Johnson Matthey PLC · LSE:JMAT

Johnson Matthey — FY2007 Earnings Presentation

42 slides from Johnson Matthey's earnings presentation, Jun 7, 2007

  1. Slide 1: Presentation of Results for the year ended 31st March 2007

     Johnson Matthey Presentation of Results for the year ended 31st March 2007 7th June 2007

  2. 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

  3. Slide 3: Introduction

     Johnson Matthey Introduction Neil Carson Chief Executive

  4. Slide 4: 2006/07 Highlights

    2006/07 Highlights  Strong growth in sales and operating profit  Underlying earnings per share up 12%  Environmental concerns and energy prices drive long term growth  New divisions from 1st April 2007 

  5. Slide 5: Financial Review

     Johnson Matthey Financial Review John Sheldrick Group Finance Director

  6. Slide 6: Summary Results

    Summary Results 2007 2006 £m £m% Revenue 6,152 4,574+34 Sales excluding precious metals 1,454 1,159+25 Profit before tax 226.5 191.5 +18 Total earnings per share 96.9p 70.8p +37 Before one-off items (including discontinued operations’ results): Profit before tax 242.6 219.8 +10 Earnings per share 81

  7. Slide 7: Operating Profit

    Operating Profit 2007 2006 2007 at 2006 exchange rates Continuing Businesses £m £m % £m % 152.7 +14 Catalysts 148.8 134.2 87.1 +40 +11 36.2 +7 Precious Metal Products 85.3 62.2 (17.2) +37 258.8 +21 Pharmaceutical Materials 35.5 33.8 +5 Corporate (17.2) (16.8) Operating profit 252.4 213.4 +18 

  8. Slide 8: US Dollar Exchange Rate

    $/£ US Dollar Exchange Rate 2.1 2.0 Average $1.90/£ 1.9 Average $1.79/£ 1.8 1.7 1.6 March 2005 March 2006 March 2007 

  9. Slide 9: Return on Sales

    Return on Sales Excluding Precious Metals ROS Sales excl. PMs 2007 2006 2007 2006 Growth Continuing % Businesses % £m £m % 14.4 Catalysts 17.1 1,036 786 +32 29.4 Metal Products Precious 25.3 290 245 +18 27.6 Pharmaceutical Materials 26.617.4 18.4129 127 +1 1,454 1,159 +25 

  10. Slide 10: Substrate Costs

    Substrate Costs Autocatalyst £3 - £10 CSF £100 - £120 HDD Flow through £60 Filter system £300 

  11. Slide 11: Taxation

    Taxation 2007 2006 £m £m Total tax 71.5 62.5 Ceramics Division (5.7) (7.8) Tax on profit on sale (1.1)- Income tax expense 64.7 54.7 Underlying tax rate 28.6%1 29.3%2 1 Excl. Ceramics 2 Incl. Ceramics Division Division 

  12. Slide 12: Capital Expenditure to Depreciation

    Capital Expenditure to Depreciation Year to 31st March 2007 Capital Capex/ Expenditure DepreciationDepreciation £m £m(times) Catalysts 91.5 46.0 2.0 Precious Metal Products 11.2 13.4 0.8 Pharmaceutical Materials 10.7 10.5 1.0 Discontinued / Other 6.4 7.6 0.8 Total Group 119.8 77.5 1.5 

  13. Slide 13: Change in Net Debt

    Change in Net Debt 2007 2006 £m £m Cash flow from operations 159 212 Interest / dividends (92) (74) Capex / asset sales (122) (115) Acquisitions / disposals 119 (24) Shares bought (50) (26) Net cash flow 14 (27) Debt disposed / acquired 19(1) Exchange 14 (13) Change in net debt 47 (42) 

  14. Slide 14: Return on Investment

    Return on Investment 2007 2006 £m £m Operating profit 252 235 1 2 Average assets: Equity 1,061 987 Net debt 388 391 Total investment 1,450 1,378 Pre-tax ROA 17.4% 17.0% Return on invested capital 12.4% 12.0% WACC 8% 8% 1 Continuing businesses  2 Including Ceramics but before one-off items

  15. Slide 15: Capital

    Capital Mar 07 Mar 06 £m £m Net debt 365 412 Equity 1,078 1,045 Capital employed 1,443 1,457 Gearing 33.8% 39.4% (net debt / equity) 

  16. Slide 16: Operating Review

     Johnson Matthey Operating Review Neil Carson Chief Executive

  17. Slide 17: Catalysts Division

    Catalysts Division  Profits up 11%  Both ECT and PCT perform well Growth at actual exchange rates £m +11% £m +48% 2,500 180 2,250 2,193 148.8 2,000 150 134.2 1,750 120 1,477 1,500 1,250 90 1,000 750 60 500 30 250 0 0 2006 2007 2006 2007 Sales Operating Profit 

  18. Slide 18: Estimated Light Vehicle Sales and Production

    Estimated Light Vehicle Sales and Production Year to 31st March 2007 2006 change North America millions millions % Sales 19.3 19.7 -2.0% Production 14.9 15.9 -6.3% Europe Sales 21.3 20.6 +3.4% Production 21.1 20.7 +1.9% Asia Sales 16.4 15.2 +7.9% Production 25.4 23.2 +9.5% Global Sales 66.3 64.5 +2.

  19. Slide 19: Environmental Catalysts and Technologies

    Environmental Catalysts and Technologies  Strong top line growth  Good growth in Europe, particularly in diesel catalysts and CSFs  Good autocatalyst growth in Asia, particularly in China and Japan  North America benefits from new diesel market  Good contribution from HDD sales to OEMs  Furthe

  20. Slide 20: Environmental Catalysts and Technologies: Light Duty Diesel

    Environmental Catalysts and Technologies Light Duty Diesel  Diesel cars now more than 50% of European market  All diesel vehicles in Europe require a diesel oxidation catalyst. Johnson Matthey has leading share  Our major customers are increasingly fitting CSFs ahead of legislation  Additional C

  21. Slide 21: Environmental Catalysts and Technologies: Light Duty Vehicles in Asia

    Environmental Catalysts and Technologies Light Duty Vehicles in Asia  Asia will provide most of growth in light duty vehicle production  Capacity increased in Japan. Johnson Matthey gaining share  New plant in South Korea opens this year  Good growth in China. Leading share of Indian and Malaysi

  22. Slide 22: HDD on-road regulation development

    Environmental Catalysts and Technologies HDD on-road regulation development New models All models Europe Euro IV 01-Oct-05 01-Oct-06 Euro V 01-Oct-08 01-Oct-09 United States US2007 01-Jan-07 01-Jan-07 US2010 01-Jan-10 01-Jan-10 Japan Short Term 2.5-12t 01-Oct-03 01-Sep-04 12t+ 01-Oct-04 01-Sep-05 Ne

  23. Slide 23: HDD Market Size Forecast

    HDD Market Size Forecast All Heavy Duty Vehicles Sold ‘000 vehicles 600 Total 959 Total 1,021 Total 864 Total 937 500 400 300 200 100 0 2005 2006 2007 2008 North America Europe Japan Europe and Japan > 6 tonnes  US classes 4-7 and 8 Source: JD Power Global Commercial Vehicle Forecast

  24. Slide 24: Heavy Duty Diesel Summary

    Environmental Catalysts and Technologies Heavy Duty Diesel Summary  Market size $700 million p.a. (ex pms) in 2008  Further tightening of legislation in Europe, US and Japan by 2010  Legislation expected in China, India, South Korea and Brazil  Non road regulation starts in 2011  Projected mark

  25. Slide 25: Process Catalysts and Technologies

    Process Catalysts and Technologies  Good growth in sales and profits  AMOG well ahead. Good demand from methanol producers  Very strong start for DPT. Several major contracts won in China  Fine chemical and catalyst businesses performed well 

  26. Slide 26: Process Catalysts: Future Business Drivers

    Process Catalysts and Technologies Future Business Drivers High oil price brings 3 important new drivers to JM’s PCT business • More heavy / dirty crude will be processed • Expensive oil will be used to make high value products. Gas and coal will increasingly be used to make chemicals and fuels • Ef

  27. Slide 27: Process Catalysts: Future Business Drivers

    Process Catalysts and Technologies Future Business Drivers  Heavy / dirty oil requires more hydrogen to crack. Contaminants removed by high tech absorbents  Syngas is first step in gas to products. DPT is a leader in process design and licensing  CO2 is new pollutant 

  28. Slide 28: Fuel Cells

    Fuel Cells  Fuel Cells will also benefit from interest in low carbon and low emission technologies  Major car companies announce fuel cell cars  Good growth in sales of membrane electrode assemblies for direct methanol fuel cells  Net expense reduced by £0.8 million to £7.3 million 

  29. Slide 29: Precious Metal Products

    Precious Metal Products  Profits up 37%  Buoyant pgm markets and good growth in manufacturing businesses £m Growth at actual exchange rates £m +29% +37% 4,200 100 3,824 85.3 3,500 80 2,962 2,800 62.2 60 2,100 40 1,400 700 20 0 0 2006 2007 2006 2007 Sales Operating Profit 

  30. Slide 30: Platinum and Palladium Prices

    Platinum and Palladium Prices US$/oz 1,400 1,200 1,000 800 600 400 200 0 March March March 2005 2006 2007 Platinum Palladium 

  31. Slide 31: Rhodium Price

    Rhodium Price US$/oz 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 March 2005 March 2006 March 2007 Rhodium 

  32. Slide 32: Precious Metal Products

    Precious Metal Products  Strong growth in marketing and distribution business  Second half of 2006/07 benefited from profits on minor metals  Market conditions remain favourable  Further growth expected in 2007/08 primarily in the first half 

  33. Slide 33: Precious Metal Products: Manufacturing Businesses

    Precious Metal Products Manufacturing Businesses  Good growth in pgm fabrication businesses, particularly in medical products in the US  New catalyst market for abatement of N2O (a powerful greenhouse gas)  Good progress in pgm refining  Continued growth in Colour Technologies business 

  34. Slide 34: Pharmaceutical Materials

    Pharmaceutical Materials  Profits up 5%  Good recovery in US operations £m Growth at actual exchange rates £m +1% +5% 150 40 134 135 35.5 33.8 120 30 90 20 60 10 30 0 0 2006 2007 2006 2007 Sales Operating Profit 

  35. Slide 35: Pharmaceutical Materials: Operations

    Pharmaceutical Materials Operations  Good recovery in US  Growth in US sales of APIs for controlled drugs (ADDERALL®, methylphenidate and specialist opiates)  Good recovery in US contract research business  Bulk opiate sales in Europe below last year  Specialist opiate sales in Europe continue

  36. Slide 36: Pharmaceutical Materials: Future Prospects

    Pharmaceutical Materials Future Prospects  Continued growth in generic pain killers  Market for platinum anticancer drugs continues to expand  NDA filed for Satraplatin. If successful, GPC Biotech hope to launch in 2007  Launch of generic ADDERALL XR® agreed for April 2009  Several new prostagl

  37. Slide 37: New Divisional Structure

    New Divisional Structure From 1st April 2007 Johnson Matthey Environmental Precious Metal Products Fine Chemicals & Technologies Division Division Catalysts Division Emission Control Platinum Marketing and Pharmaceutical Materials Technologies (ECT) Distribution Catalysts and Chemicals Process Techn

  38. Slide 38: New Divisions Restated Sales and Operating Profit

    New Divisions Restated Sales and Operating Profit 2007 Sales Operating Revenue ex. PMS Profit £m £m £m Environmental Technologies 1,864 896 120.1 Precious Metal Products 3,824 290 85.3 Fine Chemicals & Catalysts 463 268 64.2 Corporate - - (17.2) Continuing businesses 6,152 1,454 252.4 

  39. Slide 39: Outlook: Environmental Technologies

    Outlook Environmental Technologies  Further strong growth in sales ex pms  Full year benefit of HDD sales to OEMs  Continued growth in diesel products in Europe and autocatalysts in Asia  Overall, we expect ECT to achieve double digit growth in sales and operating profits in 2007/08  Process Te

  40. Slide 40: Outlook: Other Divisions

    Outlook Other Divisions  Market conditions for pgms remain favourable  PMP should achieve further growth in 2007/08 although not as strong as 2006/07  Fine Chemicals & Catalysts expected to achieve steady growth in 2007/08  US dollar weakness may cause adverse exchange translation 

  41. Slide 41: Outlook: Summary

    Outlook Summary  Overall we expect the continuing businesses to perform well in 2007/08 with very good growth in PBT  Growth in EPS will be 4 to 5% lower than PBT growth due to dilutive effect of sale of Ceramics  Medium term outlook remains very encouraging with substantial growth opportunities

  42. Slide 42: Johnson Matthey

     Johnson Matthey

Johnson Matthey — FY2007 Earnings Presentation on 6ix