Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — H1 2013/14 Earnings Presentation
33 slides from Johnson Matthey's earnings presentation, Nov 21, 2013
Slide 1: Presentation of Results for the half year ended 30th September 2013
Presentation of Results for the half year ended 30th September 2013 21st November 2013 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 Strong performance in H1 with EPS up 18% and dividend 10% ahead ECT outperformed market, particularly due to HDD pre-buy in Europe Good catalyst demand in PT enhanced by Formox Existing Anglo Platinum contracts expire 31/12/13 – will impact Q4 H2 expected to be in line with H1, if impac
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Half year to 30th September 1H 2013 1H 2012 % at £m £m % change constant rates Revenue 6,411 4,892 +31% +30% Sales excluding precious metals 1,486 1,310 +13% +12% Operating profit 234.2 203.2 +15% +14% Interest and share of JV profit (21.3) (15.3) Profit before tax 212.9 187.9 +13
Slide 7: Capital Expenditure
Capital Expenditure • First half capex £96.8m • Key projects: • Extension of UK and Macedonia ECT facilities ahead of Euro VI legislation – nearing completion • Expansion of Additives capacity in US • First half capex:depreciation = 1.5 times • Full year capex now expected to be circa £240m 7
Slide 8: Cash Flow from Operations
Cash Flow from Operations Half year to 30th September 1H 2013 1H 2012 £m £m Underlying operating profit 234.2 203.2 Depreciation and amortisation 74.5 69.8 Tax paid (19.0) (41.4) Working capital / other (43.1) (88.3) Cash flow from operations 246.6 143.3 • At 30th September 2013, working capital day
Slide 9: Cash Flow Conversion
Cash Flow Conversion Half year to 30th September 1H 2013 1H 2012 £m £m Operating cash flow 247 143 Add back: Tax paid 19 41 Pension deficit contributions 12 12 Net capital expenditure (101) (59) Cash flow before adjustment 177 137 Movement in precious metal working capital (16) 35 Net cash flow 161
Slide 10: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) 24% 22% 20% 18% 16% 14% 12% 10% 2009/10 2010/11 2011/12 2012/13 1H 2013/14 • Continued improvement in ECT (working capital • Group ROIC back above 20% long term target management) and PT • Expect to be above 20% for full year • Slight decline in PMP and FC 10
Slide 11: Other: Pensions, Treasury, Tax
Other £ Pensions Treasury Tax • De-risking strategy ongoing – • $500m of new debt via US • Continued decline in now 58% bonds in UK private placement market in underlying tax rate to 19.4% Scheme place from June 2013 • Lower UK headline rate (now • Closure of US DB scheme to • Average fixed rate of
Slide 12: Operating Review
Operating Review Neil Carson Chief Executive
Slide 13: Emission Control Technologies
Emission Control Technologies Half year to 30th September 1H 1H % % at £m 2013 2012 change constant rates Sales (excluding precious metals) 815 720 +13 +12 Underlying operating profit 94.2 81.4 +16 +14 Return on sales 11.6% 11.3% Return on invested capital (ROIC) 18.7% 18.3% Sales • Very strong firs
Slide 14: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 1H 1H 2H 2013/14 2012/13 change 2013/14 2012/13 change millions millions % millions millions % Sales 9.5 8.8 +8.0 9.5 8.5 +11.8 North America Production 8.0 7.6 +5.3 8.0 7.6 +5.3 Sales 9.0 9.2 -2.2 9.0 8.6 +4.7 Europe Production 9.3 9.4 -1.1 9.3 9
Slide 15: Emission Control Technologies: Light Duty Catalyst Sales
Emission Control Technologies Total sales 1H 2013/14 Johnson Matthey’s Light Duty Catalyst Sales up 8% at £503m £ million 600 £503m 500 £463m £464m 400 £289m 300 £264m £287m +8% 200 +9% £120m £78m £93m £96m £96m £107m 100 +12% +3% 0 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 2011/12 2012/13 2013/14 2011/12
Slide 16: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H 2013/14 2012/13 change 2013/14 2012/13 change thousands thousands % thousands thousands % Sales 233.1 223.2 +4.4 233.1 202.9 +14.9 North America Production 235.0 235.6 -0.3 235.0 204.1 +15.1 Sales 134.8 136.5 -1.2 134.8 126.6 +6.5 EU Production 18
Slide 17: Emission Control Technologies: Heavy Duty Diesel Catalyst Sales
Emission Control Technologies Total sales 1H 2013/14 Johnson Matthey’s Heavy Duty Diesel Catalyst Sales £280m up 19% £ million 350 300 250 200 £183m £165m 150 £129m 100 £79m +10% £56m £55m 50 +44% 0 1H 2011/12 1H 2012/13 1H 2013/14 1H 2011/12 1H 2012/13 1H 2013/14 North America Europe • Positive pro
Slide 18: Process Technologies
Process Technologies Half year to 30th September 1H 1H % % at £m 2013 2012 change constant rates Sales (excluding precious metals) 288 251 +15 +13 Underlying operating profit 48.9 41.7 +17 +16 Return on sales 17.0% 16.6% Return on invested capital (ROIC) 17.2% 13.5% • Sales up 15% benefiting from Sa
Slide 19: Process Technologies – Chemicals
Process Technologies – Chemicals JM Davy Catalysts • Sales down 17% to £44m • Sales up 34% to £132m (10% excluding Formox) • Only one new licence signed in H1 - hiatus not • Formox integration going very well, exceeding unexpected expectations • Forward workload good for at least 18 months • Methano
Slide 20: Process Technologies – Oil and Gas
Process Technologies – Oil and Gas Catalysts / Additives Tracerco • Sales grew 13% to £79m • Good first half with sales up 11% at £33m • Additives demand good – new plant nearing • Strong oil price and unconventional oil & gas completion applications provide opportunities • Continued recovery in pur
Slide 21: Precious Metal Products
Precious Metal Products Half year to 30th September 1H 1H % % at £m 2013 2012 change constant rates Sales (excluding precious metals) 214 217 -1 -2 Underlying operating profit 74.3 59.7 +24 +23 Return on sales 34.7% 27.5% Return on invested capital (ROIC) 40.6% 48.2% Sales • Steady first half Chemic
Slide 22: Precious Metal Products: Services Businesses
Precious Metal Products Services Businesses (sales down 4% to £84m) Platinum Marketing and Distribution Business Refining Businesses • Sales up 4% to £31m • Sales down 8% at £53m • Average prices impact demand • Higher intakes of pgms benefited results • Pt $1,463/oz down 2% • Secondary volumes of g
Slide 23: Precious Metal Products: Manufacturing Businesses
Precious Metal Products Manufacturing Businesses • Sales in line at £130m Sales (£130m) • Noble Metals (down 5% to £58m) Chemical • Soft demand for global fertilisers impacted our nitric Products acid catalyst business 21% • Medical device components business made further Noble Metals progress in US
Slide 24: Fine Chemicals
Fine Chemicals Half year to 30th September 1H 1H % % at £m 2013 2012 change constant rates Sales (excluding precious metals) 161 154 +5 +3 Underlying operating profit 40.7 40.4 +1 -1 Return on sales 25.2% 26.3% Return on invested capital (ROIC) 17.2% 17.9% Sales Catalysis and Chiral Technologies • S
Slide 25: Fine Chemicals
Fine Chemicals API Manufacturing Research Chemicals • Sales up 7% to £105m • Sales 4% ahead at £41m • Speciality opiates grew – launch of new generic • Growth in Europe and Asia partly offset by in US boosted results slower sales in US • New long term agreement for non-controlled • New facilities op
Slide 26: New Businesses
New Businesses Half year to 30th September 1H 1H £m 2013 2012 Sales (excluding precious metals) 35 2 Underlying operating profit / (loss) (9.2) (8.7) Battery Technologies Sales Fuel Cells • Sales of £32m, primarily from sales of systems for 10% E-bikes and powertools • Small operating loss in first
Slide 27: Group Outlook
Group Outlook • First half performance exceeded our expectations • In second half: • Anglo Platinum contracts expire 31st December 2013 • Difficult to assess European truck volumes – pre-buy vs Euro VI • If impact of loss of Anglo Platinum contracts excluded, expect second half in line with first si
Slide 28: Key Messages
Key Messages Strong performance in H1 with EPS up 18% and dividend 10% ahead ECT outperformed market, particularly due to HDD pre-buy in Europe Good catalyst demand in PT enhanced by Formox Existing Anglo Platinum contracts expire 31/12/13 – will impact Q4 H2 expected to be in line with H1, if impac
Slide 29: Questions and Answers
Questions and Answers Neil Carson Robert MacLeod Larry Pentz Chief Executive Group Finance Director Executive Director John Walker John Fowler Nick Garner Executive Director, Emission Division Director, Fine Chemicals Division Director, New Businesses Control Technologies and Corporate Development A
Slide 30: Key Messages
Key Messages Strong performance in H1 with EPS up 18% and dividend 10% ahead ECT outperformed market, particularly due to HDD pre-buy in Europe Good catalyst demand in PT enhanced by Formox Existing Anglo Platinum contracts expire 31/12/13 – will impact Q4 H2 expected to be in line with H1, if impac
Slide 31: Johnson Matthey
JME) Johnson Matthey
Slide 32: Emission Control Technologies: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 USA Tier II USA (CARB) LEV II LEV III EU Euro 5 Euro 6b Euro 6c Russia Euro 3 Euro 4 Euro 5 Japan Japan 2009 China Euro 4 Euro 5 (exact date uncertain) India - National BS II BS III BS
Slide 33: Emission Control Technologies: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ON ROAD Europe EU V EU VI EU VII? North America EPA10 GHG Regulation Japan JP 09 JP 16 South Korea EU V EU VI EU VII? Brazil EU III EU V EU VI? Russia EU III EU IV EU V? India (Main Cit