Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — FY2012 Earnings Presentation
42 slides from Johnson Matthey's earnings presentation, Jun 7, 2012
Slide 1: Presentation of Results for the year ended 31st March 2012
Presentation of Results for the year ended 31st March 2012 7th June 2012 Scan to download our IR app Follow us on Twitter: or visit www.matthey.com/app @johnson_matthey
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries and sectors in which Johnson Matthey operates. It is believed that t
Slide 3: Introduction
Introduction Neil Carson Chief Executive
Slide 4: Key Messages
Key Messages Another year of strong growth Further progress anticipated in 2012/13 Return of capital of 100 pence per share Confidence in group’s continuing growth potential 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Year to 31st March 2012 2011 £m £m % change Revenue 12,023 9,985 +20% Sales excluding precious metals 2,679 2,280 +17% Operating profit 450.1 366.2 +23% Interest (24.1) (20.7) +16% Profit before tax 426.0 345.5 +23% Tax (100.0) (91.7) Profit after tax 326.0 253.8 +28% Earnings per
Slide 7: Cash Flow from Operations
Cash Flow from Operations Year to 31st March 2012 2011 £m £m Operating profit 433 280 Depreciation and amortisation 147 169 Tax paid (69) (65) Working capital / other (47) (261) Cash flow from operations 464 123 • At 31st March 2012, working capital days • Net debt at 31st March 2012 – £454m, down b
Slide 8: Capital Structure
Capital Structure During year, board reviewed group’s Group’s business model allows modest balance sheet debt – target 1.5 to 2.0 times Recommending return of capital via special Pro forma net debt / EBITDA still dividend of 100 pence per share conservative at 1.3 times 8
Slide 9: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Cost of capital • Substantial increase in ROIC to 22.3% • Objective to maintain ROIC above 20% – exceeding long term target 9
Slide 10: Capital Expenditure
Capital Expenditure 203.5 149.6 134.4 137.9 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects in year: • Good growth opportunities – capex likely to average • Further expansion of: 1.5x to 1.7x depreciation over next three years • Auto / HDD capacity in China • HDD cap
Slide 11: UK Pension Scheme
UK Pension Scheme £ Actuarial valuation at Cash contributions IFRS 1st April 2012 underway • Deficit expected to increase • Total contributions in year: • Deficit at 31st March 2012 to around £250m Normal £22m slightly higher than last year (2009 £173m) Deficit funding £23m at £85m • Reviewing futur
Slide 12: Operating Review
Operating Review Neil Carson Chief Executive
Slide 13: Environmental Technologies Division
Environmental Technologies Division
Slide 14: Environmental Technologies Division
Environmental Technologies Division Year to 31st March % % at £m 2012 2011 change constant rates Revenue 3,255 2,708 +20 +20 Sales (excluding precious metals) 1,876 1,566 +20 +20 Underlying operating profit 211.8 164.7 +29 +29 Return on sales 11.3% 10.5% Return on invested capital (ROIC) 14.2% 11.5%
Slide 15: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production Year to 31st March 2H 1H 2012 2011 % 2011/12 2011/12 % millions millions change millions millions change Sales 15.6 14.5 +7.6 7.8 7.8 - North America Production 13.6 12.4 +9.7 7.3 6.3 +15.9 Sales 19.0 18.7 +1.6 9.4 9.6 -2.1 Europe Production 19.8 19.
Slide 16: Emission Control Technologies £969m up 10%
Emission Control Technologies Total sales JM’s Light Duty Catalyst Sales – 2010-2012 £969m up 10% +10% +8% +8% +20% North America Europe Asia Global • Market continued to • Outperformed • Well ahead of • Operating profit recover growth in vehicle market growth impacted in 1H by production higher rar
Slide 17: Emission Control Technologies: Light Duty Vehicle Production Outlook
Emission Control Technologies Light Duty Vehicle Production Outlook – 2009-2014 (calendar years) million Production outlook September 2011 91.0 85.4 81.2 74.4 76.8 59.5 45.7 40.9 43.0 37.1 37.0 28.9 16.5 16.5 19.0 20.1 19.0 19.6 21.0 8.6 11.9 12.9 14.7 15.4 North America Europe Asia Global • Steady
Slide 18: Light Duty: Looking Ahead
Emission Control Technologies Light Duty: Looking Ahead 1H 2012/13 will benefit from Euro 6 LDD legislation in 2014 Positive outlook for car demand removal of headwinds: drives increased demand for in North America and Asia catalysts • Rare earth prices now a pass Concerns over short to medium throu
Slide 19: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production Year to 31st March 2H 1H 2012 2011 % 2011/12 2011/12 % thousands thousands change thousands thousands change Sales 405.2 287.4 +41.0 213.0 192.2 +10.8 North America Production 451.8 301.0 +50.1 237.7 214.1 +11.0 Sales 298.7 257.4 +16.0 155.1 143.6 +8.0 EU Pro
Slide 20: Emission Control Technologies £438m up 48%
Emission Control Technologies Total sales JM’s Heavy Duty Diesel Sales – 2010 - 2012 £438m up 48% £ million Overall market circa £295m $900m in sales – JM’s market share £194m remains >65% £112m +52% £116m £91m £56m +27% North America Europe • Truck operators replacing ageing fleets • Strong sales g
Slide 21: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (calendar years) EU Truck Sales US Class 4-8 Truck Sales thousands thousands Euro IV US07 Euro V Euro VI / US 2010 regulations Sales outlook at September 2011 Source: LMC Automotive (April 2012) 21
Slide 22: Heavy Duty Diesel: Looking Ahead
Emission Control Technologies Heavy Duty Diesel: Looking Ahead Developed markets: Developing markets: • Further growth in US demand expected in • Early sales to Chinese and Indian OEMs 2012/13 • Higher competition and lower catalyst value • Outlook for Europe less certain per truck expected • Chines
Slide 23: Process Technologies
Process Technologies Catalyst Businesses (AMOG) Davy Process Technology • Strong growth, sales up 27% to £256m • An excellent year for DPT, sales up 42% to £94m • Additives business performing ahead of our • A total of 14 new projects won expectations • Ten plants in China • Good demand for hydrogen
Slide 24: Process Technologies: Looking Ahead
Process Technologies Looking Ahead • Steady growth in syngas catalysts expected • Strong performance from DPT should continue • Adding capacity in UK and India to meet future in 2012/13 demand • Strong demand for oxo alcohols plants in China • Opportunities from Additives • Range of new technologies
Slide 25: Precious Metal Products Division
Precious Metal Products Division
Slide 26: Precious Metal Products Division
Precious Metal Products Division Year to 31st March % % at £m 2012 2011 change constant rates Revenue 9,841 8,270 +19 +20 Sales (excluding precious metals) 582 541 +8 +8 Underlying operating profit 200.8 172.9 +16 +16 Return on sales 34.5% 31.9% Return on invested capital (ROIC) 58.9% 55.9% Services
Slide 27: Precious Metal Products Division: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Business Refining Businesses • Average prices • Strong performance continued in 2011/12 • Pt $1,670/oz unchanged • Intakes boosted by growth in end of life autocatalyst scrap • Pd $710/oz up 15% • Continued focu
Slide 28: Precious Metal Products Division: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales up 6% to £383m Sales • Noble Metals (up 4% to £125m) • Trend towards higher added value products Noble Metals – Industrial Products • Medical sales up 6% driven by good demand from 23% cardiovascular markets Catalysts and • Colour Tec
Slide 29: Precious Metal Products Division: Looking Ahead
Precious Metal Products Division Looking Ahead • Significant fall in precious metal prices since • Manufacturing businesses expected to make start of 2012/13, if continued, will impact good progress Services businesses • Continued investment in R&D across the • Pgm refining intakes also expected to
Slide 30: Fine Chemicals Division
Fine Chemicals Division [UMS Johnson Matthey
Slide 31: Fine Chemicals Division
Fine Chemicals Division Year to 31st March % % at £m 2012 2011 change constant rates Revenue 292 255 +15 +16 Sales (excluding precious metals) 285 245 +16 +17 Underlying operating profit 69.7 56.2 +24 +26 Return on sales 24.5% 22.9% Return on invested capital (ROIC) 16.7% 13.7% Sales • Very good yea
Slide 32: Fine Chemicals: Business Performance
Fine Chemicals Business Performance API Manufacturing Businesses Research Chemicals • Sales up 18% to £206m driven by strong • Sales up 10% to £79m, benefiting from demand for bulk and specialist opiates increased market share and new product • Results benefited from introductions • Ongoing rational
Slide 33: Fine Chemicals: Looking Ahead
Fine Chemicals Looking Ahead • Further optimisation of North American and • Further geographic expansion by Research then global API production should benefit Chemicals future results • Synergies in synthetic chemistry and • Steady flow of new products expected manufacturing support future growth 33
Slide 34: Research and Development
Research and Development • Group R&D investment increased by 17% to • New Business Development group established £129m • Identification of potential market opportunities • Further increase to circa £140m planned progressing well in 2012/13 • Working closely with R&D to expedite new developments • Ma
Slide 35: Non-Financial Performance
Non-Financial Performance Year to 31st March 2012 2011 % change Energy use (GJ ‘000) 4,726 4,749 - Global warming potential (’000 tonnes CO2 equivalent) 417 415 - Annual rate of >3 day accidents per 1,000 employees 2.07 2.99* -31 Annual Incidence of occupational illness per 1,000 employees 3.5 3.5 -
Slide 36: Outlook (1)
Outlook (1) Pt Environmental Technologies: Precious Metal Products: • Outlook for division is positive • Lower current precious metal prices, if maintained, will significantly impact Services businesses • Development of HDD market and growth in car production in North America and Asia expected • Man
Slide 37: Outlook (2)
Outlook (2) Fine Chemicals: Group: • Drivers remain in place • Further progress expected in Environmental Technologies and Fine Chemicals in 2012/13 • Continued demand should ensure another strong year • Will be offset by Precious Metal Products if precious metal prices remain at current levels • St
Slide 38: Key Messages
Key Messages Another year of strong growth Further progress anticipated in 2012/13 Return of capital of 100 pence per share Confident of group’s continuing growth potential 38
Slide 39: Questions and Answers
Questions and Answers Neil Carson Robert MacLeod Larry Pentz Chief Executive Group Finance Director Executive Director, Environmental Technologies Bill Sandford John Fowler Nick Garner Executive Director, Division Director, Fine Chemicals Group Director, Corporate and Precious Metal Products Strateg
Slide 40: JME)
JME) Johnson Matthey
Slide 41: Emission Control Technologies: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation Rest of World S-Korea India K-ULEV Euro 3 (national) Brazil L4 Brazil L5 Brazil L6 Euro 3 Euro 4 China (national 1) (national 1) Japan J-2000 NLT PNLT Euro 3 Russia Euro 2 Euro 4 Euro 5 European Union Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 Eur
Slide 42: Emission Control Technologies: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation S.Korea S.Korea Euro IV (HDD) Euro V (HDD) Rest of India India World Euro III (HDD) Euro IV (HDD) Brazil Brazil Euro III (HDD) Euro V (HDD) China Euro III Euro IV (HDD) (HDD) Japan 05 Japan 09 Tier 4A Tier 4B Japan (HDD) (HDD) (non-road) (n