Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2010 Earnings Presentation
38 slides from Johnson Matthey's earnings presentation, Nov 16, 2010
Slide 1: Platinum Interim Review 2010
16th November 2010 www.platinum.matthey.com Good morning everyone, and welcome to Platinum Interim Review 2010. As usual, I’m going to concentrate mainly on what’s been happening in the Pt and Pd markets, then briefly cover developments in the rhodium market. If anyone would like some more detail on
Slide 2: Platinum
Platinum www.platinum.matthey.com Starting with platinum…..
Slide 3: Platinum: Key features 2010
Platinum: Key features 2010 • Platinum market in surplus by 290,000 oz in 2010 • Supplies forecast to remain almost flat at 6.01 million ounces, just 15,000 oz lower than in 2009 • Gross demand expected to recover strongly as automotive purchases rise by 37% and industrial purchases increase by 51%
Slide 4: Platinum Supply and Demand
Platinum Supply and Demand ‘000 oz 2009 2010 % change Supply 6,025 6,010 (0.2) Gross Demand 6,795 7,560 11.3 Recycling (1,405) (1,840) 31.0 Net Demand 5,390 5,720 6.1 Movement in stocks 635 290 www.platinum.matthey.com Putting this in numerical terms, we forecast a decline in supplies of just 0.2 pe
Slide 5: Platinum Supply down 0.2%
Platinum Supply down 0.2% million oz 7 6.025 6.010 • South African supplies to 6 decrease slightly to 4.59 5 million oz 4 3 • Russian production to grow 2 slightly to 810,000 oz 1 • Supplies from other regions 0 also forecast to grow 2009 2010 marginally to 615,000 oz RSA Russia Others www.platinum.
Slide 6: Gross Platinum Demand to rise by 11.3%
Gross Platinum Demand to rise by million oz 11.3% 7.560 8 6.795 • Total demand forecast to increase 7 by 765,000 oz to 7.56 million oz 6 • Gross autocatalyst demand set to 5 rise by 37% to 2.99 million oz 4 • Industrial demand to soar by 51% 3 to 1.72 million oz 2 1 • Gross jewellery demand to fall
Slide 7: Platinum Demand: Gross Autocatalyst
Platinum Demand: Gross Autocatalyst million oz Changes in gross metal 3.5 2.985 demand by region 3.0 (2010 vs. 2009) : 2.185 2.5 2.0 Europe up 46% 1.5 Japan up 35% 1.0 N. America up 16% 0.5 0.0 China up 35% 2009 2010 RoW up 34% Europe Japan North America China Rest of the World www.platinum.matthey.
Slide 8: Platinum Demand: European Autocatalyst
Platinum Demand: European Autocatalyst Shift back to diesel vehicle production in Europe, stimulating platinum demand 2009 2010 Diesel 38% Diesel 47% Gasoline 62% Gasoline 53% www.platinum.matthey.com Returning to the increase in platinum demand in the European automotive sector, that 46% increase i
Slide 9: Platinum Demand: Gross Jewellery
Platinum Demand: Gross Jewellery million oz Gross demand for jewellery 3.0 2.810 2.420 forecast to fall by 14% in 2010: 2.5 • Chinese demand forecast to fall 2.0 21% to 1.65 million ounces 1.5 • Growth in North America due to 1.0 higher exports and improved 0.5 consumer confidence • European and Jap
Slide 10: Estimated monthly demand in the Chinese jewellery market
Estimated monthly demand in the Chinese jewellery market 250 2500 200 2000 thousand ounces 150 1500 US$/oz 100 1000 50 500 0 0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 www.platinum.matthey.com Monthly average platinum price ($) Looking in more detail at the Chines
Slide 11: Platinum Demand: Industrial
Platinum Demand: Industrial million oz Industrial demand to rise by 51% 2.0 1.720 in 2010: • Chemical industry set to recover on 1.5 the back of new demand by 55% 1.140 • Electrical demand to increase as 1.0 hard disk drive sector picks up • Glass sector saw strong buying in 0.5 H1 2010 as new capac
Slide 12: Platinum Demand: Investment
Platinum Demand: Investment '000 oz Identifiable physical platinum 700 660 investment demand to fall in 600 2010 by 34% to 435,000 oz 500 435 • Surge in investment demand 400 for US-based ETF 300 • Redemptions of ETF positions 200 a feature of the more mature 100 funds 0 2009 2010 • Large bar invest
Slide 13: Platinum Demand: Investment
Platinum Demand: Investment 1,200,000 2,400 1,000,000 2,100 Cumulative Holdings (oz) 800,000 1,800 Price ($/oz) 600,000 1,500 400,000 1,200 200,000 900 0 2007 2008 2009 2010 600 ETFS‐London ETFS‐Australia ZKB JB ETFS‐US Price www.platinum.matthey.com Looking in more detail at the ETF investment mark
Slide 14: Platinum Recycling
Platinum Recycling ‘000 oz 2009 2010 % change Autocatalyst (830) (1,095) 31.9 Electrical (10) (10) 0 Jewellery (565) (735) 30.1 Total Recycling (1,405) (1,840) 31.0 www.platinum.matthey.com As in our May Review, we quantify recycling separately for automotive, electrical and jewellery. Platinum has
Slide 15: Platinum Outlook
Platinum Outlook • Marginal growth in supplies • Potentially slower demand growth in Europe / North America • Higher demand likely in China / Rest of the World region • Positive investment demand in 2011 but lower than this year • Jewellery demand, subject to economic conditions, may soften in 2011
Slide 16: Forecast Platinum Price: next six months
Forecast Platinum Price: what we say for the next six months JM Base Prices (US$ per ounce) 2,400 1st November 2,200 2,000 $1,900 1,800 $1,750 1,600 $1,550 1,400 1,200 1,000 800 600 400 200 0 2008 2009 2010 www.platinum.matthey.com The recent performance of platinum suggests that its price is being
Slide 17: Palladium
Palladium www.platinum.matthey.com Moving on to palladium
Slide 18: Palladium: Key features 2010
Palladium: Key features 2010 • Palladium market forecast to be close to balance in 2010 • Supplies of palladium to remain at similar overall levels to 2009 • Gross demand forecast to increase by 15% to 8.94 million ounces • Autocatalyst demand to strengthen by 27% to 5.15 million ounces • Recycling
Slide 19: Palladium Supply and Demand
Palladium Supply and Demand ‘000 oz 2009 2010 % change Supply 7,100 7,140 0.5 Gross Demand 7,750 8,940 15.4 Recycling (1,430) (1,845) 29.0 Net Demand 6,320 7,095 12.3 Movement in stocks 780 45 www.platinum.matthey.com In numerical terms, we forecast that supplies will remain almost flat at 7.14 mill
Slide 20: Palladium Supply to remain flat
Palladium Supply to remain flat million oz 8 7.140 • Supply to remain almost constant 7.100 7 at 7.14 million oz 6 • S. African supply to strengthen by 5 115,000 oz to 2.49 million oz 4 • Russian production to rise by 3 25,000 oz 2 1 • Sales of Russian state stocks estimated at 1 million oz 0 2009 2
Slide 21: Gross Palladium Demand to rise by 15%
Gross Palladium Demand to rise by 15% million oz 10 8.940 • Gross demand to reach 8.94 9 7.750 million ounces 8 7 • Gross autocatalyst demand 6 to rise by 27% 5 4 • Gross industrial demand to grow 3 by 8% 2 • Gross jewellery demand set to 1 fall by 19% with weaker sales in 0 2009 2010 China Autocata
Slide 22: Palladium Demand: Gross Autocatalyst
Palladium Demand: Gross Autocatalyst million oz Changes in gross metal demand 6 5.150 by region (2010 vs. 2009) : 5 4.050 4 3 China up 36% 2 Japan up 30% 1 N. America up 25% 0 2009 2010 RoW up 27% Europe North America Japan China Europe up 23% Rest of the World www.platinum.matthey.com Looking in a
Slide 23: Pgm choice in European Autocatalysts
Pgm choice in European Autocatalysts Gasoline % 100 90 80 70 60 50 40 30 20 10 0 2008 2009 2010 Palladium Platinum www.platinum.matthey.com Last year’s fillip to palladium demand from national scrappage incentives, which tended to favour small gasoline passenger cars, continued to a limited extent i
Slide 24: Pgm choice in European Autocatalysts
Pgm choice in European Autocatalysts Gasoline Diesel % % 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 2008 2009 2010 2008 2009 2010 Palladium Platinum Palladium Platinum www.platinum.matthey.com However, If we delve a little deeper into the European auto market, which has increa
Slide 25: Palladium Demand: Gross Jewellery
Palladium Demand: Gross Jewellery '000 oz Gross demand for jewellery 900 775 forecast to contract in 2010 by 800 700 630 19%: 600 • Chinese jewellery sector to fall 500 by 29% as uptake of palladium 400 remains limited outside certain 300 regions. 200 100 • European demand set to grow 0 on back of U
Slide 26: Palladium Demand: Industrial and Dental
Palladium Demand: Industrial and Dental million oz Industrial, including dental, 3.0 demand set to rise by 8% 2.490 2.300 • Gross electrical purchasing set 2.5 to increase as components are 2.0 restocked and consumer 1.5 confidence improves 1.0 • Chemical demand set to rise with more positive econom
Slide 27: Palladium Demand: Investment
Palladium Demand: Investment '000 oz 1,000 • Physical palladium investment 670 800 625 demand forecast to reach a 600 new high of 670,000 oz in 400 2010 200 • Strong ETF demand, 0 particularly in North America, -200 2010 2009 seen in 2010 Europe Japan North America Rest of the World www.platinum.mat
Slide 28: Palladium Demand: ETF
Palladium Demand: ETF 2,000,000 700 1,800,000 645 1,600,000 590 Cumulative Holdings (oz) 1,400,000 535 1,200,000 480 Price ($/oz) 1,000,000 425 800,000 370 600,000 315 400,000 260 200,000 205 0 2007 2008 2009 2010 150 ETFS‐London ETFS‐Australia ZKB JB ETFS‐US Price www.platinum.matthey.com And to il
Slide 29: Palladium Recycling
Palladium Recycling ‘000 oz 2009 2010 % change Autocatalyst (965) (1,320) 36.8 Electrical (395) (440) 11.4 Jewellery (70) (85) 21.4 Total Recycling (1,430) (1,845) 29.0 www.platinum.matthey.com Recycling of palladium in the autocatalyst, electrical and jewellery sectors is forecast to increase to 1.
Slide 30: Palladium Outlook
Palladium Outlook • Mined output expected to increase in 2011 • Sales of Russian state stocks remain uncertain but are key to market balance • Gross automotive demand to remain positive • Jewellery demand could decline in China • Physical investment demand expected to remain strong in 2011 www.plati
Slide 31: Forecast Palladium Price: next six months
Forecast Palladium Price: what we say for the next six months JM Base Prices (US$ per ounce) 900 1st November $850 800 700 $710 600 $550 500 400 300 200 100 0 2008 2009 2010 www.platinum.matthey.com So what of the next six months, With steadily increasing automotive and industrial demand, the outloo
Slide 32: Rhodium
Rhodium www.platinum.matthey.com Finally, rhodium…
Slide 33: Rhodium: Key features 2010
Rhodium: Key features 2010 • The rhodium market is forecast to be in a modest surplus of 79,000 oz in 2010 • Supplies of rhodium are set to fall by 7% to 716,000 oz • Gross demand for rhodium is expected to increase by 22% to 876,000 oz in 2010 as automotive and industrial demand recover strongly •
Slide 34: Rhodium Supply and Demand
Rhodium Supply and Demand ‘000 oz 2009 2010 % change Supply 770 716 (7.0) Gross Demand 716 876 22.3 Recycling (187) (239) 27.8 Net Demand 529 637 20.4 Movement in stocks 241 79 www.platinum.matthey.com Demand from the autocatalyst sector is forecast to increase by 17 per cent with improved consumer
Slide 35: Rhodium Supply to fall by 7%
Rhodium Supply to fall by 7% '000 oz 900 770 • South African supplies to 800 716 700 decrease by 51,000 oz 600 • Russian production to remain 500 400 flat at 70,000 oz 300 • North American supplies to 200 fall by 4,000 oz 100 0 • Supplies from other regions 2009 2010 set to fall by 3,000 oz South Af
Slide 36: Gross Rhodium Demand to rise by 22.3%
Gross Rhodium Demand to rise by '000 oz 22.3% 1,000 • Gross autocatalyst demand 876 900 forecast to grow by 17.4% to 800 716 727,000 ounces 700 • Chemical demand to rise by 24% 600 500 • Glass demand to increase by 200% 400 to 57,000 oz 300 200 100 0 2009 2010 Autocatalyst Chemical Electrical Glass
Slide 37: Rhodium Outlook
Rhodium Outlook • Rhodium market likely to remain close to balance • Growth in automotive demand to continue in 2011 particularly in gasoline car markets • Industrial demand could fall as few new glass facilities are built • Consumer confidence is key to rhodium in the chemical and electrical sector
Slide 38: Thank you and questions
16th November 2010 www.platinum.matthey.com Thank you and we’ll now take some questions. 38