Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2005/06 Earnings Presentation
39 slides from Johnson Matthey's earnings presentation, Nov 23, 2005
Slide 1: Presentation of Results for the half year ended 30th September 2005
E Johnson Matthey Presentation of Results for the half year ended 30th September 2005 23rd November 2005
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
E Johnson Matthey Introduction Neil Carson Chief Executive
Slide 4: Progress on Strategic Initiatives
Progress on Strategic Initiatives • Focus on delivery of organic growth • Good share of future HDD catalyst market secured. Sales started in Europe • Further growth in Catalysts driven by CSFs, Asia and impact of high oil price on process catalyst demand • Increased investment in new capacity • Cash
Slide 5: Financial Review
E Johnson Matthey Financial Review John Sheldrick Group Finance Director
Slide 6: Summary Results
Summary Results 1H 1H % % 2005 2004 Underlying £m £m Change Growth Revenue 2,283 2,461 -7 -7 Sales excluding precious metals 637 586 +9 +9 Profit before tax 106.4 88.3 +20 +3 Total earnings per share 35.2p 25.8p +36 +5 Dividend per share 9.1p 8.7p +5 +5 E
Slide 7: IFRS
IFRS Overview of impact on first half of 2004 UK GAAP IFRS Profit before tax £62.0m £88.3m Total earnings per share 18.5p 25.8p Net assets £901.2m £927.2m Major changes to PBT • Goodwill amortisation, discontinued Major changes to balance sheet • Goodwill amortisation, capitalised development, defer
Slide 8: IFRS
IFRS Impact on profit before tax, exceptional items and goodwill amortisation: 1H 1H Full Year 2005 2004 2004/05 £m £m £m UK GAAP 105.0 103.3 204.0 Capitalised development 3.2 2.4 5.4 Amortisation of capitalised (0.6) (0.6) (1.1) development Share options (2.1) (1.9) (4.1) Employee benefits 0.9 0.9
Slide 9: Operating Profit
Operating Profit 1H 1H 1H 2005 at 1H 2004 2005 2004 exchange rates £m £m % £m % Catalysts 65.2 61.2 +7 65.1 +6 Precious Metal Products 30.6 27.5 +11 30.3 +10 Pharmaceutical Materials 16.2 21.1 -23 16.2 -23 Ceramics 10.8 9.2 +17 10.5 +14 Corporate (8.3) (8.2) (8.3) 114.5 110.8 +3 113.8 +3 E
Slide 10: Return on Sales
Return on Sales Excluding Precious Metals Sales excl. PM’s ROS 1H 1H 1H 1H 2005 2004 Growth 2005 2004 £m £m % % % Catalysts 375 329 +14 17.4 18.6 Precious Metal Products 117 113 +4 26.1 24.3 Pharmaceutical Materials 55 63 -13 29.6 33.6 Ceramics 90 81 +11 12.0 11.3 Group 637 586 +9 18.0 18.9* *exclud
Slide 11: Interest
Interest 1H 1H 2005 2004 £m £m Interest payable (15.7) (13.4) Interest receivable 8.0 6.2 (7.7) (7.2) E
Slide 12: Taxation
Taxation 1H 1H 2005 2004 £m £m Underlying tax 31.1 31.1 Tax relief on restructuring costs - (4.7) 31.1 26.4 Underlying tax rate 29.2% 30.0% E
Slide 13: Net Cash Flow
Net Cash Flow 1H 1H 2005 2004 £m £m Operating profit 114.5 95.4 Depreciation and amortisation 33.2 32.7 Working capital / tax / other (21.2) (37.0) Cash flow from operations 126.5 91.1 Interest / dividends (48.5) (46.1) Net capital investment (46.5) (37.0) Acquisitions / disposals (1.1) 21.3 Shares
Slide 14: Capital
Capital Sep 05 Mar 05 £m £m Net debt 361 370 Equity 978 930 Capital employed 1,339 1,300 Gearing 37% 40% (net debt / equity) E
Slide 15: Operating Review
E Johnson Matthey Operating Review Neil Carson Chief Executive
Slide 16: Catalysts Division
Catalysts Division • Profits up 7% • Good growth despite weak US automotive market Growth at actual exchange rates £m £m +19% +7% 800 75 675 65.2 61.2 640 60 570 480 45 320 30 160 15 0 1H 1H 1H 1H 0 2004/05 2005/06 2004/05 2005/06 Sales Operating Profit E
Slide 17: Light Vehicle Sales and Production
Light Vehicle Sales and Production Half year to 30th September 2005 2004 change millions millions % North America Sales 10.7 10.3 3.9% Production 7.8 7.8 0.0% Europe Sales 9.3 9.1 2.2% Production 10.2 10.1 1.0% Asia Sales 7.2 6.5 10.8% Production 10.9 10.2 6.9% Global Sales 32.3 30.8 4.9% Production
Slide 18: Environmental Catalysts and Technologies
Environmental Catalysts and Technologies • Good top line growth in Europe and Asia, North America flat • Europe benefits from strong sales of diesel products • Good volume growth in Asia, particularly in China and Japan E
Slide 19: Environmental Catalysts and Technologies
Environmental Catalysts and Technologies HDD on-road regulation timetable and sales New Models All Models Europe HDD Vehicle Production 2004 Euro 4 01-Oct-05 01-Oct-06 over 6 tonnes gross weight Euro 5 01-Oct-08 01-Oct-09 United States US2007 01-Jan-07 01-Jan-07 Europe 433,000 US2010 01-Jan-10 01-Ja
Slide 20: Environmental Catalysts and Technologies: Heavy Duty Diesel
Environmental Catalysts and Technologies Heavy Duty Diesel • HDD catalyst sales to OEMs beginning to grow • Main growth in Europe to occur as we approach October ’06 when legislation covers all new vehicles • US legislation applies to all new vehicles from January ’07 • Johnson Matthey has secured a
Slide 21: Environmental Catalysts and Technologies: Light Duty Diesel
Environmental Catalysts and Technologies Light Duty Diesel • LDD Pt/Pd technology adopted by most OEMs • Very tight particulate control will be required to meet European 2010 LDD emissions standards • Strong consumer demand ahead of legislation • New CSF factory commissioned at Royston. Further expa
Slide 22: Growth in Asia
Environmental Catalysts and Technologies Growth in Asia • Good growth across the region • New facility announced in Korea • Further expansion in Japan Hwasung, Kitsuregawa, Korea Japan Shanghai, China Delhi, India E Kuala Lumpur, Malaysia
Slide 23: Process Catalysts and Technologies
Process Catalysts and Technologies • Good growth in the first half • AMOG business well ahead benefiting from strong demand for catalysts in hydrogen based processes and for gas purification products • New methanol licences awarded to OneSynergy • Edible oil catalysts ahead, polymer catalysts down •
Slide 24: Process Catalysts and Technologies: Future Trends
Process Catalysts and Technologies Future Trends • High oil price • Increasing demand for greener fuels (low sulphur, low aromatic, bio fuels, gas derived fuels etc) • Dirtier crude oil • Investment in synthetic liquid products from natural gas and coal • Increased investment in catalyst R&D E
Slide 25: Fuel Cells
Fuel Cells • Continuing progress in automotive MEAs • Energy and global warming concerns drive interest in fuel cells • Renewed demand for PAFC fuel cells for medium scale stationary applications Courtesy of UTC Power E
Slide 26: Fuel Cells
Fuel Cells • Considerable interest in DMFC technology for laptops and mobile phone chargers • Collaborations with a number of major consumer electronics companies E
Slide 27: Precious Metal Products
Precious Metal Products • Profits up 11% • Most of growth comes from manufacturing businesses £m Growth at actual exchange rates £m -16% +11% 35 1,800 1,743 30.6 27.5 30 1,460 1,500 25 1,200 20 900 15 600 10 300 5 0 1H 1H 1H 1H 0 E 2004/05 2005/06 2004/05 2005/06 Sales Operating Profit
Slide 28: Platinum and Palladium Prices
Platinum and Palladium Prices US$/oz 1,200 1,000 800 600 400 200 0 March 2004 September 2004 March 2005 September 2005 Platinum Palladium E
Slide 29: Rhodium Prices
Rhodium Prices US$/oz 3,500 3,000 2,500 2,000 1,500 1,000 500 0 March 2004 September 2004 March 2005 September 2005 Rhodium E
Slide 30: Precious Metal Products
Precious Metal Products • Price volatility in platinum and palladium subdued compared with first half of last year • However, platinum demand continues to grow • Rise in rhodium price provides some benefits in trading but adversely impacts working capital E
Slide 31: Precious Metal Products
Precious Metal Products • Colour Technologies business benefits from strong demand and cost reductions • Gold and Silver’s profits improve as result of closure of UK refinery • Continued good progress in fabricated pgm products, especially medical parts • Pgm refining transferred to Precious Metal P
Slide 32: Pharmaceutical Materials
Pharmaceutical Materials • Profits down 23% • US business down, Macfarlan Smith continues to perform well £m Growth at actual exchange rates £m -13% -23% 75 25 66 21.1 60 58 20 16.2 45 15 30 10 15 5 0 1H 1H 1H 1H 0 2004/05 2005/06 2004/05 2005/06 Sales Operating Profit E
Slide 33: Pharmaceutical Materials: US Operations
Pharmaceutical Materials US Operations • Impact of expiry of carboplatin patent in October ’04 • Weaker contract research market compared with first half of last year • Improvement expected in second half • 2006 to benefit from new product launches and growth in opiates E
Slide 34: Pharmaceutical Materials: Europe
Pharmaceutical Materials Europe • Profits up at Macfarlan Smith • Good growth in high potency products • Strong demand for specialist opiates • New manufacturing capacity coming on stream at end of year E
Slide 35: Ceramics
Ceramics • Profits up 17% • New division benefiting from restructuring and top line growth £m Growth at actual exchange rates £m +11% +17% 100 12 90 10.8 81 10 9.2 75 8 50 6 4 25 2 0 1H 1H 1H 1H 0 2004/05 2005/06 2004/05 2005/06 Sales Operating Profit E
Slide 36: Ceramics
Ceramics • Ceramics Division formed following restructuring of Colours & Coatings • Global supplier of decorative materials to tile manufacturers • Good growth in demand from Eastern Europe and Asia, particularly China • Strong cash generation E
Slide 37: Divisional Outlook
Divisional Outlook • ECT expected to achieve 10% growth driven by diesel and Asia • Good growth expected in PCT • PMP’s profits in the second half expected to be ahead of last year but down on particularly strong first half • Pharmaceutical Materials’ profits to improve reflecting stronger sales in
Slide 38: Group Outlook
Group Outlook • Overall, good growth in earnings expected for the year • Outlook very encouraging • Environmental and energy concerns will underpin future growth E
Slide 39: Johnson Matthey
JME Johnson Matthey