Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2007/08 Earnings Presentation
39 slides from Johnson Matthey's earnings presentation, Nov 28, 2007
Slide 1: Presentation of Results for the half year ended 30th September 2007
Presentation of Results for the half year ended 30th September 2007 28th November 2007
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 3
Slide 4: Highlights
Highlights • Strong growth in sales and operating profit • Environmental Technologies well ahead. HDD catalyst sales (ex pms) to OEMs in first half reach £79m • New factories in South Korea, Russia and UK will support growth in 2008/09 • Environmental concerns and high energy prices drive long term
Slide 5: Financial Review
Financial Review John Sheldrick Group Finance Director 5
Slide 6: Summary Results
Summary Results 1H 1H 2007 2006 % £m £m change Revenue 3,512 2,922 +20 Sales excluding precious metals 840 654 +28 Operating profit 132.4 116.6 +14 Profit before tax 120.1 104.6 +15 Total earnings per share 38.3p +9 41.8p EPS before one-off items 41.0p 38.3p +7 Dividend per share 10.6p 9.9p +7 6
Slide 7: Operating Profit / Exchange
Operating Profit / Exchange 1H 1H Growth at 2007 2006 constant rates At last year’s At this year’s rates rates £m £m £m % Environmental 65.2 57.7 57.0 +14 Technologies Precious Metal 47.2 37.2 36.1 +31 Products Fine Chemicals & 31.0 30.1 29.2 +6 Catalysts Corporate (11.0) (8.4) (8.5) Group 132.4 116
Slide 8: Exchange Rates
Exchange Rates $/£ 2.2 2.1 Average $2.00/£ Average $1.94/£ 2.0 Average $1.86/£ 1.9 1.8 1.7 March 2006 September 2006 March 2007 September 2007 8
Slide 9: Return on Sales
Return on Sales Excluding Precious Metals Sales ex pms ROS 1H 1H* 1H 1H* 2007 2006 Growth 2007 2006 £m £m % % % Environmental 541 384 +41 12.0 14.9 Technologies Precious Metal Products 151 129 +17 31.3 27.9 Fine Chemicals & 148 123 +20 21.0 23.8 Catalysts Group 840 636 +32 15.8 17.9 * At 2007 exchan
Slide 10: Sales Excluding Precious Metals - ECT
Sales Excluding Precious Metals - ECT £m 500 450 83 429 400 73 (7) 350 286 (6) 300 250 200 150 100 50 0 First Half 2006 HDD Sales to HDD Retrofit Light Duty Exchange First Half 2007 OEMs Sales Sales 10
Slide 11: Incremental Costs - ECT
Incremental Costs - ECT Substrates – a pass through cost for JM • Flow through £3 to £10 • Filters £80 to £120 – price coming down Start up / commissioning / freight costs • > £3m of non-recurring costs expensed in first half 11
Slide 12: Taxation
Taxation 1H 1H 2007 2006 £m £m Tax on continuing businesses 32.5 30.1 Effect of corporation tax change 1.8 - Underlying tax 34.3 30.1 Average rate 28.6% 28.8% 12
Slide 13: Net Cash Flow
Net Cash Flow 1H 1H 2007 2006 £m £m Operating profit 117 132 Depreciation and amortisation 38 38 Tax paid (32) (42) Working capital / other (31) (62) Cash flow from operations 107 51 Interest / dividends (62) (59) Net capital investment (57) (56) Acquisitions / disposals (1) (8) Shares (bought) / is
Slide 14: Capital
Capital Sep 07 Mar 07 £m £m Net debt 419 365 Equity 1,065 1,078 Capital employed 1,484 1,443 Gearing (net debt / equity) 39% 34% 14
Slide 15: Operating Review
Operating Review Neil Carson Chief Executive 15
Slide 16: Environmental Technologies Division
Environmental Technologies Division 16
Slide 17: Environmental Technologies Division
Environmental Technologies Division 1H 1H £m 2007 2006* % Revenue 1,055 843 +25 Sales excluding precious metals 541 384 +41 Operating profit 65.2 57.0 +14 (*At 2007 exchange rates) PT + • Emission Control Technologies sales Fuel Cells excluding precious metals up 54%* 21% • Growth in HDD, Asia and d
Slide 18: Estimated Light Vehicle Sales and Production
Estimated Light Vehicle Sales and Production Half year to 30th September 2007 2006 Change millions millions % Sales 9.9 10.2 -2.9 North America Production 7.6 7.5 +1.3 Sales 10.6 10.2 +3.9 Europe Production 10.8 10.1 +6.9 Sales 8.3 7.7 +7.8 Asia Production 13.0 12.0 +8.3 Sales 34.1 32.8 +4.0 Global
Slide 19: Emission Control Technologies: Light Duty
Emission Control Technologies Light Duty • Diesel cars now up to 52% of Western European market • Diesel particulate filters increasingly fitted as standard • In 2007, 4 million of 9 million diesel cars sold are expected to be fitted with filters 19
Slide 20: Emission Control Technologies: Light Duty
Emission Control Technologies Light Duty • Sales of autocatalysts in Asia continue to grow strongly • US market flat but JM’s profits up • Three new facilities will open in the second half – Russia, South Korea and new diesel particulate filter plant in Royston, UK 20
Slide 21: Emission Control Technologies: Heavy Duty Diesel
Emission Control Technologies Heavy Duty Diesel Western European Truck Sales US Class 4-8 Truck Sales (Thousands of units) (Thousands of units) 450 600 400 500 350 300 400 250 300 200 150 200 100 100 50 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sou
Slide 22: Emission Control Technologies: Heavy Duty Diesel
Emission Control Technologies Heavy Duty Diesel CRT System • Sales to OEMs grow to £79 (DOC + Filter) NH3 Slip million in first half Catalyst Module • Market size $700 million (ex pms) in 2008 SCR Catalyst • In 2010 most US manufacturers Modules Urea will use SCR + filters + DOCs Injection Nozzle •
Slide 23: ECT – Medium Term Growth Drivers
ECT – Medium Term Growth Drivers • 2008/09 Light Duty Vehicle Production Forecasts Increasing sales in Asia; growth million 35 in diesel particulate filters; US 30 26.9 28.8 truck sales grow in final quarter; 25 20.8 22.0 22.7 24.9 lower costs 20 15.3 14.9 14.8 15 • 2009/10 10 Continued growth in fi
Slide 24: Process Technologies
Process Technologies Crude Oil - WTI US$/BBL 100 • Good growth in sales and 80 profits in first half 60 • High oil price encourages 40 investment in projects from 20 gas and coal 0 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 • Increased hydrogen demand in refineries driven by low sulphur fuels • Stron
Slide 25: Process Technologies
Process Technologies Methanol Global Methanol Capacity Additions/Deletions Million Metric Tons 12 • Continued growth in methanol 10 Additions catalyst sales 8 6 • High methanol price stimulates 4 2 0 increased methanol -2 Deletions production capacity -4 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 26: Process Technologies: Davy Process Technology
Process Technologies Davy Process Technology • Davy Process Technology (DPT) ahead of prior year • Two major DPT LP oxo-alcohol projects licensed in China and India in first half • First choline chloride plant to be built in Thailand utilises JM proprietary technology • New process developed to conv
Slide 27: Fuel Cells
Fuel Cells • Continued good demand for MEAs for direct methanol fuel cells • Increasing sales of components for phosphoric acid fuel cells • Encouraging progress in automotive • Continued fall in net expense expected for full year 27
Slide 28: Precious Metal Products Division
Precious Metal Products Division 28
Slide 29: Precious Metal Products Division
Precious Metal Products Division 1H 1H £m 2007 2006* % Revenue 2,201 1,792 +23 Sales excluding precious metals 151 129 +17 Operating profit 47.2 36.1 +31 (*At 2007 exchange rates) • Strong growth in sales and profits • Good trading conditions in the pgms • Manufacturing businesses continue to perfor
Slide 30: Precious Metal Products Division: Metal Prices
Precious Metal Products Division Metal Prices US$/oz Platinum • In calendar 2007 Pt demand to 1,500 grow 3% but supply to fall 1,400 1,300 leaving the market in deficit. 1,200 Average price $1,293/oz up 7% 1,100 1,000 in first half 900 800 Mar-06 Sep-06 Mar-07 Sep-07 US$/oz Palladium • Pd supplies c
Slide 31: Precious Metal Products Division: Metal Prices
Precious Metal Products Division Metal Prices US$/oz Rhodium • Rh remains in deficit for fourth 7,000 6,500 successive year. Average price 6,000 $6,163/oz 27% up on first half of 5,500 last year 5,000 4,500 4,000 3,500 3,000 Mar 2006 Sep 2006 Mar 2007 Sep 2007 US$/oz Ruthenium • Demand for Ru in har
Slide 32: Precious Metal Products Division: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Metal fabrication businesses well ahead - good industrial demand and expanding sales of medical parts • Colour Technologies’ sales of automotive enamels and decorative products well ahead • Strong demand for secondary pgm refining • Gold re
Slide 33: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division 33
Slide 34: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division 1H 1H £m 2007 2006* % Revenue 256 195 +31 Sales excluding precious metals 148 123 +20 Operating profit 31.0 29.2 +6 (*At 2007 exchange rates) LME-Nickel Price • Sales excluding precious metals up US$/MT 60,000 20% boosted by high metal price for 50,000 nickel cata
Slide 35: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division • Catalysts and Chemicals achieved good growth in catalyst sales • Good sales growth achieved in US Pharmaceutical Materials and Services • Sales of opiate products in US well ahead of last year • Volumes in Europe slightly down in first half but stronger order bo
Slide 36: Fine Chemicals & Catalysts Division
Fine Chemicals & Catalysts Division • Integration of the division has progressed well • Catalyst sales continue to grow • Satraplatin not approved • Sales of APIs to generic pharmaceutical companies expected to grow at 6% pa • Future investment planned in Asia for catalysts, Research Chemicals and A
Slide 37: Outlook
Outlook • Operating profit growth in Environmental Technologies expected to be similar to first half • Emission Control Technologies to benefit from full six months of HDD sales in US • Continued growth supported by new capacity in South Korea, Russia and new filter facility in UK • High energy pric
Slide 38: Outlook Continued
Outlook Continued • Precious Metal Products will benefit from rising pgm prices but growth in second half will be lower than in first • Growth in Fine Chemicals & Catalysts should be similar to or slightly ahead of the first half • US dollar weakness will impact exchange translation • Overall, EPS g
Slide 39: Johnson Matthey
JME) Johnson Matthey 39