Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — Investor Presentation (May 2008)
44 slides from Johnson Matthey's investor presentation, May 19, 2008
Slide 1: Platinum 2008
ye Johnson Matthey Platinum 2008 19th May 2008
Slide 2: Platinum
ye Johnson Matthey Platinum
Slide 3: Platinum: Key features
Platinum: Key features • Platinum market in deficit by 480,000 oz in 2007 • Supplies fall due to South African problems • Autocatalyst demand grows 8.2% due to diesel emissions control • Jewellery demand resilient: falls only marginally • Investment demand climbs due to ETFs • Platinum records a ser
Slide 4: Platinum Supply and Demand
Platinum Supply and Demand ’000 oz 2006 2007 % Supply 6,830 6,550 (4.1) Demand 6,475 7,030 +8.6 Movements in stocks 355 (480) www.platinum.matthey.com
Slide 5: www.platinum.matthey.com
www.platinum.matthey.com
Slide 6: Platinum Supply Falls 4.1%
Platinum Supply Falls 4.1% million oz 8 • 2007 South African output 6.830 6.550 drops to 5.035 million oz due 7 to a combination of strikes, 6 safety issues and processing problems 5 4 • Russian production falls marginally to 910,000 oz 3 • North American production 2 falls slightly to 325,000 oz 1
Slide 7: South African Platinum Supply
South African Platinum Supply • Supplies fall from 5.295 million oz in 2006 to 5.035 million oz in 2007 • Problems include: • Lonmin smelter shutdown • Strikes surrounding wage negotiations • Continued focus on improving safety • Finding and retaining skilled staff • Some growth at mines such as Mot
Slide 8: Platinum Demand Climbs by 8.6%
Platinum Demand Climbs by 8.6% million oz 8 • Total demand climbs 555,000 6.475 7.030 oz to 7.03 million oz 7 6 • Gross autocatalyst demand rises by 320,000 oz 5 • Jewellery demand drops by 4 55,000 oz to 1.585 million oz 3 • Industrial demand climbs 2 6.0% to 1.940 million oz 1 • ETFs boost investm
Slide 9: www.platinum.matthey.com
www.platinum.matthey.com
Slide 10: Platinum Demand: Autocatalyst
Platinum Demand: Autocatalyst million oz • Gross auto sector platinum 5 3.905 4.225 purchases rise by 8.2% to 4.225 million oz 4 • Diesel sector drives growth 3 • Increasing fitment of DPFs • Further growth in HDD market 2 • Japan and Korea continue to use 1 platinum in autocatalysts • Substitution
Slide 11: Platinum Demand: Autocatalyst
Platinum Demand: Autocatalyst million oz 5 Gasoline 4 3 2 1 0 2003 2004 2005 2006 2007 www.platinum.matthey.com
Slide 12: Platinum Demand: Autocatalyst
Platinum Demand: Autocatalyst million oz 5 Gasoline Diesel 4 3 2 1 0 2003 2004 2005 2006 2007 www.platinum.matthey.com
Slide 13: Platinum Demand: Jewellery
Platinum Demand: Jewellery million oz 2.0 • Jewellery demand resilient in 1.640 1.585 the face of high and volatile prices 1.5 • Global manufacturer purchases of new metal fall by 1.0 3.4% to 1.585 million oz • Demand grows in China and 0.5 Europe • Tougher times in North America and Japan 0.0 2006
Slide 14: Platinum: Chinese Jewellery
Platinum: Chinese Jewellery million oz 1.4 • Chinese manufacturers buy 1.2 2.6% more metal, at 780,000 oz 1.0 • Demand supported by beads 0.8 in early 2007 and Olympic memorabilia in late 2007 0.6 • White gold applies some 0.4 pressure to the platinum jewellery market as prices rise 0.2 • High price
Slide 15: Platinum Demand: Industrial
Platinum Demand: Industrial million oz 2.0 1.830 1.940 • Industrial demand climbs 6.0% to 1.94 million oz 1.5 • Electronics demand rises on hard disk production 1.0 • Petroleum refining and glass purchases rise • Limited price sensitivity seen 0.5 0.0 2006 2007 Chemical Electrical Glass Petroleum Ot
Slide 16: www.platinum.matthey.com
www.platinum.matthey.com
Slide 17: Platinum Demand: Investment
Platinum Demand: Investment '000 oz 100 • Investment demand rises to -40 +170 170,000 oz in 2007 75 • Two physically-backed ETFs 50 launched • Net purchases reach 195,000 oz 25 • Coin sales fairly flat in North 0 America -25 • Net disinvestment of large bars in Japan -50 2006 2007 www.platinum.matth
Slide 18: Platinum Outlook
Platinum Outlook • Automotive demand likely to grow as emerging economies offset weak US performance • Effects of high prices in early 2008 not seen yet but jewellery demand likely to be lower • ETF activity may accentuate volatility • South African supply problems will impact output but this could
Slide 19: Platinum Price Correlation
Platinum Price Correlation Annual Average Price Cumulative Surplus/Deficit ($/oz) (‘000 oz) 1,400 1,000 1,200 500 1,000 0 800 -500 600 -1,000 400 -1,500 200 -2,000 0 -2,500 1975 1979 1983 1987 1991 1995 1999 2003 2007 www.platinum.matthey.com
Slide 20: Forecast Platinum Price for the Next 6 Months
Forecast Platinum Price for the Next 6 Months $ per oz 2,500 2,250 2,000 1,750 1,500 1,250 1,000 J A J O J A J O 2007 2008 www.platinum.matthey.com
Slide 21: Forecast Platinum Price for the Next 6 Months
Forecast Platinum Price for the Next 6 Months $ per oz 2,500 2,250 $1,775 – $2,500 2,000 1,750 1,500 1,250 1,000 J A J O J A J O 2007 2008 www.platinum.matthey.com
Slide 22: Palladium
ye Johnson Matthey Palladium
Slide 23: Palladium: Key features
Palladium: Key features • Palladium market in fundamental surplus by 1.75 million oz in 2007 • Supplies rise, boosted by Russian stock sales in early 2007 • Vehicle production growth and substitution for platinum drive autocatalyst demand 10.8% higher • Chinese jewellery demand drops • ETFs reinvigo
Slide 24: Palladium Supply and Demand
Palladium Supply and Demand ’000 oz 2006 2007 % Supply 7,950 8,585 +8.0 Demand 6,605 6,835 +3.5 Movements in stocks 1,345 1,750 www.platinum.matthey.com
Slide 25: www.platinum.matthey.com
www.platinum.matthey.com
Slide 26: Palladium Supply Rises by 8.0%
Palladium Supply Rises by 8.0% million oz 9 7.950 8.585 • Supply grows 635,000 oz to 8.585 8 million oz 7 • North American supplies almost 6 5 flat 4 • South African supply falls 3 marginally to 2.770 million oz: 2 supported by expansion and sales 1 of refined stocks 0 2006 2007 S.Africa Russia • Ru
Slide 27: www.platinum.matthey.com
www.platinum.matthey.com
Slide 28: Palladium Demand Rises by 3.5%
Palladium Demand Rises by 3.5% million oz 8 • Global demand grows by 6.605 6.835 230,000 oz to 6.835 million oz 7 6 • Autocatalyst demand rises on 5 substitution for platinum and 4 growing vehicle production 3 • Jewellery demand drops 2 mainly due to recycling in 1 China 0 • Strong demand in electro
Slide 29: Palladium Demand: Autocatalyst
Palladium Demand: Autocatalyst million oz 5 • Palladium continues to 4.015 4.450 replace platinum in gasoline 4 • Increasing market share of 3 Pt/Pd technology in diesel 2 • Growth in vehicle production 1 in emerging economies offsets weakness in the North 0 American market 2006 2007 China Japan N.
Slide 30: Pgm choice in Autocatalysts
Pgm choice in Autocatalysts Gasoline percentage of pgm used (Pt/Pd) 100 75 50 25 0 2005 2006 2007 Palladium Platinum www.platinum.matthey.com
Slide 31: Pgm choice in Autocatalysts
Pgm choice in Autocatalysts Gasoline Diesel percentage of pgm used (Pt/Pd) percentage of pgm used (Pt/Pd) 100 100 75 75 50 50 25 25 0 0 2005 2006 2007 2005 2006 2007 Palladium Platinum Palladium Platinum www.platinum.matthey.com
Slide 32: www.platinum.matthey.com
www.platinum.matthey.com
Slide 33: Palladium Demand: Jewellery
Palladium Demand: Jewellery million oz 1.50 • Chinese new palladium purchases fall by 260,000 oz 1.25 to 500,000 oz 1.00 • Manufacturing margins fall, 0.75 hitting demand 0.50 • Significant use of recycled old palladium stock 0.25 • Retail sales picture mixed 0.00 2003 2004 2005 2006 2007 • healthy
Slide 34: Palladium Jewellery Positives
Palladium Jewellery Positives • Palladium is selling well in some markets in China • Old Pd950 stock may now be running out • Growing strength in the North American market, particularly in men’s wedding rings • European demand grows in 2007 • Further co-ordinated market development activity now like
Slide 35: Palladium Demand: Industrial and Dental
Palladium Demand: Industrial and Dental million oz 2.5 2.350 2.385 • Industrial palladium demand grows by 1.2% to 1.750 2.0 million oz 1.5 • Dental purchases grow as the 1.0 palladium price is outpaced by the gold price 0.5 0.0 2006 2007 Dental Industrial www.platinum.matthey.com
Slide 36: Palladium Demand: Investment
Palladium Demand: Investment '000 oz • Palladium investment demand 300 50 260 grows to 260,000 oz 250 • ETF launches reinvigorate 200 investment market 150 • Demand from coins and bars 100 in North America turns negative in 2007 50 0 2006 2007 www.platinum.matthey.com
Slide 37: Palladium Outlook
Palladium Outlook • Palladium to make further inroads into the diesel catalyst sector • Increases in demand in industrial sector expected, driven by electronics growth • Jewellery demand outlook improving • Growth in North America and Europe • Recycling rates may fall in China • Russian shipments in
Slide 38: Forecast Palladium Price for the Next 6 Months
Forecast Palladium Price for the Next 6 Months $ per oz 600 500 400 300 J A J O J A J O 2007 2008 www.platinum.matthey.com
Slide 39: Forecast Palladium Price for the Next 6 Months
Forecast Palladium Price for the Next 6 Months $ per oz 600 500 $400 – $575 400 300 J A J O J A J O 2007 2008 www.platinum.matthey.com
Slide 40: Rhodium
JME] Johnson Matthey Rhodium
Slide 41: Rhodium Remains in Deficit
Rhodium Remains in Deficit • Market in deficit again in $ per oz Rhodium price 10,000 2007, by 34,000 oz 9,000 8,000 • Supplies rise by 20,000 7,000 oz to 822,000 oz due to 6,000 sales from stock 5,000 4,000 • Demand climbs to 3,000 856,000 oz 2,000 J A J O J A J O J A • Price hits a series of 2006
Slide 42: Rhodium Demand Climbs by 2.1%
Rhodium Demand Climbs by 2.1% '000 oz 1,000 • Total demand climbs 2.1% to 838 856 856,000 oz 800 • Gross autocatalyst demand 600 rises by 1.9% to 879,000 oz • Autocatalyst recycling rises by 400 7.0 % 200 • Other demand rises by 9.6% 0 2006 2007 Auto Glass Other www.platinum.matthey.com
Slide 43: Rhodium Outlook
Rhodium Outlook • Strong growth in vehicle manufacturing in China, Russia and elsewhere to support rhodium demand • Growth in LCD glass capacity positive for demand • Continued high price to drive thrifting in autocatalyst and glass sectors • Rhodium production hit by South African supply problems b
Slide 44: Platinum 2008
ye Johnson Matthey Platinum 2008 19th May 2008