Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2009/10 Earnings Presentation
39 slides from Johnson Matthey's earnings presentation, Nov 25, 2009
Slide 1: Presentation of Results for the half year ended 30th September 2009
Presentation of Results for the half year ended 30th September 2009 25th November 2009
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
Introduction Neil Carson Chief Executive
Slide 4: Highlights
Highlights • Sales (ex pms) down 5% • Underlying operating profit down 25% • Results adversely impacted by: • Fall in global vehicle production • Lower pgm prices • Balance sheet remains strong • Group well positioned to benefit from recovery in markets • Long term business drivers remain firmly in
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Summary Results
Summary Results 1H 1H 2009 2008 % £m £m change Revenue 3,577 4,355 -18 Sales excluding precious metals 883 924 -5 Profit before tax 109.5 140.3 -22 Total earnings per share 37.4p 46.8p -20 Underlying*: Profit before tax 114.4 144.9 -21 Earnings per share 39.1p 48.4p -19 Dividend per share 11.1p 11.1
Slide 7: Underlying Operating Profit / Exchange
Underlying Operating Profit / Exchange 1H 1H 2008 at 2009 Growth at 2009 2008 exchange constant Change rates rates £m £m % £m % Environmental 54.5 77.8 -30 84.6 -36 Technologies Precious Metal 49.2 76.7 -36 84.0 -41 Products Fine Chemicals 30.7 19.9 +54 21.4 +43 Corporate (10.5) (10.1) (10.2) Group
Slide 8: Cost Base
Cost Base • Early action taken to reduce costs • Headcount down by 550 people • First half cost savings of ca. £15m • Variable costs approx. 60% of total costs (ex pms) 8
Slide 9: Return on Sales
Return on Sales Excluding Precious Metals Sales ex pms ROS 1H 1H 1H 1H 2009 2008 Growth 2009 2008 £m £m % % % Environmental 564 596 -5 9.7 13.1 Technologies Precious Metal Products 206 236 -13 23.9 32.5 Fine Chemicals 113 93 +22 27.2 21.4 Group 883 924 -5 14.0 17.8 9
Slide 10: Pgm Prices
Pgm Prices US$/oz Platinum 2,400 • At current prices (Pt $1,450/oz, 2,000 1,600 Pd $375/oz) a 10% change in the Average Average $1,795 Average 1,200 basket of pgms can impact Average $1,293 $1,655 $952 Average 800 $1,208 commission / distribution income by 400 approx £3.0m p.a. (but volatility also
Slide 11: Exchange Rates
Exchange Rates $/£ 2.3 • Average rate in 1H 2009/10 was $1.60/£ 2.1 1.9 Average Average Average Average $2.00/£ $2.01/£ • Each 1 cent change in the average US 1.7 $1.93/£ Average $1.60/£ $1.50/£ dollar / sterling rate affects operating 1.5 profit by £0.4m in a full year 1.3 Mar-07 Sep-07 Mar-08 Sep-
Slide 12: Interest and Taxation
Interest and Taxation 1H 1H 2009 2008 £m £m Net finance costs (interest) (10.2) (19.9) Income tax expense (30.7) (41.3) Underlying tax rate 28.0% 29.4% (underlying tax / underlying profit before tax) • Reduction in tax rate maintainable 12
Slide 13: Net Cash Flow
Net Cash Flow 1H 1H 2009 2008 £m £m Operating profit 119 160 Depreciation and amortisation 61 49 Tax received / (paid) 5 (67) Working capital / other (107) 15 Cash flow from operations 78 157 Interest / dividends (66) (73) Net investment hedges (31) (12) Net capital investment (67) (69) Acquisitions
Slide 14: Capital
Capital 30th Sept 09 31st March 09 £m £m Net debt 584 534 Equity 1,224 1,176 Capital employed 1,808 1,710 Gearing (net debt / equity) 48% 45% 14
Slide 15: UK Pensions
UK Pensions • Provisional actuarial deficit at 1st April 2009 £173m • Ten year funding plan from 1st April 2010 of £23m p.a. agreed • To limit growth in future liabilities: • Consultation with UK employees underway • Proposing transfer of all employees to career average salary scheme • Results expec
Slide 16: Operating Review
Operating Review Neil Carson Chief Executive
Slide 17: Environmental Technologies Division
Environmental Technologies Division
Slide 18: Environmental Technologies Division
Environmental Technologies Division 1H 1H £m 2009 2008 % Revenue 919 1,316 -30 Sales excluding precious metals 564 596 -5 Underlying operating profit 54.5 77.8 -30 PT + Fuel • Emission Control Technologies’ sales excluding Cells precious metals fall 7% 22% • Process Technologies’ sales (ex pms) up 1
Slide 19: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 1H 1H 2H Change Change 2009/10 2008/09 2009/10 2008/09 % % millions millions millions millions North Sales 6.8 8.7 -21.8 6.8 5.7 +19.3 America Production 4.1 6.4 -35.9 4.1 4.4 -6.8 Sales 9.4 10.8 -13.0 9.4 7.7 +22.1 Europe Production 8.6 11.1 -22.
Slide 20: Emission Control Technologies: Light Duty
Emission Control Technologies Light Duty • Lower autocatalyst sales in North America: • Incentives drive gradual improvement through summer • Europe also down but: • Incentives helped gasoline vehicle sales • September unit sales ahead of same month last year • DPF sales slightly ahead of first half
Slide 21: Light Duty Vehicle Production Outlook
Emission Control Technologies Light Duty Vehicle Production Outlook Light Duty Vehicle Production Forecasts million 80 71.0 • Recent industry 70 68.2 68.7 forecasts for light duty 62.7 60 58.2 vehicle production in calendar year 50 • Small decline in Asia 40 in 2009. Returning to 33.3 30 28.3 28.7 2
Slide 22: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H Change Change 2009/10 2008/09 2009/10 2008/09 % % thousands thousands thousands thousands North Sales 117.1 201.3 -41.8 117.1 148.2 -21.0 America Production 106.1 200.8 -47.2 106.1 138.9 -23.6 Sales 100.1 206.7 -51.6 100.1 147.9 -32.3 EU Productio
Slide 23: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (October 2009) Western European Truck Sales US Class 4-8 Truck Sales (Thousands of units) (Thousands of units) 400 600 350 500 300 250 400 200 300 150 200 100 50 100 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008
Slide 24: Emission Control Technologies: Heavy Duty Diesel
Emission Control Technologies Heavy Duty Diesel • Catalyst sales significantly down in first half: • No government incentives • No evidence of pre-buy ahead of US 2010 legislation • Sales in North America a little more encouraging in October • New facility in western Pennsylvania recently commission
Slide 25: Stationary Emissions Control (SEC)
Emission Control Technologies Stationary Emissions Control (SEC) • SEC business impacted by reduced demand • Customers’ projects delayed in US and China • Applied Utility Systems purchased for up to US $10m: • Complements our existing NOx control business • Expands range of applications served • NOx
Slide 26: Process Technologies: Global Methanol Demand
Process Technologies Global Methanol Demand • Solid first half performance (Million metric tonnes) • Continued strong demand in China: 80 70 • Two new licences for DPT – another good 60 first half 50 40 • Further growth in demand for methanol 30 catalysts: 20 • Utilisation of coal reserves 10 0 • In
Slide 27: Process Technologies
Process Technologies • Outside China: • Catalyst demand supported by continued Middle East investment in ammonia production capacity • Lower demand from oil refineries with catalyst replacements being delayed • DPT – Substitute Natural Gas (SNG) project licensed in USA 27
Slide 28: Process Technologies: Future Growth Prospects
Process Technologies Future Growth Prospects • New methanol catalyst plant at Clitheroe being commissioned: • New Apico product launched in June: • Well received by customers • Reinforces our leading position in methanol • Prospects good • Key drivers for future growth: • Energy security – gas and c
Slide 29: Precious Metal Products Division
Precious Metal Products Division
Slide 30: Precious Metal Products Division
Precious Metal Products Division 1H 1H £m 2009 2008 % Revenue 2,544 2,943 -14 Sales excluding precious metals 206 236 -13 Underlying operating profit 49.2 76.7 -36 Catalysts and Platinum Marketing and • Significantly lower platinum group metal Chemicals Distribution, Noble prices and reduced volatil
Slide 31: Precious Metal Products: Metal Prices
Precious Metal Products Division Metal Prices US$/oz Platinum 2,400 • Pt demand expected to fall by 4% in 2,000 calendar year 2009 1,600 • Automotive demand down by around a 1,200 third to lowest level since 2000 800 400 • Supply forecast to rise by 2% 0 • Average price in first half $1,208/oz, Mar-
Slide 32: Precious Metal Products: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales in Noble Metals down: • Sales to nitric acid and medical parts industries held up • All other areas impacted by lower demand • Demand for pgm refining hit by lower metal prices • Gold and silver refining achieved good growth: • High g
Slide 33: Fine Chemicals Division
Fine Chemicals Division MER) Johnson Matthey
Slide 34: Fine Chemicals Division
Fine Chemicals Division 1H 1H £m 2009 2008 % Revenue 114 95 +19 Sales excluding precious metals 113 93 +22 Underlying operating profit 30.7 19.9 +54 Research • One-off US $12m benefit from launch of Chemicals Macfarlan Smith ADDERALL XR® in April 2009 26% 38% • API manufacturing businesses performed
Slide 35: Fine Chemicals Division
Fine Chemicals Division • Good growth in opiates sales at Macfarlan Smith • Pharmaceutical Materials and Services: • Ahead of last year even without one-off contribution from ADDERALL XR® • Higher sales of amphetamine salts and opiates • Research Chemicals’ sales slightly down: • Lower sales in Euro
Slide 36: Outlook: Second Half (1)
Outlook Second Half (1) Environmental Technologies: • Second half will be significantly up on the same period last year • In autocatalysts, return of consumer confidence and end of scrappage schemes will be key factors in driving demand • HDD legislation tightens in the US on 1st January 2010. Much
Slide 37: Outlook: Second Half (2)
Outlook Second Half (2) Precious Metal Products: • Results should benefit from higher pgm prices • Unlikely to match second half of last year Fine Chemicals: • Expected to deliver steady growth for full year Group: • For full year, expect results in line with current market expectations 37
Slide 38: Outlook: Longer Term
Outlook Longer Term • Long term growth drivers remain firmly in place • Tighter emissions legislation: • Full fitment of DPFs on diesel cars in Europe by 2011 • HDD market expected to be worth US $2.5bn (sales ex pms) by end of 2014 • Significant growth expected in SEC markets • Energy security and
Slide 39: Johnson Matthey
JME Johnson Matthey 39