The
Colours & Coatings Division continued to make good progress during
the year achieving an 11% increase in operating profits to £27.9
million despite the adverse effect of exchange translation. Since
the acquisition of 100% of the business in February 1998, the division
has nearly doubled its profits.
The Colours & Coatings Division is one of the world’s leading
suppliers of inorganic colours and the associated frits, glazes
and enamels by which they are applied to a wide range of substrates
across a number of markets including automotive, glass, tile,
tableware, plastics and surface coatings.The division is organised
into four sectors reflecting its major markets: Structural Ceramics,
which combines the Tile, Sanitaryware and Zircon businesses, Glass,Tableware
and Pigments and Dispersions. Colours & Coatings has operations
in 30 countries, with its major manufacturing based in Spain,
Italy, the Netherlands and the UK. It is in the top three by market
share in all of its major market segments.
1999/2000 has seen the continuation of the strategy of refocusing
the division’s resources away from declining or slower markets
and investing in order to fully exploit faster growing markets,
particularly those of its Tile and Glass businesses.
Structural
Ceramics
The Structural Ceramics sector achieved strong sales growth in
the year and strong growth in operating profits. Recovering Asian
and Brazilian markets underpinned another strong year for Tile
operations in Spain and further improvement in Italy. The business’
global frit manufacturing capacity is fully utilised and in September
1999 the board approved a £10 million investment in a new frit
factory in Spain. Johnson Matthey’s novel Atomker stain system
for the manufacturing of highly fashionable gres porcellenato
tiles has gained widespread recognition in the Italian market
and with other leading tile manufacturers around the world. Manufacture
of all base stains has now been consolidated within the Structural
Ceramics sector, allowing an improved manufacturing strategy that
will support the needs of the whole division.The Zircon business,
which supplies milled zircon, a white pigment used extensively
in frit and glaze systems, suffered from a continued fall in selling
prices and profits were down on prior year. However, all of its
plants were full through the year and prices appeared to be firming
in the last quarter of 1999/2000. A new low cost zircon production
facility in the US started production in February 2000.
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| The Glass business based in Maastricht, Holland, manufactures a wide range of high technology products for decorating glass |
Glass
The
Glass sector also had a very good year with good growth in profits
on the back of a strong increase in sales.There was strong growth
in demand for black obscuration enamels for automotive glass.The
core European business based in Maastricht is at full capacity,
while encouraging progress was made in growing market share in
the US. Glass has had a very strong record in introducing new
products in recent years, including improvements to its benchmark
automotive neutral black and a market leading range of unleaded
decorative colours.A major investment programme to expand the
Maastricht site has been approved to support good prospects for
future growth.
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| The trend to infomal dining has led to the use of innovative colours and designs by tableware manufacturers around the world |
Tableware
Profits
in Tableware improved on prior year as a continuing fall in sales
to UK manufacturers was offset by the benefits of cost reduction
initiatives and increased sales to other markets.The UK tableware
market now shows signs of having reached the bottom and there
are growth opportunities with leading customers both in the UK
and around the world. An exceptional charge has been taken this
year to rationalise the business.This rationalisation has resulted
in the closure of two sites, the announcement of the closure of
a third and has supported the refocusing of sales and support
resources on leading global accounts.
Pigments and Dispersions
The core Pigments and Dispersions businesses had an excellent
1999/2000 and are well positioned for further growth, following
the successful exit from organic pigment manufacture. Sales of
cadmium, complex inorganic pigments and transparent iron oxide
all showed strong growth, as did Micraflo, a novel encapsulated
pigment technology for the construction plastics industry. The
Dispersions business significantly increased output of printing
inks, paints and wood finish products.
Research
and Development
Research for the Colours & Coatings Division is based at
the Johnson Matthey Technology Centre and at its main European
facilities. Research activities include fundamental studies
into the base chemistry of the businesses’ core products
as well as new product development.
The introduction of new products and new application effects
is an important part of the division’s strategy for growth.
Its customers’ markets are fashion driven and so development
programmes are closely linked to the need to develop innovative
new ways of using colours and to match changing consumer
tastes.
Increasing environmental requirements are also leading to
the development of robust lead free colour ranges, such
as the new Arcopal glass range. Colours & Coatings works
closely with its customers in order to lower their cost
of ownership of its products while maintaining margins.
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