Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — FY2011 Earnings Presentation
40 slides from Johnson Matthey's earnings presentation, Jun 2, 2011
Slide 1: Presentation of Results for the year ended 31st March 2011
Presentation of Results for the year ended 31st March 2011 2nd June 2011
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: Key Messages
Key Messages Return to strong growth Further good progress expected in 2011/12 Increasing investment in R&D Longer term drivers remain firmly in place 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Change Year to 31st March 2011 2010 As reported £m £m const. curr Revenue +27% +26% 9,985 7,839 Sales excluding precious metals +21% +19% 2,280 1,886 Operating profit 366.2 271.8 +35% +33% Interest (20.7) (19.4) -7% Share of profit from associates - 1.7 - Profit before tax 345.5 2
Slide 7: Reconciliation to Reported Results
Reconciliation to Reported Results Year to 31st March 2011 2010 £m £m Underlying profit before tax 345.5 254.1 Amortisation of acquired intangibles (9.9) (13.2) Major impairment / restructuring: Closure of Vertec business - (14.8) Closure of Brussels plant - (57.0) Impairment of pharmaceutical servi
Slide 8: Components of Increase in Gross Profit
Components of Increase in Gross Profit • Fixed production costs up £40m principally due to: • Ramp up of production at newly commissioned plants (e.g. Macedonia and Smithfield, USA) • Increased numbers of production staff 8
Slide 9: Cash Flow from Operations
Cash Flow from Operations Year to 31st March 2011 2010 £m £m Operating profit 281 251 Depreciation and amortisation 168 140 Tax paid (65) (1) Working capital / other (260) (114) Cash flow from operations 124 276 • At 31st March 2011, working capital • Net debt at 31st March 2011 – £639.4m, days up b
Slide 10: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Target Cost of capital • Substantial increase in ROIC – double • Well placed to exceed target of 20% in cost of capital 2011/12 and beyond 10
Slide 11: Capital Expenditure
Capital Expenditure 203.5 145.0 134.4 137.9 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects in year: • 2011/12 capex likely to be around 1.3x • Expansion of autocatalyst manufacturing depreciation plant in China • Additional process catalyst capacity • New pgm cataly
Slide 12: Operating Review
Operating Review Neil Carson Chief Executive
Slide 13: Environmental Technologies Division
Environmental Technologies Division
Slide 14: Environmental Technologies Division
Environmental Technologies Division Year to 31st March % % at change constant £m 2011 2010 rates Revenue 2,708 2,062 +31 +29 Sales (excluding precious 1,566 1,252 +25 +23 metals) Underlying operating profit 164.7 120.9 +36 +33 Return on sales 10.5% 9.7% Return on invested capital • (ROIC) 11.5% Stro
Slide 15: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 1H 2011 2010 2010/1 2010/1 change 1 1 chang million million % e s s million million % s s Sales 14.5 13.0 +11.5 North 7.2 7.3 -1.4 America Production 12.4 9.8 +26.5 6.4 6.0 +6.7 Sales 18.6 18.6 - Europe 9.5 9.1 +4.4 Production 1
Slide 16: Emission Control Technologies: Light Duty Catalyst Sales
Emission Control Technologies Total sales JM’s Light Duty Catalyst Sales – 2009-2011 £879m up £ million 16% North Europe Asia Global America • Good recovery • Sales in line with • Continued in market growth in strong growth in vehicle China • JM sales grew in production line with market • Market sha
Slide 17: Light Duty Vehicle Production Outlook
Emission Control Technologies Light Duty Vehicle Production Outlook – 2008-2012 (calendar years) million Production outlook October 83.3 2010 78.1 73.9 67.4 59.3 42.2 37.1 39.2 28.7 29.0 21.2 20.9 16.8 19.520.1 12.6 8.6 11.913.1 13.9 North Europ Asia Globa America e l • Steady recovery • European •
Slide 18: Light Duty: Looking Ahead
Emission Control Technologies Light Duty: Looking Ahead Closure of Brussels by end Strong growth in China Rare earth prices continue of first half likely to continue – to rise additional capacity • European plant utilisation • Impact commenced in Q4 (excl. Brussels) currently required 2010/11 – circ
Slide 19: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production Year to 31st March 2H 1H 2011 2010 2010/1 chan 2010/11 thousan thousa 1 chan ge % thousa ds nds thousa ge % nds nds North Sales 289.3 251.0 +15.3 America 155.1 134.2 +15.6 Production 298.4 235.8 +26.5 165.3 133.1 +24.2 Sales 251.9 197.4 +27.6 EU 135.7 116.2 +
Slide 20: Emission Control Technologies: Heavy Duty Diesel Sales
Emission Control Technologies Total sales JM’s Heavy Duty Diesel Sales – 2009 - 2011 £296m up £ 71% million Overall market circa $700m in sales – JM’s market share remains >65% North Europ America e • Steady recovery in second half, • Steady recovery throughout year continues into 2011/12 • Signific
Slide 21: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (March 2011) Western European US Class 4-8 Truck thousan Truck Sales thousan Sales ds ds Euro IV / US07 Euro V / US 2010 regulations Euro VI regulations Sales outlook at October 2010 Source: JD Power and Johnson Matthey 21
Slide 22: Heavy Duty Diesel: Looking Ahead
Emission Control Technologies Heavy Duty Diesel: Looking Ahead Developed markets: Developing markets: • Further growth in demand, • First sales to Chinese and Indian particularly in US, expected in OEMs 2011/12 • Catalyst value per truck considerably lower than in US and Europe • Early Euro VI and n
Slide 23: Process Technologies
Process Technologies Catalyst Businesses Davy Process Technology • Good growth in methanol, up 57% to £49m – • Another very good year for DPT, sales up ApicoTM performing well 49% to £66m • Refinery business impacted by reduction in • A total of 13 new projects won gas processing capital projects •
Slide 24: Process Technologies: Looking Ahead
Process Technologies Looking Ahead • Further growth in methanol • Strong performance from DPT catalysts expected should continue • Increasing focus on methanol to • Range of new technologies olefins in China available for license with more in • ApicoTM catalyst starting to development deliver benefi
Slide 25: Precious Metal Products Division
Precious Metal Products Division
Slide 26: Precious Metal Products Division
Precious Metal Products Division Year to 31st March % % at change constant £m 2011 2010 rates Revenue 8,270 6,198 +33 +32 Sales (excluding precious 541 454 +19 +18 metals) Underlying operating profit 172.9 116.7 +48 +47 Return on sales 31.9% 25.7% Return on invested capital Sales Services (ROIC) 55.
Slide 27: Precious Metal Products: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Refining Businesses Business • Average prices boosted by increasing global • Strong performance in 2010/11 demand • Throughputs boosted by higher precious • Pt $1,672/oz up 24% metal prices • Pd $616/oz up 90% •
Slide 28: Precious Metal Products: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales up 19% to £361m Sales • Noble Metals • Excellent growth in industrial products • Medical sales up 20% Noble Metals • Colour Technologies Catalysts 33% and • Good growth in automotive, especially in Chemicals Asia 44% • Decorative dema
Slide 29: Precious Metal Products: Looking Ahead
Precious Metal Products Division Looking Ahead • Precious metal prices expected • Benefits from new product to remain robust launches, e.g. e+TM ethylene scavenger, and new pgm catalyst • Continued strong refining plant in Shanghai intakes expected • Continued investment in R&D across the division 2
Slide 30: Fine Chemicals Division
Fine Chemicals Division es Johnson Matthey
Slide 31: Fine Chemicals Division
Fine Chemicals Division Year to 31st March % % at % chang constant 2010 change £m 2011 2010 e rates * * Revenue 255 223 +14 +13 216 +18 Sales (excluding precious 245 221 +11 +10 213 +15 metals) Underlying operating profit 56.2 55.8 +1 -1 48.3 +16 * Excluding the one-off benefit in 2009/10 from the l
Slide 32: Fine Chemicals: Business Performance
Fine Chemicals Business Performance API Manufacturing Businesses Research Chemicals •Sales up 14% to £173m, strong •Sales up 17% to £72m, growth led by demand across product range US •Availability of narcotic raw materials and Asia remains tight •Continued focus in Asia and on new •Results benefited
Slide 33: Fine Chemicals: Looking Ahead
Fine Chemicals Looking Ahead • Acquisition of Conshohocken, US • Further investment in new API plant provides capacity for development at contract growth and synergies research operations • Progress made at Hebei Aoxing • Continued geographic expansion JV in China and new biochemicals catalogue laun
Slide 34: Research and Development
Research and Development • Group R&D investment increased • Initial additional central by 20% to £110m investment of up to £5m p.a. to target new areas for growth • Further increase of circa £15m to • Early work to identify attractive opportunities underway £125m in 2011/12 to develop • Good progres
Slide 35: Outlook
Outlook Pt Environmental Technologies: Precious Metal Products: •Well placed for continued growth •Robust demand across the division and higher precious metal prices will benefit •Increasing demand for cars and trucks – results in 2011/12 temporary hiatus following Japan earthquake likely to impact
Slide 36: Key Messages
Key Messages Return to strong growth Further good progress expected in 2011/12 Increasing investment in R&D Longer term drivers remain firmly in place 36
Slide 37: Questions and Answers
Questions and Answers Neil Carson Robert MacLeod Larry Pentz Chief Executive Group Finance Director Executive Director, Environmental Technologies Bill Sandford John Fowler Nick Garner Executive Director, Division Director, Fine Group Director, Corporate Precious Metal Products Chemicals and Strateg
Slide 38: Appendix
JME) Johnson Matthey
Slide 39: Emission Control Technologies: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation Rest of World S-Korea India K-ULEV Euro 3 (national) Brazil L4 Brazil L5 Brazil L6 Euro 3 Euro 4 China (national 1) (national 1) Japan J-2000 NLT PNLT Euro 3 Russia Euro 2 Euro 4 Euro 5 European Union Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 Eur
Slide 40: Emission Control Technologies: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation Brazil S.Korea Euro 111 Euro IV (HDD) Rest of (HDD) India India World Euro III (HDD) Euro IV (HDD) Brazil Euro IV (HDD) China Euro III Euro IV (HDD) (HDD) Japan LTP Japan Japan (HDD) (HDD) Russia Stage IIB Stage IV (non-road) (non-road) Eur