Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — FY2023 Earnings Presentation
44 slides from Johnson Matthey's earnings presentation, May 25, 2023
Slide 1: Presentation of results for the year ended 31st March 2023
Presentation of results for the year ended 31st March 2023 25th May 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: Today's agenda
Today’s agenda 01 Introduction 02 Financial results 03 Strategic progress 04 Q&A 3
Slide 4: Continued progress on strategic execution
01. Introduction 02. Financial results 03. Strategic update Continued progress on strategic execution Results Delivering on Transforming JM in line with our commitments to drive growth expectations Net zero transition driving growth 4
Slide 5: We have clear milestones…
01. Introduction 02. Financial results 03. Strategic update We have clear milestones… End of End of 2022/23 2023/24 Win at least 2 large scale strategic partnerships in Hydrogen Technologies Customers Win targeted Euro 7 business and deliver on £4bn+ trajectory for Clean Air Win >10 additional large
Slide 6: …and we have made good progress this year
01. Introduction 02. Financial results 03. Strategic update …and we have made good progress this year Status Hydrogen Technologies: two strategic partnerships – Plug Power and Hystar Customers Clean Air: winning targeted Euro 7 business and on track to deliver £4bn+ cash Won 5 additional large scale
Slide 7: Today's agenda
Today’s agenda 01 Introduction 02 Financial results 03 Strategic progress 04 Q&A 7
Slide 8: Results in line with expectations
01. Introduction 02. Financial results 03. Strategic update Results in line with expectations Delivered stronger second half Underlying operating Earnings per share Sales up profit down 6% 178.6p 21% down 16% Net debt of Net debt to EBITDA Ordinary dividend of £1.0bn 1.6 times 77.0p per share, stabl
Slide 9: Group sales up 6% – strong performance in growth businesses
01. Introduction 02. Financial results 03. Strategic update Group sales up 6% – strong performance in growth businesses Sales for year ended 31st March % change, 2023 £m 20221 £m constant FX rates Clean Air 2,644 2,457 +2 PGM Services 570 587 -8 Catalyst Technologies 560 454 +17 Hydrogen Technologie
Slide 10: Profit reflects lower PGM prices and volumes
01. Introduction 02. Financial results 03. Strategic update Profit reflects lower PGM prices and volumes Inflation recovered by pricing and Mainly auto related transformation savings volumes in PGM Services and Clean Air £45m (£55m) £38m £96m £553m (£65m) £465m (£147m) Note: PGM – platinum group met
Slide 11: Underlying results
01. Introduction 02. Financial results 03. Strategic update Underlying results Underlying results for year ended 31st March¹ % change, 2023 £m 2022 £m % change constant FX rates Sales excluding precious metals (sales) 4,201 3,778 +11 +6 Operating profit 465 553 -16 -21 Finance charges (61) (60) Prof
Slide 12: Reported results
01. Introduction 02. Financial results 03. Strategic update Reported results Year ended 31st March 2023 £m 2022 £m Underlying operating profit 465 553 Profit on disposal of businesses 12 106 Major impairment and restructuring charges1 (41) (440) Amortisation of acquired intangibles (5) (6) Gain and
Slide 13: Free cash flow and net debt
01. Introduction 02. Financial results 03. Strategic update Free cash flow and net debt Free cash flow from continuing operations for year ended 31st March (£m) 2023 2022 Underlying operating profit from continuing operations 465 553 Depreciation and amortisation¹ 176 173 – Precious metal working ca
Slide 14: Clean Air
01. Introduction 02. Financial results 03. Strategic update Clean Air Underlying results for 2023 2022 % change, year ended 31st March constant £m £m FX rates Light duty diesel 1,075 1,005 +4 Increased momentum and inflation recovery through Light duty gasoline 599 574 -1 the year Heavy duty diesel
Slide 15: PGM Services
01. Introduction 02. Financial results 03. Strategic update PGM Services Underlying results for 2023 2022 % change, year ended 31st March constant £m £m FX rates Lower PGM prices and Total sales 570 587 -8 refinery volumes Operating profit 257 308 -21 Margin 45.1% 52.5% Sales down 8% against Operati
Slide 16: Catalyst Technologies
01. Introduction 02. Financial results 03. Strategic update Catalyst Underlying results for 2023 2022 % change, Technologies year ended 31st March £m £m constant FX rates Strong sales growth Total sales 560 454 +17 Operating profit 51 50 -2 Margin 9.1% 11.0% Sales increased 17% Operating profit in l
Slide 17: Hydrogen Technologies
01. Introduction 02. Financial results 03. Strategic update Hydrogen Underlying results for 2023 2022 % change, Technologies year ended 31st March £m £m constant FX rates High growth and investing Total sales 55 25 +112 to meet customer demand Operating loss (45) (33) n/a Margin n/a n/a n/a Sales mo
Slide 18: Transforming JM and delivering efficiencies
01. Introduction 02. Financial results 03. Strategic update Transforming JM and delivering efficiencies Examples of structural savings in 2022/23: Procurement Removing Our priorities management layers Price negotiations, raw 1. Further consolidation of Clean materials substitution Removed 170 Air ma
Slide 19: Cost inflation
01. Introduction 02. Financial results 03. Strategic update Cost inflation 2022/23 c.65% of cost inflation costs and inflation by category¹ recovered in 2022/23³ c.£150m Raw materials inflation Majority of raw materials 40% are pass-through costs +6% Labour c.£80m 24% £2.6bn Includes one-off payment
Slide 20: Investing with discipline in key growth areas
01. Introduction 02. Financial results 03. Strategic update Investing with discipline in key c.£1.1bn Hydrogen Larger upfront scale up growth areas Technologies investments; modular capacity additions to scale with demand Catalyst Capital light business with low near-term investment needs but 2022/2
Slide 21: Outlook for year ending 31st March 2024
01. Introduction 02. Financial results 03. Strategic update Outlook for year ending 31st March 2024 Group Expect at least mid single digit growth in operating PGM prices: performance at constant PGM prices and constant currency. c.£50m¹ adverse impact This is underpinned by transformation benefits o
Slide 22: Today's agenda
Today’s agenda 01 Introduction 02 Financial results 03 Strategic progress 04 Q&A 22
Slide 23: Catalysing the net zero transition
01. Introduction 02. Financial results 03. Strategic update Clean Air Catalyst Hydrogen Technologies Technologies Catalysing the Leading in #1 in Market leader net zero transition autocatalyst syngas-based in performance markets chemicals and components for fuels technology fuel cells and electrolys
Slide 24: Structural growth markets accelerating
01. Introduction 02. Financial results 03. Strategic update Structural growth markets accelerating Catalyst Technologies and Hydrogen Technologies addressable markets are scaling rapidly…. US Europe China India UK Inflation Reduction REPowerEU 30GW green 50% of India’s to produce 10GW Act: c.US$370b
Slide 25: Portfolio transitioning and growing over time
01. Introduction 02. Financial results 03. Strategic update Portfolio Illustrative chart transitioning and Development of underlying operating profit growing over time • Early sales from • Hydrogen Technologies and growth businesses Catalyst Technologies driving growth • Clean Air volume recovery Ac
Slide 26: Catalyst Technologies: strong ability to win in a net zero world
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Catalyst Technologies: strong ability to win in a net zero world Science and technology expertise developed over decades A strong business – focused on Proven technology deployed in pioneering projects driving growth •
Slide 27: Creating a stronger platform for growth
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Creating a stronger Strong focus on improving platform for growth operating margin Returning Pricing initiatives to mid-teens • Surcharges to recover cost inflation • Driving value-based pricing in key segments • Focus
Slide 28: Won five projects worth c.£120m sales
01. Introduction 02. Financial results 03. Strategic update Catalyst Technologies Won five projects worth c.£120m sales¹ Low carbon hydrogen (LCH™) Within the first 5 years Equinor and Linde for H2H Saltend – one of 1 the UK’s largest low carbon hydrogen projects Licensing c.£10m A large scale low c
Slide 29: Hydrogen Technologies: strong ability to win in a net zero world
01. Introduction 02. Financial results 03. Strategic update Hydrogen Technologies Hydrogen Technologies: strong ability to win in a net zero world Strong customer base – adding strategic partners Established hydrogen fuel cell business Expertise in PGM chemistry and catalysis Existing manufacturing
Slide 30: Investing in up to 15GW of capacity to support customer demand
01. Introduction 02. Financial results 03. Strategic update Hydrogen Technologies Investing in up to 15GW of capacity to support customer demand Partnerships underpin sales of more than £200m by the end of 2024/25 Anticipate this business to be 2026 and breakeven in 2025/26 beyond 2025 2023 2024 202
Slide 31: PGM Services is a key enabler for our growth businesses
01. Introduction 02. Financial results 03. Strategic update PGM Services PGM Services is a key enabler Market supply of PGM volumes1 for our growth businesses excluding closed loop supply JM is the #1 recycler of PGMs – c.2x capacity of nearest competitor Market demand will be sustained over the lon
Slide 32: Investing in the capacity, resilience, efficiency and long-term sustainability of our assets
01. Introduction 02. Financial results 03. Strategic update PGM Services Investing in the capacity, resilience, efficiency and long-term sustainability of our assets Milestones Fuel cells catalyst Project China refining capability capacity Completion expected Status Completed end of 2023/24 Rational
Slide 33: Clean Air: on track to deliver at least £4bn of cash by 2030/31
01. Introduction 02. Financial results 03. Strategic update Clean Air Clean Air: on track to deliver at least £4bn of cash by 2030/31² Cash breakdown (£bn) – faster electrification¹ Benefiting from tighter emissions legislation Reduction in Underlying working capital EBIT Winning business globally -
Slide 34: Clean Air: driving competitiveness through efficiency measures
01. Introduction 02. Financial results 03. Strategic update Clean Air Clean Air: driving competitiveness through efficiency measures Optimisation Greater streamlining of Driving significant of manufacturing SG&A, fixed overheads improvement in footprint, closing or procurement exiting 4 out of 16 si
Slide 35: Transforming JM
01. Introduction 02. Financial results 03. Strategic update People Transforming JM People growth Customer focus Simplification Development Commercial capability Cost discipline Recognition Engineering, capital projects Streamlining processes Performance management Manufacturing Clear accountabilitie
Slide 36: Sustainability is at the heart of everything we do
01. Introduction 02. Financial results 03. Strategic update Sustainability Sustainability is Key progress in the year at the heart of Already achieved targeted c.10% reduction in Scope everything we do 1+2 CO2e emissions¹ 13% in 2022/23 Complete Helping customers reduce CO2e emissions by >1mt p.a. t
Slide 37: Focused on execution
01. Introduction 02. Financial results 03. Strategic update Net zero transition driving growth 01 Results in line with expectations Focused on 02 Delivering on our commitments execution 03 Transforming JM to drive growth 37
Slide 38: Today's agenda
Today’s agenda 01 Introduction 02 Financial results 03 Strategic progress 04 Q&A 38
Slide 39: Q&A
Q&A 39
Slide 40: Appendix
APPENDIX 40
Slide 41: Group operating profit
Appendix Group operating profit Underlying operating profit for full year ended 31st March % change, 2023 £m 20221 £m constant FX rates Clean Air 230 302 -28 PGM Services 257 308 -21 Catalyst Technologies 51 50 -2 Hydrogen Technologies (45) (33) n/a Value Businesses² 40 12 n/a Eliminations (68) (86)
Slide 42: Net debt to EBITDA 1.6 times
Appendix Net debt to EBITDA 1.6 times¹ Continuing operations £m £m Net debt at the beginning of the year (856) Free cash flow 74 Dividends (141) Share buyback (45) Movement in net debt (112) Lease adjustments² 1 Net debt before FX and other movements (967) FX and other non-cash movements³ (56) Net d
Slide 43: 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 01/04/2021 01/04/2022 01/04/2023 Price (US$ per troy oz) 2021/22 average 2022/23 average Current (22nd May 2023) Platinu
Slide 44: Financial guidance summary
Appendix Financial guidance summary Group underlying operating profit growth¹: • 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 High single digit growth in Catalyst Technologies over the medium-term, with mar