Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — Investor Day (January 2014)
74 slides from Johnson Matthey's investor day presentation, Jan 30, 2014
Slide 1: Presentation to Investors / Analysts – Opportunities in Process Technologies
Presentation to Investors / Analysts – Opportunities in Process Technologies 30th January 2014 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 and Welcome
Introduction and Welcome Neil Carson Chief Executive
Slide 4: Programme
Programme 14.00 Introduction and Welcome Neil Carson 14.10 Opportunities in Process Technologies Q&A and coffee break after this session Geoff Otterman 15.30 Adding Value Through Technology Iain Martin Process Technologies and the Chemicals Market Iain Martin Process Technologies in China Henry Liu
Slide 5: Introduction
Introduction A world leading Success founded on Differentiation technology company continued investment in through technology R&D and product development Proven strategy in Well positioned in Delivers value place to develop new growth markets business areas 5
Slide 6: Opportunities in Process Technologies
Opportunities in Process Technologies Geoff Otterman Division Director, Process Technologies
Slide 7: Agenda
Agenda 01 Opportunities in Process Technologies Geoff Otterman 02 Adding Value Through Technology Iain Martin 03 PT and the Chemicals Market Iain Martin 04 PT in China Henry Liu 05 PT and the Oil and Gas Market Don Roche 06 Summary Geoff Otterman 7
Slide 8: Our Aims Today
Our Aims Today Provide Insight Explain Highlight an overview of into the growth how the division is prospects for the Process Technologies’ drivers in Process well placed to development of activities, markets Technologies’ markets benefit from growth the businesses and competitive in these markets i
Slide 9: What is Process Technologies?
What is Process Technologies? Core technology strengths combined with expertise and know how of our people Catalysts • High performance catalysts • Pellets, granules and powders often sold on tonne scale • Replacement cycle or continuous dosing • Investment in new product development Processes • Pro
Slide 10: History of Process Technologies
History of Process Technologies Building blocks for a new division ICI Synetix Intercat Base metal Additives for catalysts FCC applications Process JM pgm 2002 2006 2010 2013 Technologies catalysts Division Davy Process Technology Formox Process technologies, process Formaldehyde catalysts, engineer
Slide 11: Development of the Division
Development of the Division People R&D • World class scientists and engineers • Continued investment • Threading together new business • Aligned with core technology competences • Attracting industry experts • Process and industry know how Process Technologies +++ Acquisitions Capex • Market leaders
Slide 12: Overview of Process Technologies
Overview of Process Technologies Global leader in process catalysts and process technology >2,300 Employees; 10% in R&D 15% CAGR in Sales 600 Europe North America 500 Intercat 66% China 400 1% Middle East and Asia 300 12% Other 200 5% 100 16% 0 2009/10 2012/13 Broad Geographical Spread Two Key Marke
Slide 13: Global Coverage
Aberdeen UK sites Global Coverage Billingham Stockton Clitheroe Royston London Sonning Common Bergen Perstorp Moscow Utrecht Brussels Emmerich Paris Oberhausen Chicago West Deptford Beijing Milan Seoul Sevierville Barcelona Qingdao Tokyo Savannah New Delhi Shanghai Houston Bahrain Oman Panki Trinida
Slide 14: Process Technologies Division Strategy
Process Technologies Division Strategy Delivering double digit growth Maintain leading positions in catalysts and Develop larger presence in oil and gas markets process technologies for chemicals markets • Exploit existing technology advantages • Leverage catalyst and process expertise for • Develop
Slide 15: Serving Two Market Sectors
Serving Two Market Sectors Chemicals Oil and Gas • Syngas • Refineries Oleo / Bio Refineries • Petrochemicals 13% 19% • Gas Processing • Oleo / Biochemicals • Diagnostic Services Petro Gas ‐chemicals Processing 18% 8% ~60% ~40% Diagnostic Services of PT sales 11% of PT sales Syngas What we do 30% Wh
Slide 16: PT's Chemicals Markets
Catalyst Licensing JM covered technology / products / service PT’s Chemicals Markets Feedstock Building Blocks Intermediates End Use Products Natural Gas Ammonia Fertilisers SNG Syngas GTL Clean Fuels Hydrogen Formaldehyde Adhesives Methanol Mono Ethylene Glycol Coal Vinyl Chloride Monomer Construct
Slide 17: Expanding Activities in Chemicals Markets
Expanding Activities in Chemicals Markets JM Today • JM a significant player in targeted markets Opportunity Added Process • Opportunity for JM to grow within £2bn p.a. Catalyst Value Technology chemical catalysts and process technology market for JM Expansion • Expansion through: • Increasing catal
Slide 18: PT's Oil and Gas Markets
PT’s Oil and Gas Markets JM has strong positions in targeted high value markets Refineries Leading position in reforming, shift and purification catalysts Hydrogen for hydrogen manufacture Refineries Unique product offering in FCC additives and dosing systems Additives for improving efficiency and e
Slide 19: Robust Growth in Existing Markets
Robust Growth in Existing Markets Underlying Market Growth Superior Growth Markets Catalyst Syngas Petrochemicals Chemicals Market Methanol SNG Formaldehyde 2‐3% 4% 6‐7% 10+% 5% Catalyst Refineries Diagnostic Oil Market Refinery Hydrogen Services 1‐2% Additives Subsea Instrumentation Gas H 2‐3% 3% 5
Slide 20: Global Drivers and their Impact on PT
PT business focus Pgm Global Drivers and their Impact on PT catalysts Emission Obscuration Medical control Automotive Electronics APIs enamels components catalysts Pharma‐ Agricultural Petrochemic‐ Population ceuticals chemicals Ammonia Pgms al catalysts Construc‐ Bulk Growth Health synthesis and Fi
Slide 21: Change Drives Growth for PT
Change Drives Growth for PT Key opportunities beyond underlying growth • Shale gas, its new availability and the effect on process economics Could add £100m p.a. in sales by 2020 • Greater global demand for fuels, particularly cleaner fuels made from dirtier Could add £50m p.a. and less accessible f
Slide 22: Shale Gas
Could add £100m p.a. in sales by 2020 Shale Gas The Changes Key Opportunities • New era of low cost natural gas in US • New ammonia and methanol capacity • Natural gas liquids (NGL) feedstocks from shale gas • Gas to liquids to monetise gas provide favourable economics for petrochemicals • Stimulate
Slide 23: Global Demand for Fuels
Could add £50m p.a. in sales by 2020 Global Demand for Fuels The Changes Key Opportunities • Product slate shift towards middle distillate (diesel) • Strong growth in hydrogen demand • Trend towards heavier and sourer crudes • Greater demand for refinery additives • FCC capacity growth in Asia (fuel
Slide 24: Coal-based Chemicals
Could add £100m p.a. in sales by 2020 Coal‐based Chemicals The Changes Key Opportunities • Energy demand growth drives uptake of coal resources • Huge investment in new capacity in China requiring in China catalytic processes • China is now the major market for coal to chemicals • Coal to SNG (subst
Slide 25: Asset Performance and Integrity
Could add £30m p.a. in sales by 2020 Asset Performance and Integrity The Changes Key Opportunities • Capex pressures mean • High efficiency catalysts for high efficiency reactors • Greater value from more efficient processes and better • Process changes, revamps and repurposing catalyst technology •
Slide 26: Adding Value and De-risking for Customers
Adding Value and De‐risking for Customers Why choose JM? For a new plant When the plant is running Choosing JM’s technologies enables our customers to: JM’s R&D, technical support, products and services allow • Maximise the credibility of a new project when raising our customers to: finance • Optimi
Slide 27: The JM Advantage
The JM Advantage How we stay ahead Use Technical Strength Protect Value • Produce superior products, reduce our production • Strong know how and IP costs • In‐house capabilities • Additional services that are difficult for our • Continuous improvement faster than our competitors to replicate competi
Slide 28: Key Takeaways…
Key Takeaways… Strong and defensible Able to leverage both Technology and position in all catalyst and process know how investment our markets technology Global drivers support Stable margins Double digit growth increasing demand for on average for the PT’s offerings foreseeable future 28
Slide 29: Adding Value Through Technology
Adding Value Through Technology Iain Martin Technology Director, Process Technologies
Slide 30: Introduction
Introduction • Strong technology underpins • High level of targeted R&D • Ability to integrate catalyst and leading market positions investment to support process development future growth • Greater value to JM • ~5% of sales p.a. • Creates opportunities to develop new markets • Increased resilience
Slide 31: Unique Position in Market
Unique Position in Market • Technology licensing and catalyst know how Modelling Pgm and base metal spanning many decades chemistry • Recognised technology leader with broad portfolio Surface Character Synthetic science • Adding value through deep understanding of ‐isation Chemistry customer operati
Slide 32: Serious Science Applied to Catalyst Design
Effective Technology Serious Science Applied Translating Catalyst Design Creating Processes Around Transfer to Realise to Catalyst Design into Manufacturing the Catalyst the Value Serious Science Applied to Catalyst Design • Expert scientists and engineers • World class catalyst research and develop
Slide 33: Translating Catalyst Design into Manufacturing
Effective Technology Serious Science Applied Translating Catalyst Design Creating Processes Around Transfer to Realise to Catalyst Design into Manufacturing the Catalyst the Value Translating Catalyst Design into Manufacturing • Close linkage between laboratory, pilot and commercial facilities • Wid
Slide 34: Creating Processes Around the Catalyst
Effective Technology Serious Science Applied Translating Catalyst Design Creating Processes Around Transfer to Realise to Catalyst Design into Manufacturing the Catalyst the Value Creating Processes Around the Catalyst • Existing processes are made more competitive and new processes are developed •
Slide 35: Effective Technology Transfer To Realise The Value
Effective Technology Serious Science Applied Translating Catalyst Design Creating Processes Around Transfer to Realise to Catalyst Design into Manufacturing the Catalyst the Value Effective Technology Transfer To Realise The Value • Manage the risks associated with first demonstration of catalyst or
Slide 36: R&D in Action
R&D in Action Creating new markets 2‐Propylheptanol (2PH) – a growing intermediate for improved plasticiser performance 2‐Propyl‐ heptanol Plastic Coated Cable Butene Methanol to Coal Gasification Methanol Propylene Polypropylene Olefins (MTO) Ethylene Carpets Polyethylene Plastic Bags 36
Slide 37: Adding Value Through Technology
Adding Value Through Technology • Innovation enables us to increase sales margin Simplified Customer Production Cost Model for Terephthalic Acid for our customers compared to our competitors Raw Materials $/tonne • Catalyst cost is generally relatively small contribution to total cost Paraxylene 725
Slide 38: Adding Value Through Technology – Key Takeaways…
Adding Value Through Technology – Key Takeaways… + + + Talented and Investing for growth Unique technology Focus on protection of enthusiastic staff in facilities in Europe, capability provides knowledge to sustain continue to be at core USA and Asia confidence in ability the growth of our success t
Slide 39: PT and the Chemicals Market
PT and the Chemicals Market Iain Martin Technology Director, Process Technologies
Slide 40: Chemicals Drivers
Chemicals Drivers Global Drivers Chemicals Drivers Petrochemical Demand Growth Growth in primary petrochemical and derivative Population Health demand, regional and product slate shifts Growth & Nutrition Urbanisation Ageing Shale Gas Population New projects and growth based upon US shale gas, Incre
Slide 41: PT's Chemicals Markets
Catalyst Licensing JM covered technology / products / service PT’s Chemicals Markets Feedstock Building Blocks Intermediates End Use Products Natural Gas Ammonia Fertilisers SNG Syngas GTL Clean Fuels Hydrogen Formaldehyde Adhesives Methanol Mono Ethylene Glycol Coal Vinyl Chloride Monomer Construct
Slide 42: Methanol
Methanol JM Offer • World leading technology licensing and full range of catalysts Natural Gas Chemical Uses Reforming Market Drivers • Coal to chemicals in China Coke / C2H2 • Shale gas based opportunities in the US Off Gas Methanol Fuels M15 Methanol Market • Methanol product market: 65mtpa demand
Slide 43: Formaldehyde
Formaldehyde JM Offer • Licensing, engineering and procurement of formaldehyde plants and oxide catalysts for formaldehyde manufacture Wood Products Market Drivers • Market generally grows in line with GDP Methanol Formaldehyde Resins • China forecast to experience fast growth rates (around 7% p.a.)
Slide 44: Gas to Liquids
Gas to Liquids JM Offer 1. Licensing: fixed bed Fischer Tropsch process and reactor licensing with BP Lubricants 2. Catalysts: syngas and Fischer Tropsch catalysts Shale Gas Reforming Fixed Bed Market Drivers Low Sulphur (or slurry) • Spread of oil vs NG price and access to large amounts of low cost
Slide 45: Low Pressure Oxo Alcohols
Low Pressure Oxo Alcohols 2‐Ethylhexanol JM Offer • Licensed process with catalysts Propylene PVC • Developed, co‐marketed and licensed with Dow Chemical Company n‐Butanol for >40 years • 52 licences sold Syngas Coatings i‐Butanol Market Drivers • Market drive towards high molecular weight plasticis
Slide 46: Mono Ethylene Glycol (MEG)
Mono Ethylene Glycol (MEG) JM Offer • Novel process developed in partnership with Eastman Chemical Company and now available for licensing Market Drivers Polyester Methanol Fibre and PET • China production deficit, imports ~7 million tonnes p.a. MEG • High cost of traditional oil based and MTO route
Slide 47: Opportunities in Biorenewables
Opportunities in Biorenewables JM Offer • Catalysts and licensed processes for the emerging biofuels and biochemicals markets Fermentation Market Drivers Cellulose Conversion • Biofuels: climate change regulations and energy security Palm Oil and Upgrade Sugar / Starch • Biochemicals: consumer deman
Slide 48: Process Technologies in China
Process Technologies in China Henry Liu Country Director, China
Slide 49: PT in China – Overview
PT in China – Overview PT Sales to China (2012/13 £119m) • First office in China in 2001 Syngas • ~120 employees and growing 48% • All areas of PT now operating in China Oil and Gas Chemicals 5% • Forecasted double digit CAGR over next Oil and Gas ten years Oleo / Bio • Offices in Beijing and Shangh
Slide 50: Chinese Market Drivers
Chinese Market Drivers Key Drivers China Chemical Trade Balance (£bn) • Economic growth • GDP ~7% over next few years Chemical Import • Chemical demand growth normally 2x GDP Chemical Export • Energy security • China imports >50% of its oil demand • Government looking to reduce import deficit • Envi
Slide 51: Coal to Chemicals
Coal to Chemicals Coal is an appealing and available chemical feedstock ‐ China has 13% of the global coal reserves Coal to SNG Coal to Methanol Coal to Ethylene Glycol Coal to Olefins Capacity Capacity Capacity Capacity (billion m3) (million tonnes) (million tonnes) (million tonnes) +39% +9% +35% +
Slide 52: Coal to Chemicals Flowsheet
Coal to Chemicals Flowsheet Ammonia Fertilisers Coal to chemicals is growing 15‐20% CAGR SNG China Coal Consumption by Sector (mtpa) Hydrogen CAGR ~5.3% Clean GTL Fuels 4,640 ~6% Others ‐3% Coal ~7% Chemicals 15‐20% Methanol 3,778 ~14% Cement 2‐3% 9% 5% MTO PE, PP 15% ~16% Steel 3‐4% Films and Oxo A
Slide 53: Substitute Natural Gas
Substitute Natural Gas Market Drivers • Energy security and urban air quality Gasified Gas for • Coal to gas play driven by China: Gas demand will be met Coal SNG Energy by mix of domestic, imported, shale, LNG and SNG SNG Market Growth • SNG market (2020): ~80bn Nm3 p.a. • Market: ~£20bn in 2020 at
Slide 54: Substitute Natural Gas
Substitute Natural Gas JM Offer • Licensed technology, engineering services and catalyst supply Gasified SNG Gas for Coal Energy • 7 plants licensed by JM Davy – first plant started up summer 2012 • Total licence fees and catalysts ~£50m in next two years JM Projects Bn Nm3 p.a. Market Size • JM sha
Slide 55: The JM Advantage in China
The JM Advantage in China Focused on defensible and profitable long term growth in China + Customers Technologies and Products Resources and Capabilities • Established strong relationships • JM Davy is a strong brand in • Continuously adding best in class with coal to chemicals customers the industr
Slide 56: PT and the Chemicals Market – Key Takeaways…
PT and the Chemicals Market – Key Takeaways… x + Strong position in Expanding portfolio Very good visibility on Attractive opportunities our target markets through R&D capex to support in new feedstocks investment and growth (shale, coal to chemicals) through leveraging catalyst and process technolo
Slide 57: PT and the Oil and Gas Market
PT and the Oil and Gas Market Don Roche Director, Oil and Gas
Slide 58: PT in Oil and Gas
PT in Oil and Gas Three main sectors Opportunities for growth Key strengths Refineries Oil Gas • Advanced materials expertise • Ability to integrate catalyst, Gas Processing 1‐2% 2‐3% process and provide services Diagnostic Services • Matching catalyst to changing plant conditions • Unique measureme
Slide 59: PT's Oil and Gas Markets
PT’s Oil and Gas Markets JM has strong positions in targeted high value markets Refineries Leading position in reforming, shift and purification catalysts Hydrogen for hydrogen manufacture Refineries Unique product offering in FCC additives and dosing systems Additives for improving efficiency and e
Slide 60: Refineries – Hydrogen Catalysts
Refineries – Hydrogen Catalysts JM Offer • Hydrogen catalysts to industrial gas producers, refiners and Natural Gas Refinery chemical plants Hydrogen / Reforming Industrial Gas Hydrogen Plant Market Drivers Off Gases, Liquid Chemicals (Naphtha, LPG) • Hydrogen demand driven by increased diesel produ
Slide 61: Refineries – FCC Additives
Refineries – FCC Additives JM Offer • Fluidised bed catalyst additives with loading equipment for FCC applications Hydroprocessing Olefins Refinery • Provides environmental control and performance products Oil Diesel Distillation Fluid Catalytic Gasoline Market Drivers Cracking (FCC) • Gasoline dema
Slide 62: Building Capabilities Across PT
Building Capabilities Across PT Oil & Gas ++ Chemicals + Fluidised bed catalyst and process skills Fixed bed catalyst and process skills Zeolite catalysts Base metal and pgm catalysts Catalyst manufacturing excellence Catalyst research and scale up Building capabilities 62
Slide 63: Accelerating Growth
Accelerating Growth Oil and Gas drivers Technology / competences Petrochemical demand changes Catalyst development and impact refining manufacturing Feedstock changes in refining Advanced material science R&D and chemicals Process technology development Shale gas and oil and improvements Emission, e
Slide 64: PT and the Oil and Gas Market – Key Takeaways…
PT and the Oil and Gas Market – Key Takeaways… ++ x Leading positions Strong technology + Building synergies Attractive opportunities in target markets skills supported by across PT to for growth both across the R&D investment strengthen our organically and by value chain capabilities acquisition 64
Slide 65: Summary
Summary Geoff Otterman Division Director, Process Technologies
Slide 66: Key Takeaways…
Key Takeaways… Strong position in all Able to leverage both Technology and our markets catalyst and process know how investment technology Global drivers support Stable margins Double digit growth increasing demand for on average for the PT’s offerings foreseeable future 66
Slide 67: Closing Remarks
Closing Remarks Neil Carson Chief Executive
Slide 68: Summary
Summary A world leading Success founded on Differentiation technology company continued investment in through technology R&D and product development Proven strategy in Well positioned in Delivers value place to develop new growth markets business areas 68
Slide 69: JME
JME Johnson Matthey
Slide 70: JM Executive Board
JM Executive Board Neil Carson Robert MacLeod Chief Executive Group Finance Director John Walker Larry Pentz Executive Director Executive Director Emission Control Technologies 70
Slide 71: Presentation Team
Presentation Team Geoff Otterman Iain Martin Division Director Technology Director Process Technologies Process Technologies Henry Liu Don Roche Country Director Director China Oil and Gas 71
Slide 72: Other Senior Management
Other Senior Management Paul Armitage Antoine Bordet Dr Jane Butcher Managing Director Managing Director General Manager Syngas Johnson Matthey Davy Technologies Chemical Catalysts Andy Hurst Mohammed Khan Dr Andrew Heavers Managing Director General Manager Business Development Director Tracerco Pur
Slide 73: Glossary
Glossary 2PH 2‐Propylheptanol NG Natural gas API gravity Measure of how heavy / light a petroleum NGL Natural gas liquids liquid is compared to water Nm3 Normal cubic metre (volume of gas under bbl Oil barrel, a unit of volume standard conditions of 0oC and 1atm pressure C2H4 Ethylene NOx Nitrogen o
Slide 74: Johnson Matthey
JME Johnson Matthey