UpdateUK’s Johnson Matthey Q3 pre-tax profits slump 19%

30 January 2013 11:18  [Source: ICIS news]

(updates with division performance breakdown, analyst comment)

LONDON (ICIS)--Johnson Matthey’s underlying profit before tax for the three months to 29 January fell by 19% year on year, on the back of weak precious metals products sales volumes and a shifting business mix for its environmental technologies division, the UK-based specialty chemicals firm said on Wednesday.

The company’s pre-tax profits fell to £84.3m (€98m, $134m) during the quarter, while sales excluding precious metals products were down 2% year on year at £635m.

Net debt during the period increased by £44m during the quarter to £739m, primarily due to the company’s £22m acquisition of automotive battery technology company Axeon in October 2012.

The company’s fine chemicals division noted a slight uptick in sales to £63m over the period, while operating profit was up year on year but down quarter on quarter. Operating margins for the division have returned to normal levels, Johnson added.

Environmental technology products sales were broadly stable year on year at £456m compared with £461 in the previous October-January period, but operating profits were “adversely impacted” by a change in business mix for the division.

According to Johnson, the shift was compounded by a decline in light duty vehicle catalyst sales, primarily in Europe and Japan, leading to a 10% decline in sales of the products, to £227m.

Precious metal products sales fell by 7% year on year to £128m, as a decline in volumes for platinum group metals (PGMs) outweighed a slight increase in prices for the materials.

Johnson Matthey added that it expected overall performance for the second half of its fiscal year will be similar to the first half – the six months to 30 September 2012 – when pre-tax profits fell 6% year on year to £191.2m.

US-based investment bank JP Morgan Cazenove said that it would be maintaining its current forecast for Johnson’s full-year results.

In an investor note, it said: “
Johnson Matthey’s Q3 [third quarter] 2013 interim management statement revealed a continuation of the challenging macro environment with pressure in the European automotive market and a reduction in platinum volumes.

“We maintain our FY [full year] 2013 estimate at PTP [pre-tax profits of] £383m, EPS [earnings per share of] 148p,” the firm added.

 ($1 = €0.74, $1 = £0.63, €1 = £0.86)

By: Tom Brown
+44 208 652 3214

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