£234m) 1. Net debt including post tax pension deficits. Shown on a continuing basis
Slide 15: Clean Air
01. Introduction 02. Financial results 03. Strategic update Clean Air Strong growth in operating profit Sales up 4% Underlying results 2023 2022 % change, for half year ended £m £m constant • Supported by increased pricing 30th September FX rates and slightly higher volumes in LDD and HDD Light duty
Slide 16: PGM Services
01. Introduction 02. Financial results 03. Strategic update PGM Services Lower PGM prices and refinery volumes Sales declined 16% Underlying results 2023 2022 % change, for half year ended £m £m constant • Lower average PGM prices 30th September FX rates • Reduced refinery volumes due to lower auto
Slide 17: Catalyst Technologies
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Strong profit growth and margin progression Sales increased 5% Underlying results 2023 2022 % change, for half year ended £m £m constant • Growth in Catalysts and Licensing 30th September FX rates • Higher average pric
Slide 18: Hydrogen Technologies
01. Introduction 02. Financial results 03. Strategic update Hydrogen Technologies Significant sales growth and investing for scale up Sales up materially Underlying results 2023 2022 % change, for half year ended £m £m constant • Higher volumes for strategic 30th September FX rates customers in fuel
Slide 19: Outlook for year ending 31st March 2024
01. Introduction 02. Financial results 03. Strategic update Outlook for year ending 31st March 2024 Group Now expect at least high single digit growth in operating performance at constant precious metal prices and constant currency. Underpinned by transformation benefits of c.£55m Clean Air – expect
Slide 20: Agenda: Strategic progress
Agenda 03 Strategic progress 20
Slide 21: Catalysing the net zero transition: Our aspiration
01. Introduction 02. Financial results 03. Strategic update Catalyst Hydrogen Clean Air Technologies Technologies Catalysing the Leading in #1 in Market leader net zero transition autocatalyst markets syngas-based chemicals and in performance components for fuels technology fuel cells and electrolys
Slide 22: Portfolio transitioning and growing over time
01. Introduction 02. Financial results 03. Strategic update Portfolio transitioning and Illustrative chart Development of underlying operating profit growing over time • Clean Air efficiencies and • Hydrogen Technologies Catalyst Technologies driving contributing in the long-term near and mid-term g
Slide 23: Clean Air: driving efficiency and delivering cash
01. Introduction 02. Financial results 03. Strategic update Clean Air Clean Air: driving efficiency and delivering cash Strategic goals First half progress Key priorities • Continuing to drive cash Deliver £4bn+ cash • On track to deliver £4bn+ cash generation • Double digit margin in 2023/24, • Del
Slide 24: Clean Air: focused on delivering margin improvement
01. Introduction 02. Financial results 03. Strategic update Clean Air Clean Air: focused on delivering margin improvement Operating margin Margin improvement initiatives Pricing – strengthening commercial muscle • Cost recovery across wide range of areas • Better profitability data to drive pricing
Slide 25: PGM Services: key enabler for our growth businesses
01. Introduction 02. Financial results 03. Strategic update PGM Services PGM Services: key enabler for our growth businesses Strategic goals First half progress Key priorities • Increasing resilience, efficiency • Progress refineries investment Asset renewal and long-term sustainability of refinery
Slide 26: Catalyst Technologies: breakout growth and margin improvement
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Catalyst Technologies: breakout growth and margin improvement Strategic goals First half progress Key priorities • 84% profit growth • Drive further material margin Improve performance • Margin up 480 basis points impr
Slide 27: Catalyst Technologies: winning early projects and a large pipeline
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Catalyst Technologies: winning early projects and a large pipeline Won 9 projects to date worth c.£185m sales¹ Low carbon Sustainable Strategic Biofuels project 5 hydrogen 1 Equinor and Linde – H2H Saltend fuels in Nor
Slide 28: Catalyst Technologies: delivering strong margin improvement
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Catalyst Technologies: delivering strong margin improvement Operating margin Driving margin improvement High teens Operating margin targets • Mid teens by end of 2024/25 Mid • High teens by end of 2027/28 teens • Conti
Slide 29: Hydrogen Technologies: continued growth momentum
01. Introduction 02. Financial results 03. Strategic update Hydrogen Technologies Hydrogen Technologies: continued growth momentum Strategic goals First half progress Key priorities • Sign further partnerships Strategic partnerships • Delivered 61% sales growth • Diversify customer base • Deliver 3G
Slide 30: Sustainability is at the heart of everything we do
01. Introduction 02. Financial results 03. Strategic update Sustainability Sustainability is at the heart of Strengthening our commitment Protecting and developing our to protect the Planet People everything we do • On track to meet our GHG • Strong safety track record emission reduction targets ove
Slide 31: Catalysing the net zero transition
01. Introduction 02. Financial results 03. Strategic update Catalysing the net zero transition Good underlying Transforming JM Delivering strategic performance to drive growth milestones (operating profit +10%¹) Good progress in delivering on our commitments 1. Underlying basis at constant FX and ad
Slide 32: Agenda: Q&A
Agenda 04 Q&A 32
Slide 33: Q&A
Q&A 33
Slide 34: Appendix
Appendix 34
Slide 35: Group operating profit
Appendix Group operating profit Underlying operating profit for 2023 2022 % change, half year ended 30th September £m £m constant FX rates Clean Air 124 108 +22 PGM Services 78 125 -37 Catalyst Technologies 35 21 +84 Hydrogen Technologies (26) (24) n/a Value Businesses¹ 14 21 -33 Corporate (45) (29)
Slide 36: Free cash flow and net debt
Appendix Free cash flow and net debt Free cash flow from continuing operations for 2023 2022 half year ended 30th September (£m) Underlying operating profit from continuing operations 180 222 Depreciation and amortisation¹ 93 87 – Precious metal working capital inflow 234 98 – Non precious metal wor
Slide 37: Net debt to EBITDA 1.7 times
Appendix Net debt to EBITDA 1.7 times¹ Continuing operations £m £m Net debt at the beginning of the year (1,023) Free cash flow 78 Dividends (101) Movement in net debt (23) Lease adjustments² 6 Net debt before FX and other movements (1,040) FX and other non-cash movements³ (4) Net debt at the end of
Slide 38: Average PGM prices
Appendix Average PGM prices US$ per troy oz 40,000 Rhodium Platinum Palladium 4,000 (left hand axis) (right hand axis) (right hand axis) 30,000 3,000 20,000 2,000 10,000 1,000 0 0 01/10/2021 01/10/2022 01/10/2023 Price (US$ per troy oz) 1H 2022/23 average 1H 2023/24 average Current (17th November 20
Slide 39: Financial guidance summary
Appendix Financial guidance Group underlying operating profit growth¹: summary • Accelerating to high single digit over the medium-term • Strong long-term growth At least £4bn of cash generation in Clean Air by 2030/31² Catalyst Technologies: High single digit sales growth in the short term, acceler