Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — H1 2011/12 Earnings Presentation
35 slides from Johnson Matthey's earnings presentation, Nov 23, 2011
Slide 1: Presentation of Results for the half year ended 30th September 2011
Presentation of Results for the half year ended 30th September 2011 23rd November 2011
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 Group continues to perform well ROIC exceeds 20% long term target Well placed to deliver strong performance in second half Longer term prospects remain robust 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Half year to 30th September 1H 1H Change as Change 2011 2010 reported const. curr. £m £m Revenue +29% +31% 5,900 4,562 Sales excluding precious metals +17% +19% 1,293 1,104 Operating profit 214.7 174.0 +23% +25% Interest (11.7) (9.7) Profit before tax 203.0 164.3 +24% Tax (48.7) (
Slide 7: Cash Flow from Operations
Cash Flow from Operations Half year to 30th September 1H 2011 1H 2010 £m £m Underlying operating profit 214.7 174.0 Depreciation and amortisation 73.6 71.4 Tax paid (42.5) (37.7) Working capital / other (73.7) (160.0) Cash flow from operations 172.1 47.7 • At 30th September 2011, working • During 1H
Slide 8: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Target • Higher operating profit and improved • Exceeded long term target of 20% operational efficiency • Double cost of capital 8
Slide 9: Capital Expenditure
Capital Expenditure 203.5 134.4 137.9 50.4 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects in first half: • 2011/12 capex likely to be around 1.3x • New pgm catalyst plant in Shanghai depreciation • Expansion of HDD catalyst plants in Germany and China • Additional p
Slide 10: Operating Review
Operating Review Neil Carson Chief Executive
Slide 11: Environmental Technologies Division
Environmental Technologies Division
Slide 12: Environmental Technologies Division
Environmental Technologies Division Half year to 30th September 1H 1H % % at 2011 2010 change constant £m rates Revenue 1,533 1,264 +21 +22 Sales (excluding precious 888 727 +22 +24 metals) Underlying operating profit 90.9 76.6 +19 +20 Return on sales 10.2% 10.5% Sales • Good growth in light duty ca
Slide 13: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 2H 2011/1 2010/1 2 1 chang e million million % s s 7.8 7.1 +9.9 6.3 6.3 - 9.6 9.5 +1.1 9.8 10.6 -7.5 14.2 15.8 -10.1 17.6 19.3 -8.8 36.4 37.5 -2.9 37.2 39.4 -5.6 Source: IHS Global Insight 13
Slide 14: Emission Control Technologies: Light Duty Catalyst Sales
Emission Control Technologies Total sales 1H JM’s Light Duty Catalyst Sales 2011/12 £463m up 11% North Europe Asia Global America • JM sales slightly • Sales ahead of • Our sales well • Operating profit down growth in ahead of market impacted by higher vehicle growth rare earth prices • Impacted by
Slide 15: Emission Control Technologies: Light Duty Vehicle Production Outlook
Emission Control Technologies Light Duty Vehicle Production Outlook – 2008-2013 (calendar years) North Europ Asia Globa America e l • Latest forecasts for 2H 2011 and beyond slightly lower • Global vehicle sales and production have so far remained stable Source: IHS Global Insight (September 2011) 1
Slide 16: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H 2011/12 2010/11 2011/1 chan 2010/11 thousan thousa 2 chan ge % thousa ds nds thousa ge % nds nds North Sales 192.2 134.2 +43.2 America 192.2 153.2 +25.5 Production 214.1 133.2 +60.7 214.1 167.8 +27.6 Sales 143.6 116.2 +23.6 EU 143.6 138.7 +3.5 Pro
Slide 17: Emission Control Technologies: Heavy Duty Diesel Sales
Emission Control Technologies Total sales 1H JM’s Heavy Duty Diesel Sales 2011/12 £197m up 54% North Europ America e • Sales well ahead, up 56%, broadly in • Sales grew ahead of market, up 35% line with truck production • Truck operators replacing ageing fleets 17
Slide 18: Emission Control Technologies: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (calendar years) Western European US Class 4-8 Truck thousan Truck Sales thousan Sales ds ds Euro IV US07 Euro V Euro VI / US 2010 regulations Sales outlook at March 2011 Source: JD Power (September 2011) 18
Slide 19: Process Technologies
Process Technologies Catalyst Businesses Davy Process Technology • Sales benefited from inclusion of Intercat, up • Very strong first half, sales up 55% to £52m 38% at £120m • 11 new projects won • Methanol catalyst demand down as • China continues to drive DPT’s performance expected, hydrogen catal
Slide 20: Environmental Technologies: Looking Ahead
Environmental Technologies Looking Ahead Emission Control Technologies Process Technologies •Outlook for light duty catalysts •Catalyst sales expected to show remains good despite macroeconomic normal seasonality uncertainties • Plants close to full capacity • Second half will benefit from rare eart
Slide 21: Precious Metal Products Division
Precious Metal Products Division
Slide 22: Precious Metal Products Division
Precious Metal Products Division Half year to 30th September 1H 1H % % at 2011 2010 change constant £m rates Revenue 4,858 3,694 +32 +34 Sales (excluding precious 298 274 +9 +10 metals) Underlying operating profit 107.1 81.2 +32 +32 Return on sales 35.9% 29.7% Sales Services Manufacturin •Higher ave
Slide 23: Precious Metal Products Division: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Refining Businesses Business • Average prices increased sharply • Very strong first half • Pt $1,782/oz up 12% • Strong intakes, supported by higher average precious metal prices • Pd $759/oz up 53% • Operationa
Slide 24: Precious Metal Products Division: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales up 8% to £199m Sales • Noble Metals (up 10% to £64m) • Good demand across industrial product range Catalysts • Medical device components business and Noble Metals Chemicals 32% performed well 46% • Colour Technologies (down 3% to £44m
Slide 25: Precious Metal Products Division: Looking Ahead
Precious Metal Products Division Looking Ahead Services Manufacturing •Short term outlook for precious •Currently trading well metal prices uncertain • Impact of investors increasing •Order visibility has reduced volatility • Fundamentals remain robust •Refining intakes holding up 25
Slide 26: Fine Chemicals Division
Fine Chemicals Division es Johnson Matthey
Slide 27: Fine Chemicals Division
Fine Chemicals Division Half year to 30th September 1H 1H % % at 2011 2010 change constant £m rates Revenue 146 127 +15 +19 Sales (excluding precious 142 122 +16 +19 metals) Underlying operating profit 32.5 28.8 +13 +16 Return on sales 23.0% 23.6% Sales API Manufacturing •Strong performance, particu
Slide 28: Fine Chemicals: Business Performance and Looking Ahead
Fine Chemicals Business Performance and Looking Ahead API Manufacturing Research Chemicals Business Performance Business Performance •Sales up 17% to £102m •Sales up 14% to £40m •Growth aided by acquired legacy •Good demand across all regions business, new products and short term boost in market sha
Slide 29: Outlook
Outlook Pt Environmental Technologies: Precious Metal Products: •Economic growth prospects increasingly •Activity currently remains robust but uncertain but ECT has started second half well visibility reduced •Opportunities for Process Technologies Fine Chemicals: Group: •Confident of continued good
Slide 30: Key Messages
Key Messages Group continues to perform well ROIC exceeds 20% long term target Well placed to deliver strong performance in second half Longer term prospects remain robust 30
Slide 31: 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 Group Director, Corporate Precious Metal Products Chemicals and Strateg
Slide 32: Key Messages
Key Messages Group continues to perform well ROIC exceeds 20% long term target Well placed to deliver strong performance in second half Longer term prospects remain robust 32
Slide 33: Appendix
JME) Johnson Matthey
Slide 34: Emission Control Technologies: Light Duty Vehicle Legislation
Emission Control Technologies Light Duty Vehicle Legislation S. Korea India Rest of K-ULEV Euro 3 (national) World Brazil L4 Brazil L5 Brazil L6 (proposal) 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
Slide 35: Emission Control Technologies: Heavy Duty Diesel Legislation
Emission Control Technologies Heavy Duty Diesel Legislation Brazil S.Korea Euro III Euro IV (HDD) Rest of (HDD) India India World Euro III (HDD) Euro IV (HDD) Brazil Euro IV (HDD) China Euro III Euro IV (HDD) (HDD) Japan LTS Japan Japan (HDD) (HDD) Russia Stage IIIB Stage IV European (non-road) (non