Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2010 Earnings Presentation
38 slides from Johnson Matthey's earnings presentation, Jun 3, 2010
Slide 1: Presentation of Results for the year ended 31st March 2010
Presentation of Results for the year ended 31st March 2010 3rd June 2010
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) up 5% • Underlying operating profit down 9%, underlying PBT down 5% • First half impacted by recession • Recovery in second half helped by: • Improved light duty vehicle sales • Higher precious metal prices • Strong cash generation • Balance sheet remains strong • Group w
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Summary Results
Summary Results Year to 31st March 2010 2009 % £m £m Change Revenue 7,839 7,848 - Sales excluding precious metals 1,886 1,797 +5 Profit before tax 228.5 249.4 -8 Total earnings per share 77.6p -6 82.6p Underlying*: Profit before tax 254.1 267.9 -5 Earnings per share 86.4p 89.6p -4 Dividend per share
Slide 7: Underlying Operating Profit / Exchange
Underlying Operating Profit / Exchange Year to 31st March Growth at 2009 at constant 2010 2009 Change 2010 rates rates £m £m % £m % Environmental Technologies -3 129.1 -6 120.9 124.3 Precious Metal Products -18 148.9 -22 116.7 143.0 Fine Chemicals +13 51.1 +9 55.8 49.5 • Average rates for year: Corp
Slide 8: Interest and Taxation
Interest and Taxation Year to 31st March 2010 2009 £m £m Net finance costs (interest) (19.4) (32.6) Underlying income tax expense (71.2) (79.2) Underlying tax rate 28.0% 29.6% (underlying tax / underlying profit before tax) Finance costs • Reduced by £13.2m due to combination of lower interest rates
Slide 9: Net Cash Flow
Net Cash Flow Year to 31st March 2010 2009 £m £m Operating profit 251 280 Depreciation and amortisation 110 140 Tax paid (85) (1) Working capital / other (114) 196 • Cash flow Lower from than operations expected working capital outflow 276 501 • Net debt at 31st March 2010 - £473.4m • Net debt / EBI
Slide 10: Working Capital
Working Capital • We monitor working capital days excluding pgms • At 31st March 2010, working capital days (excl. pgms) were 57 (2009 63) • During 2010, working capital increased by: • Excl. pgms £24.9m • Pgms £77.1m • Cash flow benefited from unusually high amounts of customer funded metal at 31st
Slide 11: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Year to 31st March 2010 2009 £m £m Underlying operating profit 271.8 298.5 Average invested capital: Equity 1,213 1,169 Net debt 504 572 Total investment 1,717 1,741 Pre-tax ROIC 15.8% 17.1% Pre-tax cost of capital 10.8% 11.5% • Modest reduction in ROIC due to lower
Slide 12: Capital Expenditure
Capital Expenditure £ million Capex / depn (times) 203.5 2.0 200 145.0 1.5 150 134.4 100 1.0 50 0.5 0 0.0 2007/08 2008/09 2009/10 Environmental Technologies Precious Metal Products Fine Chemicals • Capex / depreciation 1.2x (2009 2.0x) • Going forward, capex likely to be between 1.0 and 1.2x depreci
Slide 13: Pensions
Pensions • Post tax IAS19 UK and US pension deficit increased to £129.5m (2009 £63.1m) • UK Actuarial Valuation: • UK actuarial deficit at 1st April 2009: £173m • From 1st April 2010, all employees moved to career average salary scheme • Funding: • UK: 10 year funding plan from 1st April 2010 of £23
Slide 14: Operating Review
Operating Review Neil Carson Chief Executive
Slide 15: Environmental Technologies Division
Environmental Technologies Division
Slide 16: Environmental Technologies Division
Environmental Technologies Division Year to 31st March % % at £m 2010 2009 change constant rates Revenue 2,056 2,226 -8 -11 Sales excluding precious metals 1,247 1,135 +10 +6 Underlying operating profit 120.9 124.3 -3 -6 Return on sales (ex pms) 9.7% 10.9% PT + Fuel • Emission Control Technologies’
Slide 17: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 1H 2010 2009 Change 2009/10 2009/10 Change millions millions % millions millions % North Sales 13.0 14.4 -9.7 6.2 6.8 -8.8 America Production 9.7 10.8 -10.2 5.6 4.1 +36.6 Sales 18.5 19.9 -7.0 9.1 9.4 -3.2 Europe Production 18.1
Slide 18: Emission Control Technologies
Emission Control Technologies Light Duty • Light duty catalyst sales (ex pms) up 17% to £754m • Strong recovery in the second half • JM’s sales volumes grew more than global car sales • Production costs benefited from actions taken during downturn • New, highly efficient production facility in Maced
Slide 19: Emission Control Technologies: Light Duty Vehicle Production Outlook
Emission Control Technologies Light Duty Vehicle Production Outlook million 80 71.0 73.6 • Most recent industry 70 68.2 67.4 forecasts for light duty vehicle production in 60 59.9 calendar year 50 • Asia achieved growth in 2009 and will 40 36.5 continue to be main 33.1 engine of growth in 30 28.3 28
Slide 20: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production Year to 31st March 2H 1H 2010 2009 Change 2009/10 2009/10 Change thousands thousands % thousands thousands % North Sales 251.4 350.4 -28 134.2 117.2 +15 America Production 239.7 340.2 -30 133.8 105.9 +26 Sales 196.4 354.7 -45 91.9 104.5 -12 EU Production 194.
Slide 21: Emission Control Technologies: Heavy Duty
Emission Control Technologies Heavy Duty • HDD vehicle sales depressed in year. Europe and USA down 45% and 28% respectively • JM’s HDD catalyst sales (ex pms) fell by 5% in 2009/10 • HDD business made small operating loss • HDD market estimated to be US $400m in 2009/10. JM share temporarily increa
Slide 22: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (March 2010) Western European Truck Sales US Class 4-8 Truck Sales (Thousands of units) (Thousands of units) 400 600 350 500 300 250 400 200 300 150 200 100 50 100 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 20
Slide 23: Process Technologies
Process Technologies 2009/10 Process Technologies sales (ex pms) £268m • AMOG performed well overall Other • Strong sales to ammonia and methanol markets 24% AMOG • Demand for gas purification products held up DPT 60% well 16% • Hydrogen catalyst sales down, impacted by slowdown in oil refining acti
Slide 24: Process Technologies: Davy Process Technology
Process Technologies Davy Process Technology (DPT) Market Size for Technologies Currently Licensed by DPT £ million • Eight new contracts won in 2009/10 100 90 • Particularly successful in China 80 70 • Three new methanol plants, all using coal feedstock 60 • One oxo alcohols plant 50 40 • Two speci
Slide 25: Methanol – Revolutionary New Catalyst
Process Technologies Methanol – Revolutionary New Catalyst • Apico methanol synthesis catalyst launched in June 2009 • New manufacturing plant at Clitheroe now operational • World’s first continuous syngas catalyst manufacturing plant • Ground breaking catalyst science and manufacturing technology G
Slide 26: Precious Metal Products Division
Precious Metal Products Division
Slide 27: Precious Metal Products Division
Precious Metal Products Division Year to 31st March % % at £m 2010 2009 change constant rates Revenue 5,562 5,402 +3 - Sales excluding precious metals 420 447 -6 -11 Underlying operating profit 116.7 143.0 -18 -22 Return on sales (ex pms) 27.8% 32.0% Catalysts and Platinum Marketing and • Sales (ex
Slide 28: Platinum Marketing and Distribution
Precious Metal Products Division Platinum Marketing and Distribution US$/oz Platinum 2,400 • Pt market in surplus by 285,000 oz in 2009 2,000 • Average Pt price in 2009/10 $1,343/oz, down 3% 1,600 on prior year 1,200 • Pd market in surplus by 760,000 oz in 2009 800 • Average Pd price in 2009/10 $325
Slide 29: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Manufacturing businesses had a difficult year • Later into recession • Later recovery • Noble Metals’ sales (ex pms) down 5% • Catalysts and Chemicals’ sales (ex pms) down 14% • Refining sales (ex pms) down 6% • Colour Technologies slightly
Slide 30: Fine Chemicals Division
Fine Chemicals Division UME) Johnson Matthey
Slide 31: Fine Chemicals Division
Fine Chemicals Division Year to 31st March % % at £m 2010 2009 change constant rates Revenue 221 220 +1 -4 Sales excluding precious metals 219 215 +2 -2 Underlying operating profit 55.8 49.5 +13 +9 Return on sales (ex pms) 25.5% 23.0% Research Chemicals Macfarlan • Modest growth in challenging marke
Slide 32: Fine Chemicals
Fine Chemicals • Good growth in speciality opiates, offset by raw material supply issues at Macfarlan Smith • Pharmaceutical Materials and Services’ sales (ex pms) up 14% • Manufacturing business performed well • Difficult year for contract research business • Generic market offers good growth oppor
Slide 33: Outlook: First Half 2010/11 vs First Half 2009/10 (1)
Outlook First Half 2010/11 vs First Half 2009/10 (1) Environmental Technologies: • Operating profit should be significantly ahead • ECT expected to perform well • Impact of end of scrappage schemes may take time to feed through • Benefit from some customer stockbuilding • Process Technologies should
Slide 34: Outlook: First Half 2010/11 vs First Half 2009/10 (2)
Outlook First Half 2010/11 vs First Half 2009/10 (2) Precious Metal Products: • Results will benefit from higher pgm prices • Manufacturing businesses emerging from recession • Division’s results in first half should be significantly ahead of same period last year Fine Chemicals: • Continued steady
Slide 35: Outlook: Second Half 2010/11 and Longer Term
Outlook Second Half 2010/11 and Longer Term Second Half: • Performance in second half harder to predict • Group well positioned to take advantage of a recovery in global economies Longer Term: • Long term drivers of our businesses remain firmly place • Strong balance sheet and proven business model
Slide 36: JME)
JME) Johnson Matthey 36
Slide 37: Emission Control Technologies: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation 37
Slide 38: Emission Control Technologies: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation 38