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 Year to 31st March 2011 2010 Change £m £m As reported const. curr Revenue 9,985 7,839 +27% +26% Sales excluding precious metals 2,280 1,886 +21% +19% 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 (13.2) (9.9) 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 £m 800 750 40 700 39 650 18 10 230 600 550 657 500 450 514 400 2009/10 Gross Net revenue Fixed production Variable R&D spend Exchange 2010/11 Gross Profit costs production costs Profit • Fixed production costs up £40m principally due to: • Ramp up of production
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 days • Net debt at 31st March 2011 – £639.4m, up b
Slide 10: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Target 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% Cost of capital 10% 9% 2006/07 2007/08 2008/09 2009/10 2010/11 • Substantial increase in ROIC – double cost of • Well placed to exceed target of 20% in 2011/12 capital and beyond 10
Slide 11: Capital Expenditure
Capital Expenditure £m 203.5 Capex / depn (times) 2.0 200 145.0 1.5 150 134.4 137.9 100 1.0 50 0.5 0 0.0 2007/08 2008/09 2009/10 2010/11 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects in year: • 2011/12 capex likely to be around 1.3x depreciation • Expansion of auto
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 £m 2011 2010 change constant rates Revenue 2,708 2,062 +31 +29 Sales (excluding precious metals) 1,566 1,252 +25 +23 Underlying operating profit 164.7 120.9 +36 +33 Return on sales 10.5% 9.7% Return on invested capital (ROIC) 11.5% 9.4% S
Slide 15: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 1H 2011 2010 change 2010/11 2010/11 change millions millions % millions millions % Sales 14.5 13.0 +11.5 7.2 7.3 ‐1.4 North America Production 12.4 9.8 +26.5 6.4 6.0 +6.7 Sales 18.6 18.6 ‐ 9.5 9.1 +4.4 Europe Production 19.9 18.
Slide 16: Emission Control Technologies: Light Duty Catalyst Sales
Emission Control Technologies Total sales JM’s Light Duty Catalyst Sales – 2009‐2011 £879m up 16% £ million North America Europe Asia Global • Good recovery in • Sales in line with • Continued strong market growth in vehicle growth in China production • JM sales grew in line • Market share gains wit
Slide 17: Light Duty Vehicle Production Outlook 2008-2012
Emission Control Technologies Light Duty Vehicle Production Outlook – 2008‐2012 (calendar years) million Production outlook October 2010 83.3 78.1 73.9 67.4 59.3 42.2 37.1 39.2 28.7 29.0 21.2 20.9 16.8 19.5 20.1 12.6 8.6 11.9 13.1 13.9 North America Europe Asia Global • Steady recovery • European •
Slide 18: Light Duty: Looking Ahead
Emission Control Technologies Light Duty: Looking Ahead Closure of Brussels by end of Strong growth in China likely to Rare earth prices continue first half continue – additional capacity to rise required • European plant utilisation (excl. • Impact commenced in Q4 Brussels) currently circa 70% 2010
Slide 19: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production Year to 31st March 2H 1H 2011 2010 change 2010/11 2010/11 change thousands thousands % thousands thousands % Sales 289.3 251.0 +15.3 155.1 134.2 +15.6 North America Production 298.4 235.8 +26.5 165.3 133.1 +24.2 Sales 251.9 197.4 +27.6 135.7 116.2 +16.8 EU Pr
Slide 20: Heavy Duty Diesel Sales
Emission Control Technologies Total sales JM’s Heavy Duty Diesel Sales – 2009 ‐ 2011 £296m up 71% £ million 250 Overall market circa $700m in sales – 200 JM’s market share 150 remains >65% 100 50 0 2009 2010 2011 2009 2010 2011 North America Europe • Steady recovery in second half, continues into •
Slide 21: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (March 2011) Western European Truck Sales US Class 4‐8 Truck Sales thousands thousands 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, particularly • First sales to Chinese and Indian OEMs in US, expected in 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 – ApicoTM • Another very good year for DPT, sales up 49% to £66m performing well • A total of 13 new projects won • Refinery business impacted by reduction in gas • Success in China with SNG, b
Slide 24: Process Technologies: Looking Ahead
Process Technologies Looking Ahead • Further growth in methanol catalysts • Strong performance from DPT should expected continue • Increasing focus on methanol to olefins • Range of new technologies available for in China license with more in development • ApicoTM catalyst starting to 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 £m 2011 2010 change constant rates Revenue 8,270 6,198 +33 +32 Sales (excluding precious metals) 541 454 +19 +18 Underlying operating profit 172.9 116.7 +48 +47 Return on sales 31.9% 25.7% Return on invested capital (ROIC) 55.9% 46.8% Sales
Slide 27: Precious Metal Products: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Business Refining Businesses • Average prices boosted by increasing global demand • Strong performance in 2010/11 • Pt $1,672/oz up 24% • Throughputs boosted by higher precious 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 and 33% Chemicals • Good growth in automotive, especially in Asia 44% • Decorative dema
Slide 29: Precious Metal Products: Looking Ahead
Precious Metal Products Division Looking Ahead • Precious metal prices expected to • Benefits from new product launches, e.g. remain robust e+TM ethylene scavenger, and new pgm catalyst plant in Shanghai • Continued strong refining intakes expected • Continued investment in R&D across the division 2
Slide 30: Fine Chemicals Division
Fine Chemicals Division UM) Johnson Matthey
Slide 31: Fine Chemicals Division
Fine Chemicals Division Year to 31st March % % at % £m 2011 2010 change constant rates 2010* change* Revenue 255 223 +14 +13 216 +18 Sales (excluding precious metals) 245 221 +11 +10 213 +15 Underlying operating profit 56.2 55.8 +1 ‐1 48.3 +16 Return on sales 22.9% 25.3% 22.7% Return on invested cap
Slide 32: Fine Chemicals: Business Performance
Fine Chemicals Business Performance API Manufacturing Businesses Research Chemicals • Sales up 14% to £173m, strong demand • Sales up 17% to £72m, growth led by US across product range and Asia • Availability of narcotic raw materials remains • Continued focus in Asia and on new catalogue tight prod
Slide 33: Fine Chemicals: Looking Ahead
Fine Chemicals Looking Ahead • Acquisition of Conshohocken, US plant • Further investment in new API provides capacity for growth and development at contract research synergies operations • Progress made at Hebei Aoxing JV in • Continued geographic expansion and China new biochemicals catalogue laun
Slide 34: Research and Development
Research and Development • Group R&D investment increased by 20% • Initial additional central investment of up to £110m to £5m p.a. to target new areas for growth • Further increase of circa £15m to £125m • Early work to identify attractive opportunities underway in 2011/12 to develop opportunities
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 results in 2011/12 • Increasing demand for cars and trucks – temporary hiatus following Japan earthquake likely to impa
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 Chemicals Group Director, Corporate and Precious Metal Products Strateg
Slide 38: JME)
JME) Johnson Matthey
Slide 39: 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: 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