Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2015 Earnings Presentation
43 slides from Johnson Matthey's earnings presentation, Jun 4, 2015
Slide 1: Presentation of Results for the year ended 31st March 2015
Presentation of Results for the year ended 31st March 2015 4th June 2015 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 £ Good progress in Underlying EPS up Focusing on attractive 2014/15, led by ECT 6% and 9% increase growth markets which fit in dividend proposed with our core strengths Good underlying growth Long term growth expected in continuing drivers remain strong businesses in 2015/16 4
Slide 5: Health and Safety is Our Priority
Health and Safety is Our Priority LTIIR reduced by 25% to 0.49 Over 50% of accidents caused Only 5% were due to renewed groupwide by manual handling incidents, chemical related focus on behavioural safety slips, trips and falls LTIIR ‐ 12 month rolling year 0.8 0.6 0.4 H&S programme introduced 0.2 0
Slide 6: Financial Review
Financial Review Den Jones Group Finance Director
Slide 7: Underlying Results
Underlying Results Year to 31st March 2015 2014 % at % at cr & constant excl. Anglo £m £m % change rates (cr) Revenue 10,060 11,155 ‐10 ‐8 Sales excluding precious metals 3,125 2,981 +5 +8 +9 Operating profit 477.1 468.9 +2 +5 Interest and share of JV profit (37.0) (41.6) Profit before tax 440.1 427
Slide 8: Good Business Growth
Good Business Growth Underlying Profit Before Tax Bridge – 2013/14 to 2014/15 (£m) 450 +1% +1% 440 +1% £6m £4m £5m +2% 430 £4m ‐1% +10% £7m 420 £16m 410 ‐4% 400 £41m £30m £440m 390 £427m 380 ‐7% 370 £381m 360 350 2013/14 Exchange Anglo Rebased ECT FC NB Other 2014/15 PT PMP uPBT 2013/14 uPBT uPBT Di
Slide 9: Reconciliation to Reported Results
Reconciliation to Reported Results Year to 31st March 2015 2014 £m £m Underlying profit before tax 440.1 427.3 Amortisation of acquired intangibles (17.3) (20.7) Profit on sale of Gold and Silver Refining 69.7 ‐ Exchange on liquidation of businesses 3.3 ‐ Profit before tax 495.8 406.6 Earnings per s
Slide 10: Cash Flow from Operations
Cash Flow from Operations Year to 31st March 2015 2014 £m £m Operating profit 533 448 Depreciation and amortisation 153 151 Tax paid (82) (49) Profit on sale of Gold and Silver Refining (70) ‐ Working capital / other (408) (73) Cash flow from operations 126 477 • Working capital days (excl. pm) were
Slide 11: Cash Flow Conversion
Cash Flow Conversion Year to 31st March 2015 2014 £m £m Cash flow from operations 126 477 Add back: Tax paid 82 49 Pension deficit contributions 30 27 Net capital expenditure (208) (210) 30 343 Movement in precious metal working capital 180 41 Cash flow (excluding precious metals) 210 384 Underlying
Slide 12: Working Capital and Cash Flow Conversion Dynamics
Working Capital and Cash Flow Conversion Dynamics Working capital days return to Days 70 66 historical levels 65 60 57 • 2013/14 unusually low 60 54 53 55 50‐60 • Expect range of 50 to 60 days due to: 50 45 45 • Growing business 40 35 • Increasing business in China – 30 payment terms longer 2010 201
Slide 13: Continued Investment to Support Business Growth
Continued Investment to Support Business Growth Capital expenditure £211.8m £m Capex / depn (times) 300 1.8 (2013/14 £218.3m) 1.7 • Key projects: 250 • Extension of European ECT facilities to 1.6 meet demand from new legislation 200 1.5 • Expansion of PT’s chemical catalyst manufacturing capacity in
Slide 14: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) 24% Target 20% 16% 12% Cost of capital 8% 2011 2012 2013 2014 2015 Decline following change in Anglo contracts £ Group ROIC 18.8% Pt Increase in precious metal balances Remain committed to 20% target 14
Slide 15: Balance Sheet Remains Strong
Balance Sheet Remains Strong £ Treasury Pension Actuarial Basis • Net debt increased to £994.4m • Number of actions over last few years to (2013/14 £729.2m) reduce deficits • Net debt (including post tax pension • UK scheme actuarial valuation underway deficits) / EBITDA 1.7 times • Average cost of
Slide 16: Operating Review
Operating Review Robert MacLeod Chief Executive
Slide 17: Emission Control Technologies – Another Strong Year
Emission Control Technologies – Another Strong Year Year to 31st March % at constant £m 2015 2014 % change rates (cr) Sales (excluding precious metals) 1,782 1,645 +8 +12 Underlying operating profit 236.9 203.6 +16 +21 Return on sales 13.3% 12.4% Return on invested capital (ROIC) 24.1% 21.0% Another
Slide 18: Outpacing Global Light Duty Growth
Outpacing Global Light Duty Growth Total sales £1,058m up 5% Johnson Matthey’s Light Duty Catalyst Sales £m +9% at cr 1200 £1,058m £1,009m 1000 £938m +5% +14% at cr 800 £622m £543m £571m 600 +9% +5% at cr ‐1% at cr 400 £214m £255m £257m £181m £183m £179m 200 +1% ‐2% 0 2012/13 2013/14 2014/15 2012/13
Slide 19: Strong HDD Sales Across all Regions
Strong HDD Sales Across all Regions Total sales £724m up 14% Johnson Matthey’s Heavy Duty Diesel Catalyst Sales £m +18% at cr 800 £724m 700 £636m +14% 600 +20% at cr £523m 500 £441m £347m £374m +13% at cr 400 +18% 300 £212m £225m +25% at cr 200 £148m +6% 100 £50m £58m £28m 0 +17% 2012/13 2013/14 201
Slide 20: Looking Ahead – Air Quality Remains a Major Global Issue
Looking Ahead – Air Quality Remains a Major Global Issue Light duty – good structural growth Heavy duty – further growth ahead Short term: • Further fitment of Euro IV systems in China • Full introduction of Euro 6b in 2015/16 • Increasingly includes more smaller engined vehicles Medium term: • Beij
Slide 21: Process Technologies – Progress in 2014/15
Process Technologies – Progress in 2014/15 Year to 31st March % at constant £m 2015 2014 % change rates (cr) Sales (excluding precious metals) 591 565 +5 +7 Underlying operating profit 106.0 101.9 +4 +7 Return on sales 17.9% 18.0% Return on invested capital (ROIC) 14.6% 15.3% Progress made in the ye
Slide 22: PT Chemicals - Good Catalyst Sales but Slower in Licensing
PT Chemicals ‐ Good Catalyst Sales but Slower in Licensing Sales 1% ahead at £342m (4% up at cr) Sales Ammonia • Higher sales of ammonia catalysts and Petrochemicals 16% 25% formaldehyde technologies Methanol Syngas 17% 54% • Lower demand in methanol Oleo/ biochemicals • Licensing sales reduced (£76
Slide 23: PT Oil and Gas – Performed Well Across All Sectors
PT Oil and Gas – Performed Well Across All Sectors Sales up 10% to £249m (up 11% at cr) Sales • Growth supported by strong drivers in mid/downstream markets Diagnostic Hydrogen • Strong sales of refinery hydrogen catalysts Services 27% boosted by new plant builds 31% Refineries • Benefit from shift
Slide 24: Looking Ahead – Short Term Hiatus, Long Term Drivers Remain
Looking Ahead – Short Term Hiatus, Long Term Drivers Remain Usual dynamics in timing of orders – Long term drivers remain in place stronger H2 • Tighter emissions regulations and energy • Good catalyst demand across PT; Oil and Gas security concerns support future demand businesses expected to perfo
Slide 25: Precious Metal Products – Impacted by Anglo
Precious Metal Products – Impacted by Anglo Year to 31st March % at constant £m 2015 2014 % change rates (cr) Sales (excluding precious metals) 379 430 ‐12 ‐9 Underlying operating profit 101.5 130.9 ‐22 ‐21 Return on sales 26.8% 30.5% Return on invested capital (ROIC) 21.6% 36.6% • Steady performanc
Slide 26: PMP Services – Strategic Supplier for JM Businesses
PMP Services – Strategic Supplier for JM Businesses Sales down 26% at £120m (24% down Platinum and Palladium Prices at cr) 1,500 • Precious Metals Management impacted by change in Anglo contracts 1,000 • Mixed year in Pgm Refining and 500 Recycling Mar‐14 Sep‐14 Mar‐15 Palladium Platinum • Volumes s
Slide 27: PMP Manufacturing – Steady Overall
PMP Manufacturing – Steady Overall Sales down 3% to £259m (flat at cr) Sales On the plus side: Chemical • Catalysts for fertiliser production ahead after Products Noble Metals slower 2013/14 17% ‐ Industrial • Steady sales of medical components Products • Demand for automotive glass products broadly
Slide 28: Looking Ahead – Short Term Tough but Investing for Growth
Looking Ahead – Short Term Tough but Investing for Growth Pgm Refining Manufacturing businesses • Lower metal prices currently impacting sales • Stable outlook for 2015/16 and volumes • Focus on accessing higher growth markets • Higher costs expected ‐ shift to more • Increased investment in new pro
Slide 29: Fine Chemicals – A Good Year
Fine Chemicals – A Good Year Year to 31st March % at constant £m 2015 2014 % change rates (cr) Sales (excluding precious metals) 327 322 +1 +3 Underlying operating profit 88.8 84.1 +6 +7 Return on sales 27.2% 26.1% Return on invested capital (ROIC) 18.4% 18.8% • Steady sales growth in API Manufactur
Slide 30: Expanding API Capabilities, Leveraging Synergies
Expanding API Capabilities, Leveraging Synergies API Manufacturing Catalysis and Chiral Technologies (CCT) • Sales up 3% to £216m (also up 3% at cr) • Sales up 4% to £34m (up 7% at cr) • Demand for APIs mixed across our portfolio • Good demand for catalyst products with steady sales overall • Levera
Slide 31: Looking Ahead – Robust Longer Term Growth Potential
Looking Ahead – Robust Longer Term Growth Potential Good growth expected in API Manufacturing Strong global drivers support future growth and CCT • Focus on complex, smaller volume APIs • Continue to invest in development of • Working with customers / partners to complex APIs formulate and develop g
Slide 32: New Businesses – Good Progress in 2014/15
New Businesses – Good Progress in 2014/15 Year to 31st March % at constant £m 2015 2014 % change rates (cr) Sales (excluding precious metals) 91 76 +20 +27 Underlying operating profit / (loss) (22.1) (18.3) ‐21 ‐19 Other Battery Technologies (sales 23% ahead at £84m) Sales 1% • Good demand from powe
Slide 33: Looking Ahead – Deepening Portfolio for Long Term Growth
Looking Ahead – Deepening Portfolio for Long Term Growth Battery Technologies Atmosphere Control Technologies • Benefit from two acquisitions • StePac business acquired from DS Smith in • Expect break even (excl. integration costs) May 2015 in 2015/16 with sales >£100m • Expect sales of ~£20m in 201
Slide 34: Outlook 2015/16
Outlook 2015/16 Good underlying growth in continuing businesses Expect 2015/16 to be slightly Well placed for long ahead of 2014/15 term growth 34
Slide 35: Key Messages
Key Messages £ Good progress in Underlying EPS up Focusing on attractive 2014/15, led by ECT 6% and 9% increase growth markets which fit in dividend proposed with our core strengths Good underlying growth Long term growth expected in continuing drivers remain strong businesses in 2015/16 35
Slide 36: Questions and Answers
Questions and Answers Robert MacLeod Den Jones Larry Pentz John Walker Chief Executive Group Finance Director Executive Director Executive Director, Emission Control Technologies John Fowler Nick Garner Alan Myers Geoff Otterman Division Director, Division Director, Division Director, Division Direc
Slide 37: Appendix
JME) Johnson Matthey
Slide 38: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 2H 2015 2014 % 2014/15 2013/14 % millions millions change millions millions change Sales 19.6 18.4 +6 9.4 8.8 +7 North America Production 16.8 16.3 +3 8.4 8.2 +3 Sales 18.0 18.1 ‐ 9.1 9.0 +1 Europe Production 19.9 19.9 ‐ 10.1 10
Slide 39: Global Growth in Vehicle Production Drives ECT
Global Growth in Vehicle Production Drives ECT Light Duty Vehicle Production Outlook – 2013 ‐ 2020 (calendar years) million CAGR 3.9% 120 (2014 – 2020) 109.3 98.2 100 93.6 89.5 CAGR 4.7% 84.7 87.1 80 (2014 – 2020) CAGR 2.6% 58.8 60 CAGR 2.0% (2014 – 2020) 49.1 51.5 (2014 – 2020) 43.1 44.6 46.4 40 23
Slide 40: 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 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 ‐ National BS II BS
Slide 41: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production Year to 31st March 2H 2H 2015 2014 % 2014/15 2013/14 % thousands thousands change thousands thousands change North Sales 514.0 446.6 +15 256.5 221.7 +16 America Production 542.9 467.2 +16 271.0 230.0 +18 Sales 272.9 298.2 ‐8 143.3 163.6 ‐12 EU Production 387.
Slide 42: Heavy Duty Vehicle Production Regulated Engines Outlook
Heavy Duty Vehicle Production Regulated Engines Outlook 2013 ‐ 2020 (calendar years) thousands CAGR 11.0% 4,000 (2014 – 2020) 3,494 3,500 2,921 3,000 CAGR 17.0% (2014 – 2020) 2,500 2,382 2,175 2,146 2,000 1,792 1,868 1,732 1,500 CAGR 1.5% CAGR 7.1% 1,280 (2014 – 2020) (2014 – 2020) 1,080 1,000 850 7
Slide 43: 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