|
|
For Release at
Preliminary Results for the year ended
Encouraging prospects for continued growth
|
|
Year to 31st March
|
%
|
||
|
|
2006 |
2005 |
change |
|
|
Revenue Sales excluding precious metals Profit before tax Total earnings per share |
£4,756m £1,341m £213.8m 70.8p |
£4,626m £1,188m £167.4m 53.2p |
+3 +13 +28 +33 |
|
Before impairment and
restructuring costs:
|
|
|||
|
Profit before tax Earnings per share Dividend per share |
£219.8m 72.7p 30.1p |
£204.1m 67.0p 27.7p |
+8 +9 +9 |
|
and disposal costs, earnings
per share up 9% to 72.7 pence
|
|
|
|
|||
|
£m |
Year to 31st March 2006 2005 |
% change |
2006 at
2005 exchange
rates |
% change |
|
|
Catalysts Precious Metal Products Pharmaceutical Materials Ceramics Corporate |
134.2 62.2 33.8 21.3 (16.8) |
122.5 52.0 39.8 18.8 (16.5) |
+10 +20 -15 +13 |
132.1 61.2 33.5 20.8 (16.9) |
+8 +18 -16 +11 |
|
Operating Profit |
234.7 |
216.6 |
+8 |
230.7 |
+7 |
|
|
|
|
|
|
|
·
Operating profit, before impairment and restructuring costs,
up 8% to £234.7 million
·
Catalysts up 10% with good growth in diesel products in
·
Precious Metal Products up 20% benefiting from favourable
trading conditions and growth in manufacturing businesses
·
Pharmaceutical Materials down 15% following expiry of
carboplatin patent
·
Ceramics up 13% with strong cash generation
Business Prospects
·
Heavy duty diesel (HDD) catalysts poised for significant
growth with Johnson Matthey to achieve leading market position
·
Continuing good growth in light duty diesel (LDD) products
expected in
·
Autocatalyst demand in
·
High oil prices to support growth of sales in process
catalysts
·
Outlook for platinum group metals demand remains strong
·
Pharmaceutical Materials well positioned for recovery in
2006/07
·
Ceramics’ encouraging performance should continue with good
cash generation
·
Investment of £200 million over two years on bolt-on
acquisitions and / or share buy-backs
Commenting on the results, Neil
Carson, Chief Executive of Johnson Matthey 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. ”
Enquiries:
|
Ian Godwin |
Director, IR and Corporate
Communications |
020 7269 8410 |
|
John Sheldrick |
Group Finance Director |
020 7269 8438 |
|
Howard Lee |
The HeadLand Consultancy |
020 7367 5225 |
|
Laura Hickman |
The HeadLand Consultancy |
020 7367 5227 |
www.matthey.com
Report to
Shareholders
Johnson Matthey
achieved good results in 2005/06. Total
earnings per share were up 33%.
Underlying earnings per share (before impairment, restructuring and
disposal costs) increased by 9%.
Growth in the
second half of the year was stronger than the first. Operating profit for the year, before
impairment and restructuring costs, rose by 8%, with Catalysts, Precious Metal
Products and Ceramics all achieving double digit growth. Pharmaceutical Materials was down but sales
and profits improved in the second half of the year.
This is the first
time Johnson Matthey has reported its full year results under International
Financial Reporting Standards (IFRS).
The impact of the transition from UK GAAP to IFRS was set out in our
Report and Accounts for 2005, and is shown on pages 25 to 29 of this report.
Revenue rose by 3% to £4,756
million. 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 £4.0 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
An impairment charge of £6.0 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 21.0 pence, making a total dividend for the
year of 30.1 pence, an increase of 9%, which is in line with the growth in
underlying earnings per share.
Catalysts Division’s sales rose by 28%
to £1,477 million, partly as a result of higher prices for platinum, palladium
and rhodium. Excluding the value of
precious metals, sales rose by 17% to £786 million. This increase was driven by good volume
growth and the impact of higher material costs, such as the cost of substrates
for catalysed soot filters, which is a pass through for Johnson Matthey.
The
division’s operating profit increased by 10% (before acquisition integration
costs included in the results for 2004/05) to £134.2 million, with most of the
growth coming in the second half of the year.
Environmental Catalysts and Technologies (ECT) was well ahead of last year with good growth in
In Johnson
Matthey’s financial year to 31st March 2006 global light duty
vehicle sales increased by 3.6% to 65.6 million. Car production rose by 3.3% with a small
overall reduction in inventories. Most of
the growth in production came in
Estimated Light Vehicle Sales and
Production 2005/06
|
|
|
Year to 31st March |
|
||
|
|
|
2006 millions |
2005 millions |
Change % |
|
|
Global |
Sales Production Sales Production Sales Production Sales Production |
|
19.7 15.9 18.3 19.3 15.2 23.0 65.6 66.3 |
19.5 15.6 18.0 18.9 13.7 20.7 63.3 64.2 |
+1.0% +1.9% +1.7% +2.1% +10.9% +11.1% +3.6% +3.3% |
|
Source: Global Insight |
|
|
|
|
|
We are
also seeing increasing demand from many of the leading car companies in
The market
for heavy duty diesel (HDD) catalysts for new vehicles is also beginning to
grow. New emission control standards for
HDD vehicles came into force in
Our business in
In early September we announced plans
to build a new autocatalyst factory in
Process Catalysts
and Technologies (PCT) also achieved good growth in sales and
profits in 2005/06. The Ammonia,
Methanol, Oil and Gas (AMOG) business was well ahead of 2004/05 with strong
demand for catalysts and purification materials for industries where hydrogen
or synthesis gas are key intermediates. Sales of edible oil catalysts were also ahead
of last year but catalyst sales to the polymer market declined.
On
The acquisition of DPT will provide
Johnson Matthey with additional opportunities to grow its sales of catalysts
and technologies into emerging markets.
The high oil price and moves towards low carbon energy are transforming
the market for catalysts and purification materials used in oil, gas and
petrochemicals. We have significantly
increased our R&D expenditure on the development of catalysts for the
production of clean synthetic liquid products from a wide range of hydrocarbon feedstocks which will be a substantial growth market for
PCT in the medium term.
The division’s Research Chemicals
business achieved good growth, successfully integrating the operations of
Lancaster Synthesis which was acquired last year. A new combined catalogue was issued during
the year which should provide a further boost to growth.
The same trends that are increasing
demand for new catalysts in PCT have also increased interest in Fuel Cells technologies and 2005/06
witnessed significant developments in the fuel cell market, particularly in
In 2005/06 the annual cost of our
Fuel Cells business on an IFRS basis fell by £0.5 million to £8.1
million. Under IFRS accounting rules
£1.6 million of the annual R&D cost was capitalised in 2005/06 (£1.5
million in 2004/05) which lowered the reported cost compared with UK GAAP. The business benefited from an expanded range
of customers and initial sales of prototype products to the direct methanol
fuel cells’ market.
Precious Metal Products Division’s sales fell by 7% to £2,962 million.
The fall reflected the withdrawal from gold refining in the
Colour Technologies, which was
transferred into the division following the restructuring of the former Colours
& Coatings Division, achieved good growth in profits benefiting from cost
reductions undertaken last year and good sales of automotive glass enamels
particularly in the North American and Asian markets. Similarly, the division’s gold and silver
businesses benefited from the closure of its
Pgm
Refining was transferred from Catalysts into Precious Metal Products Division
at the beginning of the financial year.
In 2005 we announced a plan to restructure the business in the
Profits from the division’s
marketing and trading operations were better than in 2004/05 particularly in
the second half of the year. Higher
average pgm prices and increased price volatility, especially in the rhodium
market, provided more favourable trading conditions. The price of platinum
reached its peak for 2005/06 of $1,084/oz in March 2006, an all time high in
dollar terms. The rise in the platinum price gathered pace as the year
progressed with speculative buying, particularly in
Total consumption of platinum
increased once more in 2005/06, a pattern unbroken since 1992. Demand for platinum in autocatalysts
increased by 9% with much of the growth generated in
The palladium price also reached a
peak for 2005/06 in March, touching $345/oz.
Supply and demand fundamentals became increasingly irrelevant as hedge
funds and institutional investors extended already substantial long positions
in the market. The average price for the
year was $228/oz, a modest increase of 4% on 2004/05. Physical demand for palladium increased in
2005/06, a third successive year of rising consumption after a slump in
2002/03. Autocatalyst demand was broadly
flat whereas demand from the burgeoning market for palladium jewellery in
The price of rhodium rose sharply in
2005/06, reaching a peak of $4,350/oz in March. The average price of $2,544/oz
was more than double the average for 2004/05.
Strong demand from the automotive and glass industries coupled with
speculative interest left little metal to be offered in the spot market. This additional pressure on a market which
was already tight and illiquid inevitably caused prices to rise dramatically.
Pharmaceutical Materials Division’s sales rose by 2% to £134 million with a recovery in the second half of
the year. Operating profit fell by 15%
to £33.8 million as a result of reduced income from carboplatin, which went off
patent in October 2004, and lower revenues in the division’s contract research
business.
The
division’s European businesses performed well in the year. The fall in profits all occurred in the