Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — H1 2010/11 Earnings Presentation
38 slides from Johnson Matthey's earnings presentation, Nov 24, 2010
Slide 1: Presentation of Results for the half year ended 30th September 2010
Presentation of Results for the half year ended 30th September 2010 24th November 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: Key Messages
Key Messages • Strong recovery • Record first half • Seeing benefits of management actions taken during downturn • Continued investment in R&D • Long term drivers firmly in place 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Summary Results
Summary Results 1H 1H 2010 2009 Change £m £m % Revenue 4,562 3,577 +28 Sales excluding precious metals 1,104 883 +25 Profit before tax 144.1 109.5 +32 Total earnings per share 49.2p 37.4p +32 Underlying*: Profit before tax 164.3 114.4 +44 Earnings per share 56.3p 39.1p +44 Dividend per share 12.5p 1
Slide 7: Net Cash Flow
Net Cash Flow 1H 2010 1H 2009 £m £m Underlying operating profit 174 124 Depreciation and amortisation 71 61 Tax (paid) / received (38) 5 Working capital / other (159) (112) Cash flow from operations 48 78 • Strong growth impacted cash flow, but good working capital management • Working capital: • Ex
Slide 8: Capital Expenditure
Capital Expenditure £ million 203.5 Capex / depn (times) 2.0 200 145.0 134.4 1.5 150 100 1.0 53.3 50 0.5 0 0.0 2007/08 2008/09 2009/10 1H 2010/11 Environmental Technologies Precious Metal Products Fine Chemicals • Capex / depreciation in first half 0.9x. Full year likely to be 1.2x • Going forward,
Slide 9: Results Benefited from Management Actions (1)
Results Benefited from Management Actions (1) Environmental Technologies Emission Control Technologies • Continued to invest in efficient capacity to meet future demand • e.g. Macedonia, Smithfield • Improved production costs by >5% - circa £8m p.a. • Manufacturing reject rates reduced by 33% - £4m
Slide 10: Results Benefited from Management Actions (2)
Results Benefited from Management Actions (2) Precious Metal Products • Significant improvement in metal management, working capital £100m lower • Fixed production costs at pgm refineries down by ~£2m p.a. Fine Chemicals • US plant capacity up by ~50%, cost per tonne produced ~20% lower - $5m p.a. •
Slide 11: Operating Review
Operating Review Neil Carson Chief Executive
Slide 12: Environmental Technologies Division
Environmental Technologies Division
Slide 13: Environmental Technologies Division
Environmental Technologies Division 1H 1H % % at £m 2010 2009 change constant rates Revenue 1,261 919 +37 +34 Sales excluding precious metals 724 564 +29 +26 Underlying operating profit 76.6 54.5 +41 +37 Return on sales (ex pms) 10.6% 9.7% PT + Fuel • ECT’s sales up 29% to £567m Cells 22% • Process
Slide 14: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 1H 1H 2H Change Change 2010/11 2009/10 2010/11 2009/10 % % millions millions millions millions North Sales 7.3 6.8 +7.4 7.3 6.2 +17.7 America Production 6.0 4.1 +46.3 6.0 5.6 +7.1 Sales 9.1 9.4 -3.2 9.1 9.1 - Europe Production 9.5 8.6 +10.5 9.5 9.
Slide 15: Emission Control Technologies
Emission Control Technologies Light Duty • Light duty catalyst sales up 22% to £419m • 74% of ECT’s sales • Sales in Europe benefited from increased fitment of filters and recovery in diesel’s market share • Diesel share of European car market 52%, up from 44% • Around 90% filter fitment by end of o
Slide 16: Emission Control Technologies
Emission Control Technologies Europe Light Duty Sales Growth 1H 2010 £ million 300 +25 256 +15 250 230 -12 -2 200 150 100 50 0 1H 2009 Flowthrough DPF Volumes DPF Substrate Other 1H 2010 Catalyst Volumes Costs 16
Slide 17: Emission Control Technologies
Emission Control Technologies Light Duty – Asia Quarterly Vehicle Sales and Production • China largest market in Asia million in Asia 10 • 54% of region’s light duty vehicle sales in 1H 9 • Virtually all production is for domestic market 8 7 • Vehicle sales in China up 18% to 7.8 million 6 5 • Asia
Slide 18: Emission Control Technologies
Emission Control Technologies Light Duty Vehicle Production Outlook million 90 80.8 • Most recent industry 80 70.8 74.7 forecasts show 70 67.4 increase in global 60 59.3 estimates for 2010 and 2011. Growth 50 particularly in Asia 40.6 38.0 40 35.5 28.7 29.0 • Despite the effect of 30 21.2 19.9 scrap
Slide 19: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H Change Change 2010/11 2009/10 2010/11 2009/10 % % thousands thousands thousands thousands North Sales 137.6 117.2 +17.4 137.6 133.8 +2.8 America Production 132.4 105.9 +25.0 132.4 129.9 +1.9 Sales 110.5 104.9 +5.3 110.5 92.8 +19.1 EU Production 15
Slide 20: Emission Control Technologies
Emission Control Technologies Heavy Duty Diesel • Unit sales almost double those of 1H 2009 • US 2010 HDD standards require more catalysts per vehicle • JM’s sales up 72% on first half of last year at £128m • North America £83m • Europe £41m • Modest profit in 1H 2010 • Driven by improving markets a
Slide 21: Emission Control Technologies
Emission Control Technologies Heavy Duty Sales Growth 1H 2010 £ million 150 +5 128 +24 +25 +7 100 74 -7 50 0 1H 2009 Europe Europe Other N America N America N America 1H 2010 Volumes Volumes Legislation Other 21
Slide 22: Emission Control Technologies
Emission Control Technologies Heavy Duty Diesel – Dynamics • Steady increase in US truck sales • Europe saw better growth in truck production • Circa 75% of costs are variable • Market size today approx US $600m sales. JM has >65% share • Market grows to US $2.5bn by end 2014/15 Quarterly Western Eu
Slide 23: Emission Control Technologies
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (November 2010) Western European Truck Sales thousands US Class 4-8 Truck Sales thousands 400 600 350 500 300 400 250 200 300 150 200 100 100 50 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2
Slide 24: Process Technologies
Process Technologies 1H 2010 • AMOG – good first half sales £153m • Sales up 28% • Strong demand for methanol catalysts, sales more than Other doubled 22% • Ammonia and hydrogen catalyst sales also ahead AMOG DPT 56% 22% • First commercial sales of APICO • Sale of Vertec to Dorf Ketal – agreement te
Slide 25: Process Technologies
Process Technologies Davy Process Technology (DPT) Market Size for Technologies Currently Licensed by DPT £ million • Another strong performance from DPT 100 90 • Good licensing and engineering income 80 • Nine new plants being commissioned in the year 70 60 • World’s largest methanol plant commissi
Slide 26: Process Technologies
Process Technologies Acquisition of Intercat • Intercat acquisition completed on 1st November • Leader in FCC additives and addition systems • 2009 sales of US $58m • Normalised operating profit US $8.4m in 2009 • Strengthens JM’s position in refinery catalysts • Growth driven by demand for transpor
Slide 27: Precious Metal Products Division
Precious Metal Products Division
Slide 28: Precious Metal Products Division
Precious Metal Products Division 1H 1H % % at £m 2010 2009 change constant rates Revenue 3,175 2,544 +25 +22 Sales excluding precious metals 258 206 +25 +22 Underlying operating profit 81.2 49.2 +65 +63 Return on sales (ex pms) 31.5% 23.9% Catalysts and Platinum Marketing and • Strong growth in sale
Slide 29: Precious Metal Products Division
Precious Metal Products Division Platinum Marketing and Distribution US$/oz Platinum 2,400 • Pt market expected to be in small surplus 2,000 in calendar year 2010 1,600 1,200 800 • Average Pt price in 1H 2010/11 $1,595/oz, 400 up 32% on same period last year 0 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-
Slide 30: Precious Metal Products Division
Precious Metal Products Division Manufacturing Businesses • Good sales and profit growth • Continued recovery in industrial demand • Noble Metals’ sales up 20% • Particularly good growth in agrochemical and industrial sectors • Strong performance in refining businesses, sales well ahead • Catalysts
Slide 31: Fine Chemicals Division
Fine Chemicals Division (UME) Johnson Matthey
Slide 32: Fine Chemicals Division
Fine Chemicals Division 1H 1H % % at £m 2010 2009 change constant rates Revenue* 126 107 +18 +16 Sales excluding precious metals* 122 106 +15 +13 Underlying operating profit* 28.8 23.1 +25 +22 Return on sales (ex pms)* 23.7% 21.9% * Excluding one-off benefit from launch of generic ADDERALL XR® in 1H
Slide 33: Fine Chemicals Division
Fine Chemicals Division • Good first half for APIs manufacturing businesses with sales* up 15% • Strong sales of bulk opiates and other controlled APIs at Macfarlan Smith • Pharmaceutical Materials and Services saw good growth in specialist opiates, amphetamines and platinum anticancer APIs • Good r
Slide 34: Outlook
Outlook Second Half (1) Environmental Technologies • Short term visibility continues to be limited • European car sales expected to continue slight downward trend, balanced by growth in emerging markets • Continued steady improvement in HDD business • Process Technologies well placed for further gro
Slide 35: Outlook
Outlook Second Half (2) Precious Metal Products • All businesses should continue to perform well • Second half results expected to be slightly ahead of first half Fine Chemicals • Delays to customers’ launch of new products will impact 2H • However, division expected to be ahead of 2009/10 Group • O
Slide 36: JME)
JME) Johnson Matthey 36
Slide 37: Emission Control Technologies
Emission Control Technologies Light Duty Vehicle Legislation 37
Slide 38: Emission Control Technologies
Emission Control Technologies Heavy Duty Diesel Legislation 38