Johnson Matthey Plc · LSE:JMAT

Johnson Matthey — Investor Presentation (January 2010)

137 slides from Johnson Matthey's investor presentation, Jan 28, 2010

  1. Slide 1: Johnson Matthey in China

    Presentation to Analysts / Investors Johnson Matthey in China London Stock Exchange 27th / 28th January 2010

  2. 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

  3. Slide 3: Overview and Trading Update

    Overview and Trading Update Neil Carson Chief Executive

  4. Slide 4: JM Executive Board

    JM Executive Board • Neil Carson - Chief Executive • Robert MacLeod - Group Finance Director • Larry Pentz - Executive Director, Environmental Technologies • Bill Sandford - Executive Director, Precious Metal Products 4

  5. Slide 5: Other Senior Management

    Other Senior Management • John Walker Division Director, Emission Control Technologies • Neil Whitley Division Director, Process Technologies • Nick Garner Division Director, Fine Chemicals • Geoff Otterman Division Director, Catalysts, Chemicals and Refining • Linky Lai General Manager, Emission Co

  6. Slide 6: Other Senior Management

    Other Senior Management • Elaine Shao Office Manager, Johnson Matthey Shanghai • Helen Zhou General Manager, Catalysts and Chemicals, China • John Chen Commercial Director, Catalysts and Chemicals, China • Robert Bullen-Smith Managing Director, Chemical Products • Jian Zhang Managing Director, Alfa

  7. Slide 7: Programme

    Programme 11.00 Overview and Interim Management Statement (Neil Carson) 11.05 Johnson Matthey in China (Neil Carson) Environmental Technologies in China 11.15 Introduction and Overview (Larry Pentz) 11.20 Emission Control Technologies in China (John Walker) 11.25 Mobile Emissions Control – Light Dut

  8. Slide 8: Programme

    Programme 3.15 Coffee Break Precious Metal Products Division 3.25 Operations in China (Bill Sandford) 3.35 The Chinese Jewellery Market (Bill Sandford, Elaine Shao) 4.05 Catalysts and Chemicals Business in China (Helen Zhou, John Chen) 4.35 Questions 4.55 Coffee Break Fine Chemicals Division 5.05 Fi

  9. Slide 9: Interim Management Statement

    Interim Management Statement • Summary results for third quarter of 2009/10 • Sales excluding precious metals 9% ahead • Operating profit* 10% up on last year • Profit before tax* 20% higher than last year • Cash generation continued to be strong * Before amortisation of acquired intangibles 9

  10. Slide 10: Estimated Light Vehicle Sales and Production

    Estimated Light Vehicle Sales and Production for the three months to 31st December 2009 Quarter ended 31st December 2009 2008 Change millions millions % Sales 3.1 3.0 +3.3 North America Production 2.7 2.7 - Sales 4.3 4.6 -7.0 Total Europe Production 4.7 4.1 +14.6 Sales 8.0 6.4 +25.0 Asia Production

  11. Slide 11: Interim Management Statement

    Interim Management Statement • Environmental Technologies • Sales (ex pms) 22% ahead of last year and slightly ahead of the second quarter. Operational leverage and good cost control resulted in operating profit more than 30% ahead in quarter • Emission Control Technologies’ sales ahead of last year

  12. Slide 12: Interim Management Statement

    Interim Management Statement • Precious Metal Products • Profits, as expected, lower than Q3 last year. Quarter saw steady improvement in platinum group metal prices. Demand for fabricated products and precious and base metal catalysts and chemicals steady in quarter and now showing signs of recover

  13. Slide 13: Outlook for Fourth Quarter of 2009/10

    Outlook for Fourth Quarter of 2009/10 • Environmental Technologies expected to continue to make progress. Light duty vehicle production expected to remain stable but impact of end of government incentives uncertain. Short term prospects for HDD remain subdued • Precious Metal Products will benefit f

  14. Slide 14: Johnson Matthey in China

    Johnson Matthey in China • Investing in the growing markets of the Asia region and especially in China is a key element of our strategy • Fixed assets: • First investment in 2000/01 £5m • By 2007/08 £11m • By end 2009/10 £40m • Further expansion to follow • Today we have: • Five manufacturing plants

  15. Slide 15: Environmental Technologies in China

    Environmental Technologies in China Larry Pentz Executive Director

  16. Slide 16: Environmental Technologies in China

    Environmental Technologies in China Overview • ET sales ex pms in China of £85m (2008/09) ET Sales ex pms • Strong vehicle sales, market share growth and tightening regulations in light duty China 7% • Short to medium term opportunities for power plant catalyst sales and HDD • Energy security and ch

  17. Slide 17: Emission Control Technologies in China

    Emission Control Technologies in China John Walker Division Director, Emission Control Technologies

  18. Slide 18: Emission Control Technologies in China

    Emission Control Technologies in China • A rapidly growing vehicle market: ECT Sales ex pms 2008/09 • 13.5 million vehicles sold in 2009 • 44% increase over 2008 China 5% • Tightening emission regulations for light vehicles • HDD regulations requiring catalyst fitment in the world’s largest truck ma

  19. Slide 19: Emission Control Technologies in China

    Emission Control Technologies in China Light Vehicle Production Million vehicles 2008 2009 % China 8.6 12.5 45 Asia 28.7 28.4 -1 Europe 21.2 16.8 -21 N America 12.6 8.5 -32 GLOBAL 68.2 59.2 -13 • China continues at rapid pace despite global economy • It is now the largest single country for sales of

  20. Slide 20: Emission Control Technologies in China

    Emission Control Technologies in China • Market is predominantly gasoline vehicles • Engine size on average is 1.4 - 1.5 litres • Environmental regulations, hence catalyst technology, lags Europe and US • Pricing consistent with global average for light duty, flow through (non-filter) catalysts • Ca

  21. Slide 21: Mobile Emissions Control – Light Duty and HDD

    Emission Control Technologies in China Mobile Emissions Control – Light Duty and HDD Linky Lai General Manager

  22. Slide 22: Agenda

    Agenda 1 Emission Control Technologies in China 2 China market key highlights 3 Business plan and strategy 4 China business growth potential 22

  23. Slide 23: Emission Control Technologies in China

    Emission Control Technologies in China • Production started in July 2001. Wholly owned • Land size • Current 23,500 m2 • A further 30,000 m2 purchased in June 2008 (with existing building) • Capacity • Current: • Approximately 5 million autocatalysts per year • TWC, HDD SCR and DOC lines • Future: •

  24. Slide 24: ECT China Nationwide Presence

    ECT China Nationwide Presence Beijing • ECT sales office • Over 25 car companies • More than 10 LDD and HDD customers Shanghai • ECT production and sales office • Over 10 car companies • VW and GM both have JVs in area Chongqing • ECT sales office • Over 10 car companies and more than 35 motorcycle

  25. Slide 25: China Economy

    China Economy Key Highlights 2007 2008 2009 Cars sold 5,270k 5,707k 8,469k CPI % 4.8 5.9 -0.7 GDP % 11.4 9.0 8.7 USD/RMB 7.30 6.82 6.83 25

  26. Slide 26: China Major JV / OEM Affiliation

    China Major JV / OEM Affiliation 60% FAW-VW China 50% Brilliance 50% VW TOYOTA BMW Engine 40% Brilliance BMW 40% FAW-VW 50% SiChuan 60% 50% 70% HONDA Toyota 50% 50% 51% Guangzhou GZ Toyota Guangzhou 50% SH-VW Daihatsu 50% Tianjin Toyota Engine Honda Engine 50% Toyota 50% 50% 50% 30% 50% 65% 50% 50%

  27. Slide 27: Vehicle Sales in China

    Vehicle Sales in China % 20,000 50% 18,000 44% 45% 1,940 16,000 1,776 40% 1,596 14,000 5,694 35% 958 5,092 12,000 30% 4,628 4,119 10,000 25% 824 8,000 20% 2,887 6,000 12% 15% 10,845 9,894 4,000 8,469 10% 8,962 10% 5,707 10% 2,000 7% 5% 0 0% 2008 2009 2010 2011 2012 Passenger Cars Light Commercial Ve

  28. Slide 28: China Vehicle Sales 2000 - 2009

    China Vehicle Sales 2000 - 2009 16,000 50% 44% 45% 14,000 13,546 39% 40% 12,000 35% 31% 10,000 9,418 8,826 30% 8,000 7,333 25% 20% 5,920 24% 20% 6,000 5,264 14% 15% 4,551 15% 16% 4,000 3,464 2,486 12% 10% 2,170 2,000 7% 5% 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (1) In k units (2) Sou

  29. Slide 29: China Emissions Legislation

    China Emissions Legislation Light Duty Gasoline 2007 2008 2009 2010 2011 2012 China - Beijing Euro 3 Euro 4 China - Shanghai Euro 3 China - Nationwide Euro 2 Euro 3 Euro 4 Heavy Duty Diesel 2007 2008 2009 2010 2011 2012 China - Beijing Euro III Euro IV China - Shanghai Euro II Euro III Euro IV China

  30. Slide 30: China Automotive Industry is Undergoing Fundamental Shifts

    China Automotive Industry is Undergoing Fundamental Shifts • Joint ventures are doing very well but growth will slow in the longer term • Locals are doing extremely well (Geely, BYD, Changan, Great Wall etc.) supported by improving R&D capabilities • Sales slowing down in mega cities. Local brands a

  31. Slide 31: Johnson Matthey’s Business Strategy

    Johnson Matthey’s Business Strategy Addressing the Shift in the China Automotive Industry • State of the art technology to all customers • Growing share with local companies • Providing industry leading customer service and support to their programmes • Increasing our local technical support and inf

  32. Slide 32: Growing Market Share in China

    Johnson Matthey Growing Market Share in China Estimated Market Share 2008/09 26% 28% 19% 27% Johnson Matthey Umicore BASF Others Source: Johnson Matthey Estimates 32

  33. Slide 33: Summary

    Summary • Focused on long term, profitable growth in China • Sales ex pms growth should continue to be strong • We will deliver: • Best quality products in China • Tailored service to all OEMs • Preferred employer in China • Superior business growth Delivering Service. Delivering Growth. 33

  34. Slide 34: Virtual Tour of China Autocatalyst Plant

    Virtual Tour of China Autocatalyst Plant 34

  35. Slide 35: 35

    35

  36. Slide 36: Stationary Emissions Control – Power Plant Industry

    Emission Control Technologies in China Stationary Emissions Control – Power Plant Industry Peng Zhang Sales Director, Power Plant Industries, China

  37. Slide 37: Agenda

    Agenda 1 Johnson Matthey’s power plant industries business 2 SCR catalyst market for coal fired power plants in China 3 New investment – SCR catalyst plant in China 4 Current developments in SCR catalysts 5 Summary 37

  38. Slide 38: Johnson Matthey’s Power Plant Industries

    Johnson Matthey’s Power Plant Industries Catalysts for reduction of nitrogen oxides (NOx) in power generation industry Decades of experience in SCR catalyst / systems R&D and manufacturing Johnson Matthey’s catalysts are installed in more than 500 fossil fired power plants worldwide JM is the only s

  39. Slide 39: JM PPI Locations Worldwide

    JM PPI Locations Worldwide Germany (Redwitz) • Sales • Engineering • Service • Manufacturing Redwitz USA (Alpharetta) • Sales Beijing • Engineering Alpharetta • Service Shanghai China (Shanghai) • Sales • Service Kuala Lumpur • Manufacturing (from 2010) China (Beijing) • Sales Malaysia (Kuala Lumpur

  40. Slide 40: Catalyst Products

    Catalyst Products • Plate type catalyst • Extruded honeycomb catalyst • For high dust flue gas applications • For low dust flue gas applications and special applications (coal fired (plants firing high grade coal, oil or power plants, industrial process gas; waste incineration plants, diesel plants,

  41. Slide 41: JM Reference Projects in China

    JM Reference Projects in China 41

  42. Slide 42: PPI Development in China

    PPI Development in China • Reference projects summary • Installed capacity: >14,000 MW • Catalysts sold: >10,000 m3 • Treated flue gas volume: >23,700,000 Nm3/h • Orders received since 2007: >300 million RMB • Market position in China • No. 3 position achieved despite a later market entry (2007) • L

  43. Slide 43: NOx Emission Control for Power Plants

    NOx Emission Control for Power Plants A Growing Market in China 43

  44. Slide 44: Power Plant NOx Emissions Control in China

    Power Plant NOx Emissions Control in China • Market drivers: • China is the world’s largest coal producer and consumer • 75% of power plants in China are coal fired • Total installed coal fired power plant capacity ~ 680 GW in 2010 • ~ 280 GW new coal fired power plants to be installed by 2015 • Big

  45. Slide 45: Power Plant NOx Emissions Control in China

    Power Plant NOx Emissions Control in China • Technology drivers: • JM is the only supplier able to produce both plate type and honeycomb SCR catalysts for power plant applications • Plate type catalysts are particularly suitable for coal with high ash content (typical for China) • Numerous successfu

  46. Slide 46: Estimation of China SCR Catalyst Market Size

    Estimation of China SCR Catalyst Market Size cubic meters (m3) • Since 2008 new power plants 50,000 have been required to install SCR 45,000 systems 40,000 • Existing power plants are 35,000 required to be retrofitted with 30,000 SCR 25,000 • After all power plants have been 20,000 15,000 fitted wit

  47. Slide 47: Estimation of China SCR Catalyst Market Size

    Estimation of China SCR Catalyst Market Size £ million 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 New Power Plant Retrofit Reload 47

  48. Slide 48: New Investment in China

    New Investment in China JM’s SCR Catalyst Plant 48

  49. Slide 49: JM’s SCR Catalyst Plant

    New Investment in China JM’s SCR Catalyst Plant • Plate type SCR catalyst plant • Location: Songjiang, Shanghai • Plant area: 20,000 m2 • Capacity: 9,000 – 10,000 m3 / year • Employees: 108 • Start up: Spring 2010 • All permits in place • Plant will operate to JM Quality and EHS standards • JM’s exp

  50. Slide 50: Current Development of SCR Catalysts

    Current Development of SCR Catalysts • Catalyst development for power plant and industry applications: • SCR catalysts for high ash applications – Chinese high ash coals and lignite coal applications • Further development of low SOx catalysts • Mercury oxidation capabilities of SCR catalysts • Inves

  51. Slide 51: Summary

    Summary SCR Technology NOx Emissions Regulation in China • Well established technology for NOx emissions • NOx emissions control on its way to being control enforced by MEP of China • Successfully proven in Europe and USA • Regulations / standards similar to Europe and • Plate type catalyst superior

  52. Slide 52: JM

    JME

  53. Slide 53: Process Technologies in China

    Process Technologies in China Neil Whitley Division Director, Process Technologies

  54. Slide 54: Agenda

    Agenda 1 Process Technologies - China Overview - Neil Whitley 2 Syngas Catalyst Growth in China - Andrew Wright 3 Technology Licensing in China - David Tomlinson Breakout groups: 4 • Technology licensing in China • Coal to products in China 54

  55. Slide 55: Process Technologies China Overview

    Process Technologies China Overview PT Sales ex pms 2008/09 • Sales in China >50% up on prior year (Regional) • AMOG sales up 70% on prior year China 18% • Strong methanol catalyst sales • Sales of sour shift catalysts ROW • Hero JV – additional investment in land 82% • DPT sales up ~ 50% on prior y

  56. Slide 56: Process Technologies China Overview

    Process Technologies China Overview • Growth in China driven by: Coal Reserves in China • Abundance of coal resources which is a strategic source of synthesis gas • Increasing demand for fuels and petrochemicals • Use of methanol as a gasoline additive • Tightening environmental regulations • China

  57. Slide 57: Syngas Catalyst Growth in China

    Syngas Catalyst Growth in China Andrew Wright Managing Director, Syngas & Gas to Products

  58. Slide 58: Synthesis Gas (Syngas) from Coal

    Synthesis Gas (Syngas) from Coal 2 58

  59. Slide 59: Syngas in China

    Syngas in China 2,000 Growth in Hydrocarbon Demand in China Million tonnes oil equivalent 1,800 1,600 1,400 1,200 • Coal is an abundant and 1,000 800 key strategic resource 600 400 • Energy consumption 200 0 growing rapidly in China 2002 2003 Oil 2004 Gas 2005 Coal 2006 2007 Total HC demand 2008 • I

  60. Slide 60: Syngas in China

    Syngas in China • Methanol • Ammonia • Hydrogen • New syngas markets in China: Traditional Traditionalmarkets markets (formaldehyde (formaldehyde etc.) etc.) Hydrogen Hydrogen Gasolineblending Gasoline blending Olefins Olefins Olefins Methanol Methanol Propylene Propylene Propylene DME DME DME Coal

  61. Slide 61: Syngas in China

    Syngas in China • China Syngas catalyst market estimated New Methanol Capacity in China at £180 million – 11% of global market Projects under construction or planned • Smaller uneconomic ammonia, hydrogen 13 plants 49 plants and methanol plants not run at full rates • 22 from 83 methanol projects pl

  62. Slide 62: Methanol in China

    Methanol in China • Shift to energy molecule Global Methanol Demand 80 (Million metric tonnes) • Fuel blending – M5, M15, M85, M100 70 • DME for LPG substitution 60 • China demand forecast to double over 50 next five years - focus on larger more 40 efficient plants 30 • Catalyst volumes installed ra

  63. Slide 63: Ammonia in China

    Ammonia in China • Population growth • Switch to larger, more efficient plants • One third of global fertiliser market size (56 million tonnes p.a.) • Growth rate: 1.5% p.a. • Catalyst volumes installed range from 50 to 200 tonnes 63

  64. Slide 64: Hydrogen in China

    Hydrogen in China • Fuel specifications Refinery, Oil versus Hydrogen Capacity Hydrogen Gasoline / • New refineries and hydrogen Capacity kNm3/hr Refining Mntpa plants 5,000 600 4,500 • Hydrogen plant investment 4,000 500 3,500 gaining momentum 3,000 400 • Marketing venture with 2,500 300 2,000 Sino

  65. Slide 65: Substitute Natural Gas in China

    Substitute Natural Gas in China • China short of natural gas • Potential for “clean coal” • SNG can utilise natural gas • JM recently won the first pipeline infrastructure commercial SNG plant at Datang China gas pipeline – completed 2009 Source: China Daily, AP 65

  66. Slide 66: Syngas Team in China

    Syngas Team in China • Hero Joint Venture incorporated in 2007 to manufacture sour shift catalyst • JM recently increased ownership to 51% and is investing in adjacent land • Will continue to develop manufacturing capability in China • Beijing sales and technical service office established in 2006 •

  67. Slide 67: JM Syngas in China

    JM Syngas in China China: Economic and Social Drivers Levers to meet needs JM Capability Fuel growth Methanol fuel blending, DME Lead methanol licensor: large scale, leading edge flowsheets Plastics consumption increasing Produce plastics via MTO / MTP As above Fuel growth and tightening New capacit

  68. Slide 68: Licensing Technology in China

    Licensing Technology in China David Tomlinson President, Davy Process Technology

  69. Slide 69: Growth of China Petrochemical Industry

    Growth of China Petrochemical Industry Ethylene Production 1978 2006 2011 Million tonnes per year (Forecast) China 0.4 8 18 World 33 121 156 China % 1% 7% 12% Source: China Government sources Plants using DPT technologies Plants 1978 2006 2011 (Estimated) All technologies 2 6 22 • First licences 197

  70. Slide 70: Locations of Plants and Licences in China

    Locations of Plants and Licences in China METHANOL OXO ALCOHOLS BUTANEDIOL OTHERS: NDA, DMF, EA, SNG, THF 70

  71. Slide 71: Licensing Components

    Licensing Components • Licence contract (phased and running royalty) • Basic engineering package • Supply of proprietary equipment • Supply of catalyst • Commissioning services • Underpinned by ongoing investment in process improvement and development of the IP portfolio • Strong market share result

  72. Slide 72: Chinese Design Institutes (CDIs)

    Chinese Design Institutes (CDIs) • DPT has worked with ten CDIs nominated by the end user: • China Chengda Engineering Company Ltd • Sinopec Ningbo Engineering Company Ltd • China Tianchen Chemical Engineering Corporation • China Tianjin Chemical Engineering • China Hualu Engineering Company • China

  73. Slide 73: High Proportion of Staff Familiar with China Market

    High Proportion of Staff Familiar with China Market • Key departments involved in licensing and delivery of projects • Business management, marketing and business development • Process • Engineering • Project management • (140 people out of DPT total 220) • 90% have worked on projects for China • 60

  74. Slide 74: Oxo Alcohols

    Oxo Alcohols • World market: • 7 mtpa Butanols, 2EH • Growth: • 3% p.a. • Drivers: • Local market growth, propylene feedstock • Uses: • Solvents, plasticisers • DPT / Dow licensed capacity in China: • 1.8 mtpa • Market share (licensed technology) 2000 – 2010: • Global 100% China 100% • Marketing and

  75. Slide 75: Methanol

    Methanol • World market: • 50 mtpa (20% fuels) • Growth: • Chemicals 2.5% p.a., fuels 30% p.a. • Drivers: • Fuel use; MTO • Uses: • Chemicals, MTO, fuels • JM licensed capacity in China: • 10 mtpa • Market share 2000 – 2010: • Global 40% China 40% • Marketing and technology strengths: • Large capaci

  76. Slide 76: Butanediol (BDO)

    Butanediol (BDO) • World market: • 1.8 mtpa • Growth: • 6% p.a. • Drivers: • End use growth, raw materials in Middle East • Uses: • Spandex fibres, industrial plastics, solvents • Licensed capacity in China: • 230 ktpa • Market share 2000 – 2010: • Global 50% China 55% • Marketing and technology str

  77. Slide 77: Marketing Success in China

    Marketing Success in China • Market leading technologies worldwide • Long history of licensing in China • Good project delivery • Working with Chinese Design Institutes • Proven track record / repeat business • Maintained value of technologies • Continued improvement of technologies • Increased plan

  78. Slide 78: Latest Plant Using DPT Technology in China

    Latest Plant Using DPT Technology in China Bluestar (Nanjing) 55 ktpa BDO plant • Effective contract November 2006 • Start up May 2009 - acceptance July 2009 78

  79. Slide 79: Johnson Matthey

    JME) Johnson Matthey 79

  80. Slide 80: Precious Metal Products Division – Operations in China

    Precious Metal Products Division – Operations in China Bill Sandford Executive Director

  81. Slide 81: PMPD in China

    PMPD in China Two key activities: PMPD Sales ex pms • JM Shanghai • Chemicals and catalysts China 8% • Chemical, petrochemical and pharma industries • JM Hong Kong / Shenzhen • Resale of other PMPD products • Pgm trading and marketing ROW 92% • Represents 8% of total PMPD sales ex pms 81

  82. Slide 82: PMPD Hong Kong

    PMPD Hong Kong • Regional HQ for business in SE Asia • Six offices in four countries • Three major functions • JM group product resale • Pgm trading and distribution • Pgm marketing 82

  83. Slide 83: PMPD Hong Kong: JM Group Product Resale

    PMPD Hong Kong JM Group Product Resale • Products made in Europe, USA and Korea • Sales, warehousing and distribution in Hong Kong, Shenzhen and Shanghai • Major product groups • Metallurgical products (Noble Metals) • Colour Technologies • Emerging markets e.g. fuel cells 83

  84. Slide 84: PMPD Hong Kong: Metallurgical Products

    PMPD Hong Kong Metallurgical Products • Products made in UK and USA • Pgm alloys for industrial applications • Nitric acid catalysts, glass furnaces, medical etc. • Catalysts for N2O destruction • Competitors – Heraeus, local Chinese, in-house mfr 84

  85. Slide 85: PMPD Hong Kong: Colour Technologies

    PMPD Hong Kong Colour Technologies • Products developed and manufactured in Maastricht and Korea • Enamels and inks for automotive glass • Became world’s largest market in 2009 • Technology and quality are key • Competitors – Ferro, Okuno, Pemco, local Chinese • Large range of decorative products •

  86. Slide 86: PMPD Hong Kong: Pgm Trading

    PMPD Hong Kong Pgm Trading • Gives JM 24-hour coverage • Trading in US$ and local currency • China has become major consumer of all Pgms • Biggest demand market for both Pt and Pd 86

  87. Slide 87: Platinum Demand 2009

    PMPD Hong Kong Platinum Demand 2009 Pt Demand by Region (m oz) China Pt Demand by Application (m oz) 0.09 0.21 8 7 6 5 million oz 4 3 1.75 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 China Europe Japan N America ROW Autocat (gross) Jewellery Industrial Total China Market 2.05m oz 87

  88. Slide 88: Palladium Demand 2009

    PMPD Hong Kong Palladium Demand 2009 Pd Demand by Region (m oz) China Pd Demand by Application (m oz) 10 0.30 9 8 0.52 7 6 0.68 million oz 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 China Europe Japan N America ROW Autocat (gross) Jewellery Industrial Total China Market 1.5m oz 88

  89. Slide 89: PMPD Hong Kong: Pgm Marketing

    PMPD Hong Kong Pgm Marketing • Part of our Anglo Platinum relationship • JM is Anglo’s Marketing Agent • Market research • Market development 89

  90. Slide 90: The Chinese Jewellery Market

    The Chinese Jewellery Market Bill Sandford Executive Director Elaine Shao Office Manager, JM Shanghai

  91. Slide 91: Platinum Jewellery

    Platinum Jewellery Early Success Factors • Perceived as being western, fashionable, young • Helped by one child policy • Preference for “white” jewellery • High purity • Strict control on gold fabrication • Higher manufacturing margins 91

  92. Slide 92: Johnson Matthey’s Role

    Johnson Matthey’s Role • Early 1990s - market evaluation, early marketing • Lobbying for quality standards • Support for jewellery testing centres • Support for Pt listing on Shanghai Gold Exchange • Technical training for manufacturers • Provision of local metal stocks / trading • Measurable sales

  93. Slide 93: Market Features

    Market Features • Good quality, high purity, quality assured • Lightweight, affordable, low mark-up • Metal intensive • Aspirational • Price sensitive market • Large, well financed manufacturers / retailers 93

  94. Slide 94: Ongoing Market Development

    Ongoing Market Development • Coordination with Platinum Guild International (PGI) • Funded by major Pt producers • JM a sponsor • PGI China established 1997 • Consumer marketing campaigns launched 94

  95. Slide 95: Platinum Jewellery Demand – China

    Platinum Jewellery Demand – China Purchase of new metal by manufacturers 2,000 400 1,750 350 1,500 300 1,250 250 RMB per gram '000 oz 1,000 200 PGI China established in 1997 750 150 500 100 JM active in China 250 jewellery from early 1990s 50 0 0 1985 1988 1991 1994 1997 2000 2003 2006 2009 Demand P

  96. Slide 96: World Platinum Demand

    World Platinum Demand • Jewellery 40% total demand in 2009 8 7 • China biggest jewellery market 6 5 • Price sensitive – provides million oz 4 3 support when industrial 2 demand slows 1 0 • Sales in 2009 up 900k oz 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 China Jewellery ROW Jewellery Other

  97. Slide 97: Growing Consumer Base

    Growing Consumer Base • Population 1.34 billion • Middle class population estimated at 100 - 250 million • Urban population 575 million in 666 cities • Continuing high savings rates • Majority of sales in 1st and 2nd tier cities • Significant scope for further market penetration 97

  98. Slide 98: The Platinum Jewellery Industry in China

    The Platinum Jewellery Industry in China 98

  99. Slide 99: Future Market Drivers

    Future Market Drivers • Chinese economic growth • Manufacturing premiums • Marketing – expanding the customer base • Platinum price 99

  100. Slide 100: Johnson Matthey

    JME) Johnson Matthey 100

  101. Slide 101: Catalysts and Chemicals Business in China

    Catalysts and Chemicals Business in China Helen Zhou, General Manager John Chen, Commercial Director

  102. Slide 102: Agenda

    Agenda 1 China site history and development 2 Organisation 3 Operations 4 Platinum group metal (pgm) chemicals review 5 Sponge nickel catalyst review 6 Summary 102

  103. Slide 103: History: Catalysts and Chemicals China

    History Catalysts and Chemicals China • 1980s – Johnson Matthey established sales office in Hong Kong • Covers all JM products • 1990s – development / commercial visits in China • JM established sales office in Shanghai • 2002 – constructed chemicals manufacturing plant to support ECT and external m

  104. Slide 104: Shanghai Site Bird’s-eye View

    Shanghai Site Bird’s-eye View Songjiang – 40km from Shanghai city centre Pgm chemicals facility 2002 - 2008 (420 m2 ) Pgm chemicals plant 2008 (2,500 m2) Sponge nickel catalyst plant 2009 (880 m2) C&C Available for future expansion C&C ECT ECT ECT ECT 104

  105. Slide 105: Catalysts and Chemicals Manufacturing

    Catalysts and Chemicals Manufacturing China General Manager Helen Zhou Sales / HR / Admin Manufacturing Engineering QA and EHS Finance Marketing Sponge Nickel Pgm Chemicals Catalyst Production Production 105

  106. Slide 106: Operational Focus

    Operational Focus • Products and processes transferred from JM USA 20% • Optimisation in China – two way technology transfer 15% • Modern, highly efficient factory • Meets highest international specifications 10% • Consistent with JM Sustainability 2017 • Recruit high quality staff 5% • 104 employee

  107. Slide 107: Catalysts and Chemicals Manufacturing

    Catalysts and Chemicals Manufacturing • Platinum group metal (pgm) chemicals • Full range of platinum, palladium and rhodium based products • Simple binary salts (e.g. platinum nitrate, palladium chloride, rhodium iodide) • Pgm coordination complexes and organometallic compounds • Sponge nickel cata

  108. Slide 108: Pgm Chemicals Production Trend

    Pgm Chemicals Production Trend 8 7 6 5 Multiple 4 3 2 1 0 2003 2004 2005 2006 2007 2008 2009 Trend Volumes CAGR 38% in past 6 years 108

  109. Slide 109: Market Growth – 2009

    Market Growth – 2009 % Automotive*1 43.9 Petroleum*2 6.4 Chemicals*3 7.4 Pharma*4 23.0 1 IHS Global Insight 2, 3 China Petroleum and Chemical Industry Association 4 Wind, Bloomberg, Yuanta research September 2009 109

  110. Slide 110: China Chemicals Market

    China Chemicals Market • Pgm chemicals for autocatalysts Markets by Revenue • Plating for decorative and electronic 10% applications 11% • Catalysts and catalyst precursors for petroleum, petrochemical, chemical and pharma industries 65% • Others – aerospace, electronics 14% • Competitors • Heraeus,

  111. Slide 111: Chemical Catalysts and Precursors

    Chemical Catalysts and Precursors Pgm Salt Application Product Pt Petroleum Gasoline Rh Acetic acid PVA / plastics Rh Oxo alcohols Plasticisers Pd Pharma APIs 111

  112. Slide 112: Sponge Nickel Products and Technologies

    Sponge Nickel Products and Technologies • Products – sponge nickel • Often promoted by other metals • Catalyst tailored for discrete chemical reactions • Used as hydrogenation catalyst in a range of processes • Products and process transferred from JM Tennessee, USA • Plant commissioned in Q4 2009 •

  113. Slide 113: China Sponge Nickel Market 2010

    China Sponge Nickel Market 2010 • Hydrogenation catalyst Markets by Revenue • Polyol – current largest market, will 10% grow 10.6% in 2010*1 32% • Pharma and Fine Chem – growing 10% 24%*2. Largest sector in 2011 • Variety of chemical and speciality chemical application • Competitors 15% • WR Grace,

  114. Slide 114: Supported Catalysts

    Supported Catalysts • Resale of supported catalysts made by Johnson Matthey in Europe and USA • Active metals can be pgm or base metals • Variety of support materials • Carbon, alumina, silica etc. • Used in the pharma, chemical and petroleum industry • Market growing quickly • Chinese pharma indust

  115. Slide 115: Virtual Tour of Catalysts and Chemicals, Shanghai

    Virtual Tour of Catalysts and Chemicals, Shanghai 115

  116. Slide 116: Summary

    Summary • Invested in strong manufacturing presence and management infrastructure at the Shanghai site • Established capability to manufacture a wide range of products tailored to local requirements • The business has shown good growth over last few years • The markets for our products are expected

  117. Slide 117: Johnson Matthey

    JME) Johnson Matthey 117

  118. Slide 118: Fine Chemicals Division

    Fine Chemicals Division Nick Garner Division Director

  119. Slide 119: Agenda

    Agenda 1 Fine Chemicals Division Overview 2 Fine Chemicals developments in Asia 3 Research Chemicals in Asia - Yantai 119

  120. Slide 120: Fine Chemicals Division

    Fine Chemicals Division FC Sales ex pms 2008/09 China 2.5% • Division formed April 2009 • Comprises Research Chemicals and the Active Pharmaceutical ROW Ingredients (API) businesses: 97.5% • Macfarlan Smith – Edinburgh • Pharmaceuticals Materials and Services – NJ and MA, USA FC Sales ex pms 1H 2009

  121. Slide 121: Research Chemicals

    Research Chemicals • Catalogue range of 30,000 products. Grown from 11,000 in 1995 • Catalogue sizes (over 80,000 items). Usually shipped same or next day from stock in all markets • Sell to academic, industrial, R&D, high tech, analytical, and pharma accounts • Business has averaged double digit op

  122. Slide 122: Research Chemicals

    Research Chemicals • Current products are inorganics, organics and metals (not life science) • Research Chemicals’ new global web site (www.alfa.com) launched in October 2009 • Bulk or custom items represent a minority of transactions but account for a significant percentage of sales 122

  123. Slide 123: Fine Chemicals in Asia

    Fine Chemicals in Asia Beijing • RC China Head office Tianjin • RC Distribution Centre Seoul • RC Sales Office Yantai • RC Manufacturing Facility Hyderabad • RC Distribution Centre Opening 2010 Chennai • RC Sales Office 123

  124. Slide 124: Research Chemicals in Asia

    Research Chemicals in Asia • Research Chemicals’ major focus to develop Asian markets £k Research Chemicals’ Sales Growth Direct to Customers 10,000 5,000 0 Asia 06/07 Asia 07/08 Asia 08/09 • Asia sales approx 15% of Research Chemicals’ total sales • Particular emphasis on the Chinese and Indian mar

  125. Slide 125: Alfa Aesar Synmax Yantai China Laboratories and Pilot Plant

    Alfa Aesar Synmax Yantai China Laboratories and Pilot Plant Jian Zhang Managing Director

  126. Slide 126: Location: Yantai, Shandong Province

    Location: Yantai, Shandong Province • Coastal city southeast of Beijing and north of Shanghai • One hour flight from Beijing or Shanghai • Located in YEDA - Yantai Economic and Technical Development Zone • Low cost but desirable location in general proximity to resort areas Kilo Labs Pilot Plant 126

  127. Slide 127: Virtual Tour of Alfa Aesar Synmax, Yantai

    Virtual Tour of Alfa Aesar Synmax, Yantai 127

  128. Slide 128: Strategy: The Kilo Lab

    Strategy: The Kilo Lab • In-house manufacture of current product range at lower cost • Manufacture hundreds of new and competitor listed products • Develop new and interesting processes to make products for new markets • Keep opportunities, quality control and intellectual property in-house 128

  129. Slide 129: Strategy: The Pilot Plant

    Strategy: The Pilot Plant • Opportunities to expand bulk capabilities to supply external customers and for in-house manufacturing of intermediates for wider JM group • 100 to 2,000 litre capacity - presents enhanced capability to supply • Keeps opportunities, quality control, and intellectual proper

  130. Slide 130: World Class Chemistry

    World Class Chemistry • Alfa Aesar Synmax Board Member, Guomin Zhang, former Head of the Chinese Chemical Society • Team leaders with decades of experience and >100 literature references • Knowledge to perform and manage several hundred types of reactions • Excellent local and national contacts with

  131. Slide 131: Sales and Marketing

    Sales and Marketing • Yantai products will be offered via global catalogue and established sales network • Sales and marketing will be managed by Alfa Aesar regional facilities • Alfa Aesar regional bulk sales teams will convert quotes into orders for Yantai 131

  132. Slide 132: Research Chemicals Growth Strategy

    Research Chemicals Growth Strategy Building on Strengths and Synergies, Keeping Costs Low • Strategy enables us to address opportunities which we were unable to pursue in the past • Low cost materials and low overheads enables competitive pricing • Local presence strengthens our position in Chinese

  133. Slide 133: Johnson Matthey

    JME) Johnson Matthey 133

  134. Slide 134: Wrap Up and Q&A

    Wrap Up and Q&A Neil Carson Chief Executive

  135. Slide 135: Glossary

    Glossary ABS Ammonia bisulphate ECT Emission Control Technologies AMOG Ammonia, Methanol, Oil and Gas EHS Environment, Health and Safety API Active pharmaceutical ingredient ELV Emission limit value BDO Butanediol ET Environmental Technologies Division C&C Catalysts and Chemicals FC Fine Chemicals D

  136. Slide 136: Glossary

    Glossary MEP Ministry of Environmental Protection R&D Research and development MTO Methanol to olefins RC Research Chemicals MTP Methanol to propylene RMB Renminbi MW MegaWatt ROW Rest of the world NDA Natural detergent alcohol Rh Rhodium N2O Nitrous oxide SCR Selective catalytic reduction NOx Nitro

  137. Slide 137: 137

    137

Johnson Matthey — Investor Presentation (January 2010) on 6ix