Johnson Matthey PLC · LSE:JMAT
Johnson Matthey — Investor Presentation (November 2004)
36 slides from Johnson Matthey's investor presentation, Nov 16, 2004
Slide 1: Platinum 2004 Interim Review
abcd Platinum| Platinum 2004 Interim Review 16th November 2004 1
Slide 2: Platinum
Platinum • Demand to edge up to 6.47 million oz • Good growth in auto & industrial demand • Purchasing by Chinese jewellers slides • Supplies to grow to 6.43 million oz • Market moving close to balance • Fund long positions help to support the price www.platinum.matthey.com •Demand for platinum to b
Slide 3: Platinum Demand by Application
Platinum Demand by Application Autocatalyst: +7% 3,210 3,430 3,500 RoW 3,000 2,500 N.America 2,000 '000 oz Japan 1,500 1,000 Europe 500 0 2003 2004 www.platinum.matthey.com Autocatalyst demand for platinum is forecast to rise by 7% in 2004 to 3.43 million oz Most of the growth will be in Europe, whe
Slide 4: Diesel share of European new car sales, 1999 vs 2004
Diesel share of European new car sales, 1999 vs 2004 1999 2004 Diesel Diesel Gasoline Gasoline www.platinum.matthey.com What’s happening in Europe is a continuation of the trend of recent years – the persistent growth in sales of diesel cars in Europe. In 1999, diesels accounted for less than 30% of
Slide 5: European Demand for Platinum in Autocatalysts 1999 - 2004
European Demand for Platinum in Autocatalysts 1999 - 2004 '000 oz 2,000 1,750 1,500 1,250 1,000 750 500 250 0 1999 2000 2001 2002 2003 2004 Pt in Diesel Pt in Gasoline www.platinum.matthey.com Driven by the diesel car sector, European auto demand for platinum has nearly trebled since 1999, (diesel c
Slide 6: Autocatalyst demand: emission regulations tightening
Autocatalyst demand: emission regulations tightening Europe: Euro IV from Jan. 2005 Japan: National HDD regulations from Oct. 2005 Other Asia: China, South Korea, India, Thailand… USA: Tier 2 phase-in from Jan 2004 www.platinum.matthey.com Tightening emissions standards are also contributing to high
Slide 7: Platinum Demand by Application: Jewellery
Platinum Demand by Application Jewellery: -10% 2,500 2,440 2,200 2,000 RoW Europe 1,500 '000 oz N.America 1,000 Japan 500 China 0 2003 2004 www.platinum.matthey.com Purchases of platinum for jewellery manufacture are forecast to fall by 10% in 2004 to 2.20 million oz. This is due almost entirely to
Slide 8: Falling Chinese Jewellery Demand for Platinum – Why?
Falling Chinese Jewellery Demand for Platinum – Why? Higher platinum price: Metal costs up but retail prices static = lower profit margins Lower margins = increased production of WG plus addition of Pd jewellery Platinum stock levels reduced throughout the trade Greater competition in stores from le
Slide 9: Demand for Platinum in Jewellery – Other Markets
Demand for Platinum in Jewellery – Other Markets Retail sales fall in Japan but less inventory recycling High Pt price = pressure on market share in USA UK bridal the bright spot in Europe www.platinum.matthey.com In Japan, retail sales of platinum jewellery have weakened further but, after several
Slide 10: Platinum Demand by Application: Industrial
Platinum Demand by Application Industrial: +9% 1,600 1,400 1,530 1,400 Petroleum 1,200 Glass 1,000 '000 oz 800 Electrical 600 Chemical 400 200 Other 0 2003 2004 www.platinum.matthey.com Demand for platinum in industrial applications is forecast to grow 9% in 2004 to 1.53 million oz. Use of platinum
Slide 11: Platinum Demand by Application
Platinum Demand by Application ‘000 oz 2003 2004 % change Autocatalyst: gross 3,210 3,430 7 recovery (645) (695) 8 Jewellery 2,440 2,200 (10) Industrial 1,400 1,530 9 Investment 15 5 (67) TOTAL DEMAND 6,420 6,470 1 www.platinum.matthey.com To recap: with autocatalyst and industrial demand for platin
Slide 12: Platinum Supply by Region
Platinum Supply by Region Total supply: +4% 6,200 6,430 7,000 6,000 Other 5,000 N. America 4,000 '000 oz 3,000 Russia 2,000 South 1,000 Africa 0 2003 2004 www.platinum.matthey.com Total supply of platinum is forecast to rise 4% to 6.43 million oz this year. Output from South Africa will lead the gro
Slide 13: South African Supply Factors
South African Supply Factors Industrial relations: Anglo Platinum, Impala Operational: Anglo, Impala, Northam, Aquarius, Southern Platinum Rand strength: All producers www.platinum.matthey.com In South Africa, almost all the major producers are expected to increase output, but a number of problems h
Slide 14: Other Supply
Other Supply Russia: sales close to mine production North America: Inco’s output up strongly Zimbabwe: modest growth www.platinum.matthey.com Shipments of platinum from Russia are therefore forecast to fall to 850,000 oz , closely reflecting the level of mine production. There are no signs of any sa
Slide 15: Platinum Supply by Region
Platinum Supply by Region ‘000 oz 2003 2004 % change South Africa 4,630 4,980 8 Russia 1,050 850 (19) North America 295 360 22 Others 225 240 7 TOTAL SUPPLY 6,200 6,430 4 www.platinum.matthey.com So, with higher South African and North American platinum production outweighing a fall in Russian sales
Slide 16: Platinum Supply and Demand
Platinum Supply and Demand ‘000 oz 2003 2004 % change Demand 6,420 6,470 1 Supply 6,200 6,430 4 Movements in Stocks (220) (40) www.platinum.matthey.com With platinum supply climbing faster than demand this year, the market deficit is forecast to shrink to just 40,000 oz. This is easily the smallest
Slide 17: Platinum price
Platinum price January - October 2004 $ per oz 950 925 900 875 850 825 800 775 750 J F M A M J J A S O Average Price www.platinum.matthey.com Platinum has traded above $800 for much of 2004 to date. The price rallied strongly between mid-February and early April, reaching a peak fixing in London of
Slide 18: Platinum price vs NYMEX net speculative position
Platinum price vs NYMEX net speculative position January - October 2004 $ per oz '000 oz 950 350 925 300 900 250 875 200 850 150 825 100 800 50 775 0 750 -50 J F M A M J J A S O Total Net Spec. Average Price www.platinum.matthey.com The blue area represents the net position in platinum futures held
Slide 19: Palladium
Palladium • Demand to improve to 6.14 million oz • US auto industry stocks falling, purchases rising • Chinese jewellers introduce palladium products • Mine output rising and large sales from stocks • Market surplus to again exceed 1 million oz • Price subdued despite large investment by funds www.p
Slide 20: Palladium Demand by Application: Autocatalyst
Palladium Demand by Application Autocatalyst: +5.5% 3,460 3,650 4,000 3,500 RoW 3,000 2,500 Japan '000 oz 2,000 1,500 Europe 1,000 N.America 500 0 2003 2004 www.platinum.matthey.com Autocatalyst demand for palladium is projected to rise 5.5% this year to 3.65 million oz. Increased purchases of metal
Slide 21: Palladium Demand by Application: Industrial & other
Palladium Demand by Application Industrial & other: +28% 2,360 3,015 3,500 3,000 Other 2,500 2,000 Jewellery '000 oz 1,500 Dental 1,000 500 Electronics 0 2003 2004 www.platinum.matthey.com Industrial and other applications for palladium will jump to just over 3 million oz in 2004 – largely because p
Slide 22: Palladium Demand: Jewellery fabrication
Palladium Demand Jewellery fabrication Large scale production of palladium jewellery began in Q1 Strong purchasing of metal in March/April as trade stocked up Mixed reception at retail level Chinese jewellery demand to climb from 25k oz to 510k oz this year www.platinum.matthey.com Some of the large
Slide 23: Palladium Demand: Electronics
Palladium Demand Electronics: +2% Strong demand from HIC and plating markets MLCC sales up but thrifting & miniaturisation continue www.platinum.matthey.com Demand for palladium from the electronics industry is expected to grow slowly this year, rising by just 2% to 915,000 oz. Growth in global sale
Slide 24: Palladium Demand: Dental and Other
Palladium Demand Dental and Other Dental +2% - modest increase in Japan, little change elsewhere Significant investment demand for small bars in the USA www.platinum.matthey.com Use of palladium in dental alloys is forecast to rise 2% to 840,000 oz – the lower piece of palladium has stimulated deman
Slide 25: Palladium Demand by Application
Palladium Demand by Application ‘000 oz 2003 2004 % change Autocatalyst: gross 3,460 3,650 5 recovery (410) (525) 28 Electronics 895 915 2 Dental and Other 1,465 2,100 43 TOTAL DEMAND 5,410 6,140 13 www.platinum.matthey.com In summary, total palladium demand is forecast to rise by 13% this year to 6
Slide 26: Palladium Supply by Region
Palladium Supply by Region Total supply: +11% 6,460 7,160 8,000 7,000 Other 6,000 5,000 North America '000 oz 4,000 South 3,000 Africa 2,000 Russia 1,000 0 2003 2004 www.platinum.matthey.com Palladium supply is projected to rise 11% in 2004 to 7.16 million oz, with sales of Russian metal and product
Slide 27: Palladium Supply by Region
Palladium Supply by Region Russia – mine production plus sales of 376,000 oz of inventory by Stillwater South Africa – output rising in line with increased platinum production USA – Inco, NAPd output up www.platinum.matthey.com Sales of Russian palladium are projected to climb to 3.3 million oz, an
Slide 28: Palladium Supply by Region
Palladium Supply by Region ‘000 oz 2003 2004 % change Russia 2,950 3,300 12 South Africa 2,320 2,570 11 North America 945 1,025 8 Others 245 265 8 TOTAL SUPPLY 6,460 7,160 11 www.platinum.matthey.com So with sales of palladium increasing from all regions, total supply is forecast to climb 11% to 7.1
Slide 29: Palladium Supply and Demand
Palladium Supply and Demand ‘000 oz 2003 2004 % change Demand 5,410 6,140 13 Supply 6,460 7,160 11 Movements in Stocks 1,050 1,020 www.platinum.matthey.com The improvement in palladium demand this year will be almost matched by the increase in production, leaving the market oversupplied for the four
Slide 30: Palladium – NYMEX net speculative position versus price
Palladium – NYMEX net speculative position versus price January – October 2004 $ per oz 350 300 250 200 150 100 J F M A M J J A S O Average Price www.platinum.matthey.com Not surprisingly, apart from a fund-driven spike to $333 in early April, the palladium price has been very subdued to date in 200
Slide 31: Palladium – NYMEX net speculative position versus price
Palladium – NYMEX net speculative position versus price January – October 2004 S per oz '000 oz 350 1200 300 1000 800 250 600 200 400 150 200 100 0 J F M A M J J A S O Total Net Spec. Average Price www.platinum.matthey.com This is despite the substantial net long position still held by funds, both o
Slide 32: Conclusion - Platinum
Conclusion - Platinum • Auto / industrial demand to stay firm • Return to growth in jewellery possible but price dependent • Supplies to rise more rapidly in 2005 • Market to move into surplus www.platinum.matthey.com In conclusion: For platinum, we believe that auto and industrial demand is likely
Slide 33: Forecast Platinum Price For The Next 6 Months
Forecast Platinum Price For The Next 6 Months $ per oz 1,000 950 900 850 $760 – $880 800 750 700 J F M A M J J A S O N D J F M A www.platinum.matthey.com We are, therefore, expecting the platinum price to be a little softer during the next six months, trading in a range of $760 to $880. 33
Slide 34: Conclusion - Palladium
Conclusion - Palladium • Recovery to continue in auto / electronics markets • Chinese jewellery demand likely to ease back • Supplies to climb further as stock sales continue • Substantial surplus to persist www.platinum.matthey.com As for palladium: Demand from the autocatalyst market is expected t
Slide 35: Forecast Palladium Price For The Next 6 Months
Forecast Palladium Price For The Next 6 Months $ per oz 400 350 300 250 $160 – $250 200 150 100 J F M A M J J A S O N D J F M A www.platinum.matthey.com Consequently, we see little upside to the price and forecast a trading range of $160 to $250 for the next six months. 35
Slide 36: Platinum 2004 Interim Review
abcd Platinum| Platinum 2004 Interim Review www.platinum.matthey.com The full Interim Review is available to view or download from our website: www.platinum.matthey.com 36
Johnson Matthey — Investor Presentation (November 2004) on 6ix