Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2004/05 Earnings Presentation
34 slides from Johnson Matthey's earnings presentation, Nov 25, 2004
Slide 1: Presentation of Results for the half year ended 30th September 2004
E Johnson Matthey Presentation of Results for the half year ended 30th September 2004 25th November 2004
Slide 2: Introduction
E Johnson Matthey Introduction Neil Carson Chief Executive
Slide 3: Strategic Initiatives
Strategic Initiatives • Focus on delivery of organic growth • Major opportunity in HDD catalysts • Good growth prospects elsewhere in Catalysts and in Pharmaceutical Materials • Improve ROA from current 16% level • Rationalise underperforming assets • Use cash from disposals / rationalisation to buy
Slide 4: Financial Review
E Johnson Matthey Financial Review John Sheldrick Group Finance Director
Slide 5: Summary Results
Summary Results 1H 1H 2004 2003 £m £m % Statutory basis: Turnover 2,473 2,165 +14 Profit before tax 62.0 87.6 -29 Earnings per share 18.5p 27.8p -33 Before exceptional items and goodwill amortisation: Operating profit 106.1 103.1 +3 Profit before tax 103.3 97.5 +6 Earnings per share 33.6p 31.8p +6 D
Slide 6: Operating Profit
Operating Profit 1H 1H 1H 2004 at 1H 2003 2004 2003 exchange rates* £m £m % £m % Catalysts 56.9 56.5 +1 59.9 +6 Precious Metals 23.4 21.9 +7 24.4 +11 Pharmaceutical Materials 20.9 20.7 +1 22.2 +7 Colours & Coatings 12.8 10.4 +23 13.8 +33 Corporate (8.3) (7.8) (8.3) 105.7 101.7 +4 112.0 +10 Discontin
Slide 7: Geographical Split
Geographical Split Operating Profit 1H 1H 2004 2003 £106.1m £103.1m 17% 15% 9% 41% 12% 38% 33% 35% Europe Asia North America Rest of the World E
Slide 8: Return on Sales
Return on Sales Excluding Precious Metals Sales excl. PM’s ROS 1H 1H 1H 1H 2004 2003 Growth 2004 2003 £m £m % % % Catalysts 342 380 -10 16.6 14.9 Precious Metals 64 59 +8 36.6 37.1 Pharmaceutical Materials 63 61 +3 33.3 33.9 Colours & Coatings 117 109 +7 10.9 9.5 586 609 -4 18.0 16.7 Discontinued 12
Slide 9: Exceptional Items
Exceptional Items 1H 2004 £m Included in operating profit: AMC integration costs 1.0 Lancaster integration costs 2.0 3.0 Other exceptionals: Loss on disposal of Pigments & Dispersions 15.3 Loss on closure of UK gold & silver refinery 12.4 30.7 E
Slide 10: Interest
Interest 1H 1H 2004 2003 £m £m Net interest (7.4) (8.5) Net return on retirement 4.6 2.9 benefits assets & liabilities (2.8) (5.6) E
Slide 11: Taxation
Taxation 1H 1H 2004 2003 £m £m Underlying tax 30.9 29.2 Tax on exceptional items (7.6) - Tax on goodwill amortisation (1.0) (1.2) 22.3 28.0 Underlying tax rate 29.9% 29.9% E
Slide 12: Net Cash Flow
Net Cash Flow 1H 1H 2004 2003 £m £m Operating profit 92.2 93.0 Depreciation and amortisation 42.7 40.1 Working capital / other (14.0) 9.3 Cash flow from operations 120.9 142.4 Interest / tax / dividends (78.3) (66.2) Capex (34.6) (62.4) Acquisitions / disposals 21.3 2.2 Shares issued 1.1 3.5 Net cas
Slide 13: Capital
Capital Sep 04 Mar 04 £m £m Net debt 363 394 Equity and minorities 901 872 Capital employed 1,264 1,266 Gearing 40% 45% (debt / equity + minorities) Interest cover 14x 12x E
Slide 14: Operating Review
E Johnson Matthey Operating Review Neil Carson Chief Executive
Slide 15: Catalysts Division
Catalysts Division • Profits up 6% on constant currency basis • Good demand for autocatalysts and process catalysts Growth at actual exchange rates £m £m -2% +1% 640 56.5 56.9 60 593 583 480 45 320 30 160 15 0 1H 1H 1H 1H 0 2003/04 2004/05 2003/04 2004/05 Sales Operating Profit E
Slide 16: 1H 2004/05 Light Vehicle sales and production
1H 2004/05 Light Vehicle sales and production Growth vs North America Vehicles 1H 2003/04 Sales 10.24m 0 Production 7.8m -0.3% Western Europe Sales 8.17m 1.5% Production 8.01m 1.3% Asia Sales 6.37m 4.2% Production 10.2m 9.7% Global Sales 27.4m 3.0% Production 29.8m 5.5% Source: Global Insight E
Slide 17: Environmental Catalysts and Technologies
Environmental Catalysts and Technologies • Autocatalysts up in Europe with good sales of diesel products • Good demand for autocatalysts in Asia, although China slows • Weaker demand in the US, profits flat • Lower contribution from HDD retrofit programmes • Increased investment in HDD development E
Slide 18: Environmental Catalysts and Technologies: Light Duty Vehicles
Environmental Catalysts and Technologies Light Duty Vehicles • Emissions legislation continues to provide important growth opportunities • Euro IV and US Tier II tightening standards require increasing level of catalyst performance • Health concerns drive market for advanced catalysed particulate fi
Slide 19: HDD on-road regulation development
Environmental Catalysts and Technologies HDD on-road regulation development New Models All Models Europe 0.2 Euro 4 Oct-05 Oct-06 Japan 2003 Euro 5 Oct-08 Oct-09 0.18 United States 0.16 US2007 Jan-07 Jan-07 0.14 US2010 Jan-10 Jan-10 US 2002 3/4 Japan PM (g/kW-hr) 0.12 New Short Term EU III 0.1 2.5-1
Slide 20: Process Catalysts and Technologies
Process Catalysts and Technologies • Good contribution from AMC acquired in March 2004 • Catalyst businesses ahead, good demand for gas processing products and syngas catalysts • Margin pressure in pgm refining E
Slide 21: Process Catalysts and Technologies
Process Catalysts and Technologies • Increased investment in gas to liquids R&D • Lancaster Synthesis acquired from Clariant • Increases JM’s share of research chemicals market E
Slide 22: Fuel Cells
Fuel Cells • Demand from automotive sector continues to grow • Increased government support • California Hydrogen Highway • Development of stationary market slower than anticipated • Net expense slightly down E
Slide 23: Precious Metals
Precious Metals • Profits up 11% on constant currency basis • Much improved trading conditions £m Growth at actual exchange rates £m +23% +7% 1,800 1,693 23.4 25 21.9 1,500 1,380 20 1,200 15 900 10 600 300 5 0 1H 1H 1H 1H 0 2003/04 2004/05 2003/04 2004/05 Sales Operating Profit E
Slide 24: Platinum, Palladium and Rhodium Prices
Platinum, Palladium and Rhodium Prices US$ 1,500 1,200 900 600 300 0 March 2003 September 2003 March 2004 September 2004 Platinum Palladium Rhodium E
Slide 25: Precious Metals
Precious Metals • Platinum group metals basket price substantially up on last year • Improved trading conditions continue • Impact of Anglo Platinum contract renewal more than offset by improved pgm market and volume growth E
Slide 26: Precious Metals
Precious Metals • Good growth in fabricated products • Demand for medical parts continues to increase • Gold refining business satisfactory in North America and Hong Kong • UK gold refinery being closed E
Slide 27: Pharmaceutical Materials
Pharmaceutical Materials • Profits up 7% on constant currency basis • Good growth in specialist opiate products £m Growth at actual exchange rates £m +3% +1% 75 25 65 66 20.7 20.9 60 20 45 15 30 10 15 5 0 1H 1H 1H 1H 0 2003/04 2004/05 2003/04 2004/05 Sales Operating Profit E
Slide 28: Pharmaceutical Materials
Pharmaceutical Materials • Carboplatin patent cover continued until October 2004 • Generic competition for carboplatin will impact second half • Other platinum pharmaceuticals perform well E
Slide 29: Pharmaceutical Materials
Pharmaceutical Materials • Good growth at Macfarlan Smith • Increase in sales of specialist opiates • New high potency drug facility successfully commissioned and in production • Investment in new capacity • Product pipeline strong with over 80 APIs in development E
Slide 30: Colours & Coatings
Colours & Coatings • Profits up 33% on constant currency basis • Glass and Structural Ceramics perform well £m Growth at actual exchange rates £m +6% +23% 150 14 12.8 12 118 111 10.4 10 100 8 6 50 4 2 0 1H 1H 1H 1H 0 2003/04 2004/05 2003/04 2004/05 Sales Operating Profit
Slide 31: Colours & Coatings
Colours & Coatings • Good growth in Glass business • Structural Ceramics continues recovery which started in second half of 2003/04 • Pigments & Dispersions sold • Restructuring of remaining Speciality Coatings business • Structural Ceramics to be retained E
Slide 32: Strategy
Strategy • Focus on core businesses • Well positioned in several new markets • Now focused on delivering these opportunities and improving ROA E
Slide 33: Outlook
Outlook • All four divisions performed well in first half • PGM market recovery continues • Currency effect – impact of weak dollar • Expect further growth in earnings before exceptional items and goodwill amortisation E
Slide 34: Johnson Matthey
UME) Johnson Matthey