Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2006/07 Earnings Presentation
36 slides from Johnson Matthey's earnings presentation, Nov 22, 2006
Slide 1: Presentation of Results for the half year ended 30th September 2006
Johnson Matthey Presentation of Results for the half year ended 30th September 2006 22nd November 2006
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
Johnson Matthey Introduction Neil Carson Chief Executive
Slide 4: Business Developments
Business Developments Strong first half Focus on delivery of organic growth Increase in sales of diesel catalysts this year CSFs HDD Environmental concerns and energy prices drive long term growth Major investment in capex and working capital. ROA is key performance measure
Slide 5: Financial Review
Johnson Matthey Financial Review John Sheldrick Group Finance Director
Slide 6: Summary Results
Summary Results 1H 1H 2006 2005 % £m £m change Revenue 3,012 2,283 +32 Sales excluding precious metals 744 637 +17 Operating profit 126.8 114.5 +11 Profit before tax 115.1 106.4 +8 Total earnings per share 38.3p 35.2p +9 Dividend per share 9.9p 9.1p+9
Slide 7: Operating Profit
Operating Profit 1H 1H 1H 2006 at 1H 2005 2006 2005 exchange rates* £m £m £m % % 71.5 +10 Catalysts 70.8 65.2 37.3 +22 +9 17.1 +6 Precious Metal Products 37.2 30.6 10.1 -6 +22 (8.4) Pharmaceutical Materials 17.0 16.2 +5 127.6 +11 Ceramics 10.2 10.8 -6 * excluding South African rand Corporate (8.4) (
Slide 8: Exchange Rates
Exchange Rates $/£ 2.0 1.9 Average $1.855/£ Average $1.820/£ Average 1.8 $1.750/£ 1.7 1.6 March 2005 September 2005 March 2006 September 2006
Slide 9: Return on Sales
Return on Sales Excluding Precious Metals Sales excl. PM’s ROS 1H 1H 1H 1H 2006 2005Growth 2006 2005 £m£m % % % Catalysts 458 375+22 15.5 17.4 Precious Metal Products 134117 +14 27.7 26.1 Pharmaceutical Materials 6155 +12 27.8 29.6 Ceramics 90 90- 11.3 12.0 Group 744 637 +17 17.1 18.0
Slide 10: Substrate Costs
Substrate Costs Autocatalyst £3 - £10 CSF £100 - £120 HDD Flow through £60 Filter system £300
Slide 11: Interest
Interest 1H 1H 2006 2005 £m £m Interest payable (17.2) (15.7) Interest receivable 5.0 8.0 (12.2) (7.7)
Slide 12: Net Cash Flow
Net Cash Flow 1H 1H 2006 2005 £m £m Operating profit 126.8 114.5 Depreciation and amortisation 37.5 33.2 Tax paid ) (41.9 6.4 Working capital / other (71.5) (27.6) Cash flow from operations 50.9 126.5 Interest / dividends (59.1) (48.5) Net capital investment (55.9) (46.5) Acquisitions / disposals (7
Slide 13: Capital
Capital Sep 06 Mar 06 £m £m Net debt 478 412 Equity 1,041 1045 Capital employed 1,520 1,457 Gearing 46% 39% (net debt / equity)
Slide 14: Operating Review
Johnson Matthey Operating Review Neil Carson Chief Executive
Slide 15: Catalysts Division
Catalysts Division Profits up 9% Both ECT and PCT achieve good growth Growth at actual exchange rates £m £m +48% +9% 1,100 996 1,000 90 900 800 70.8 75 65.2 700 675 60 600 500 45 400 300 30 200 15 100 0 1H 1H 1H 1H 0 2005/06 2006/07 2005/06 2006/07 Sales Operating Profit
Slide 16: Light Vehicle Sales and Production
Light Vehicle Sales and Production Half year to 30th September 2006 2005 change millions millions % North America Sales 10.2 10.7 -4.7% Production 7.5 7.8 -3.8% Europe Sales 9.2 9.3 -1.1% Production 9.2 9.3 -1.1% Asia Sales 7.6 7.2 +5.6% Production 11.9 10.9 +9.2% Global Sales 32.1 32.1 - Production
Slide 17: Environmental Catalysts and Technologies
Environmental Catalysts and Technologies Good top line growth Significant increase in sales of CSFs in Europe Further weakness in North American market Good growth in Asia Overall strong growth in Europe and Asia more than offsets weakness in North America
Slide 18: Environmental Catalysts and Technologies: Developments in Diesel Business
Environmental Catalysts and Technologies Developments in Diesel Business Early adoption of 2010 regulations in Europe drives growth in CSFs New sales of diesel catalysts for pick-up trucks in US this year HDD sales now starting to grow in Europe. Will start in US in January Significant pre-b
Slide 19: HDD on-road regulation development
Environmental Catalysts and Technologies HDD on-road regulation development New Models All Models 0.20 Europe Japan 2003 Euro 4 01-Oct-05 01-Oct-06 0.18 Euro 5 01-Oct-08 01-Oct-09 0.16 United States US2007 01-Jan-07 01-Jan-07 0.14 US2010 01-Jan-10 01-Jan-10 US 2002 3/4 Japan PM (g/kW-hr) 0.12 EU III
Slide 20: Environmental Catalysts and Technologies: Investment
Environmental Catalysts and Technologies Investment Extension to CSF facility in Royston Completion of HDD plant in US Further investment in Japan New factories in South Korea and Russian Federation
Slide 21: Process Catalysts and Technologies
Process Catalysts and Technologies Good growth in sales and operating profits AMOG business well ahead. Sales of syngas catalysts strong, particularly for methanol production Good growth in sponge nickel catalysts Increasing sales of catalysts for fine chemicals and pharmaceuticals Good co
Slide 22: Process Catalysts and Technologies: Developments
Process Catalysts and Technologies Developments Increasing activity in hydrocarbons to products technologies Low carbon initiatives should benefit future growth Research Chemicals benefits from new joint venture in China
Slide 23: Fuel Cells
Fuel Cells Increased interest in Direct Methanol Fuel Cells (DMFC) Growing sales of MEAs for portable DMFC applications in Europe Continuing to work on consumer electronics applications particularly in Asia
Slide 24: Precious Metal Products
Precious Metal Products Profits up 22% Both marketing and manufacturing businesses performed well £m Growth at actual exchange rates £m +27% +22% 2,000 1,861 37.2 40 1,750 35 1,460 30.6 1,500 30 1,250 25 1,000 20 750 15 500 10 250 5 0 1H 1H 1H 1H 0 2005/06 2006/07 2005/06 2006/07 Sales Operating
Slide 25: Platinum and Palladium Prices
Platinum and Palladium Prices US$/oz 1,400 1,200 1,000 800 600 400 200 0 March 2005 September 2005 March 2006 September 2006 Platinum Palladium
Slide 26: Rhodium Price
Rhodium Price US$/oz 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 March 2005 September 2005 March 2006 September 2006 Rhodium
Slide 27: Precious Metal Products
Precious Metal Products Strong growth in marketing and distribution business Good growth in pgm fabrication business, particularly in US Pgm refining demand strong. Focus on high grade materials Colour Technologies continues to perform well
Slide 28: Pharmaceutical Materials
Pharmaceutical Materials Profits up 5% Recovery in US businesses Growth at actual exchange rates £m £m +13% +5% 70 17.0 18 65 16.2 60 58 16 14 50 12 40 10 30 8 6 20 4 10 2 0 1H 1H 1H 1H 0 2005/06 2006/07 2005/06 2006/07 Sales Operating Profit
Slide 29: Pharmaceutical Materials: US Operations
Pharmaceutical Materials US Operations Good growth in platinum anticancer compounds Encouraging clinical trial results for Satraplatin® Second half to benefit from sales of Adderall® Barr’s generic Adderall XR® product to be launched in April 2009
Slide 30: Pharmaceutical Materials: Europe
Pharmaceutical Materials Europe Profits slightly ahead of last year Sales of bulk opiates below first half of last year but expected to recover in second half Small acquisition of UK poppy growing operation
Slide 31: Ceramics
Ceramics Sales unchanged Profits down 6% £m Growth at actual exchange rates £m -6% 100 12 90 90 10.8 10.2 10 75 8 50 6 4 25 2 0 1H 1H 1H 1H 0 2005/06 2006/07 2005/06 2006/07 Sales Operating Profit
Slide 32: Ceramics
Ceramics Margins slightly down but remain good Impact of increased energy costs Investment in new capacity in India Continued strong cash generation
Slide 33: Outlook: Catalysts
Outlook Catalysts Continued strong demand for light duty diesel products in Europe Further growth in Asia HDD legislation now in force in Europe and to start in US in January 2007 Pre-buying of trucks in 2006 will impact vehicle sales in 2007 however JM will still see good growth We expect
Slide 34: Outlook: Other Divisions
Outlook Other Divisions Strong pgm prices and good demand will benefit Precious Metal Products Recovery in Pharmaceutical Materials expected to continue with further growth in the US Ceramics Division’s performance in second half likely to be below last year. Continued good cash generation
Slide 35: Outlook: Group Summary
Outlook Group Summary Overall, we expect to achieve further good growth in sales and profits in the second half Compared with the second half of last year exchange translation likely to be negative Despite adverse exchange translation earnings growth should be slightly stronger in the second h
Slide 36: Johnson Matthey
Johnson Matthey