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[June 2006]
Encouraging Prospects for Continued Growth Says Johnson Matthey
For the year 2005/06, revenue at Johnson Matthey PLC rose by 3% to £4.756 billion. Catalysts Division’s sales were well ahead of 2004/05 but sales in Precious Metal Products Division were down, despite higher metal prices, reflecting the withdrawal from gold refining in the UK in 2004/05 and lower trading activity in the first half of the year. Sales excluding the value of precious metals rose by 13% reflecting good underlying growth in Catalysts Division.Operating profit, before impairment and restructuring costs, increased by 8% to £234.7 million. Exchange translation was favourable, increasing profit by £4 million compared with last year. Interest rose by £1.7 million to £14.7 million reflecting the impact of higher short-term interest rates in the USA. Profit before tax, impairment and restructuring costs was up 8% at £219.8 million.
An impairment charge of £6 million has been included in the results for 2005/06 for the write-down of process assets no longer required in the platinum group metal refining business following the successful restructuring of that business. Including the impairment charge, profit before tax was £213.8 million which was 28% up on the equivalent figure for 2004/05 which included a charge of £36.7 million for restructuring costs.
Underlying earnings per share rose by 9% to 72.7 pence, benefiting from the accretive effect of buying back shares. Including impairment, restructuring and disposal costs total earnings per share rose by 33% to 70.8 pence.
The board is recommending to shareholders a final dividend of 21p, making a total dividend for the year of 30.1p, an increase of 9%, which is in line with the growth in underlying earnings per share.
In its review of the group's various operations, Johnson Matthey explained that Ceramics was being shown as a stand alone division this year following the restructuring of the Colours & Coatings Division. That restructuring included the sale of JM's Pigments & Dispersions business, transfer of the Colour Technologies business to Precious Metal Products Division and closure or consolidation of a number of smaller manufacturing units.
The net impact has been to significantly reduce the cost base which has improved operating profit and margins. Ceramics Division also successfully grew its sales in 2005/06 by 10% to £182 million. Operating profit increased by 13% to £21.3 million.
The division, headquartered in Spain, is a global supplier of decorative materials to the ceramic industries, particularly tile manufacturing. It is realising the benefits of the investments made in recent years to position it as one of the lowest cost global producers, added JM.
Sales were strong in China, which has a large and growing tile market and where the division has a factory to supply local consumption. Growth in Europe was less strong, with Italian and Spanish customers, who export around 50% of their production outside the euro zone, continuing to suffer downward pressure on volumes and prices, due to the strength of the euro. However, sales into Eastern Europe, especially Poland and Russia, showed good growth as the region’s manufacturing base continued to expand.
In 2006/07, JM expects the Ceramics Division to trade at similar levels to 2005/06 and be strongly cash generative.
Speaking about the results across the group, the CEO Neil Carson said: "Johnson Matthey performed well last year and prospects for future growth are very encouraging. Our investment in new capacity to meet customer demand will continue and we remain optimistic about prospects for future performance. We expect growth in earnings to be stronger in the second half of the current year than in the first driven by increasing demand for our technology leading diesel catalyst products. "
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ENDS