Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — H1 2012/13 Earnings Presentation
40 slides from Johnson Matthey's earnings presentation, Nov 21, 2012
Slide 1: Presentation of Results for the half year ended 30th September 2012
Presentation of Results for the half year ended 30th September 2012 21st November 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 EPS maintained in difficult market environment Good performance from Environmental Technologies and Fine Chemicals Results impacted by lower precious metal prices Similar performance expected in second half 4
Slide 5: Financial Review
Financial Review Robert MacLeod Group Finance Director
Slide 6: Underlying Results
Underlying Results Half year to 30th September 1H 2012 1H 2011 Change £m £m % change const. curr. Revenue 4,892 5,900 ‐17% ‐17% Sales excluding precious metals 1,310 1,293 +1% +2% Operating profit 202.8 214.7 ‐6% ‐5% Interest (11.6) (11.7) Profit before tax 191.2 203.0 ‐6% Tax (40.2) (48.7) Profit a
Slide 7: Cash Flow from Operations
Cash Flow from Operations Half year to 30th September 1H 2012 1H 2011 £m £m Underlying operating profit 202.8 214.7 Depreciation and amortisation 69.8 73.6 Tax paid (41.5) (42.5) Working capital / other (87.8) (73.7) Cash flow from operations 143.3 172.1 • At 30th September 2012, working capital day
Slide 8: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) 24% 22% 20% 18% 16% 14% 12% 10% 2008/09 2009/10 2010/11 2011/12 1H 2012/13 • Substantial drop in precious metal prices • Increased ROIC in Environmental Technologies impacted group’s ROIC and Fine Chemicals 8
Slide 9: Capital Expenditure
Capital Expenditure £ million Capex / depn (times) 225 2.0 200 175 1.5 149.6 150 134.4 137.9 125 1.0 100 75 57.1 0.5 50 25 0 0.0 2009/10 2010/11 2011/12 1H 2012/13 Environmental Technologies Precious Metal Products Fine Chemicals • Key projects in first half: • Expect 2012/13 capex of circa £200m •
Slide 10: Pensions
Pensions £ UK actuarial valuation as at UK cash contributions IFRS 1st April 2012 completed • Deficit estimated at £217m • £50m one‐off contribution in • Deficit at 30th September 2012 (2009 £173m) second half into SPV for of £83m benefit of pension scheme • UK scheme closed to new • UK reduction ba
Slide 11: Operating Review
Operating Review Neil Carson Chief Executive
Slide 12: Environmental Technologies Division
Environmental Technologies Division
Slide 13: Environmental Technologies Division
Environmental Technologies Division Half year to 30th September 1H 1H % % at £m 2012 2011 change constant rates Sales (excluding precious metals) 918 888 +3 +4 Underlying operating profit 106.6 90.9 +17 +20 Return on sales 11.6% 10.2% Return on invested capital (ROIC) 15.5% 12.6% Sales • Continued g
Slide 14: Estimated Light Duty Vehicle Sales and Production
Estimated Light Duty Vehicle Sales and Production 1H 1H 1H 2H 2012/13 2011/12 change 2012/13 2011/12 change millions millions % millions millions % Sales 8.7 7.8 +11.5 8.7 7.8 +11.5 North America Production 7.4 6.3 +17.5 7.4 7.3 +1.4 Sales 9.2 9.7 ‐5.2 9.2 9.4 ‐2.1 Europe Production 8.9 9.9 ‐10.1 8.
Slide 15: Emission Control Technologies: Light Duty Catalyst Sales £464m
Emission Control Technologies Total sales 1H 2012/13 Johnson Matthey’s Light Duty Catalyst Sales up £1m at £464m £ million 500 £463m £464m 450 £419m 400 350 300 £289m £256m £264m 0% 250 200 150 £84m £93m -9% £79m £96m £107m 100 £78m 50 +18% +12% 0 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 1H 2010/11 2011/12
Slide 16: Light Duty Vehicle Production Outlook 2009-2014
Emission Control Technologies Light Duty Vehicle Production Outlook – 2009‐2014 (calendar years) million 100 Production outlook March 2012 82.4 87.5 90 80.9 76.8 74.4 80 70 59.5 60 44.7 41.8 50 40.6 37.1 37.0 40 28.9 30 19.0 15.4 16.1 16.4 19.0 20.2 18.7 19.6 20 11.9 13.1 15.2 8.6 10 0 2009 2010 201
Slide 17: Estimated HDD Truck Sales and Production
Estimated HDD Truck Sales and Production 1H 1H 1H 2H 2012/13 2011/12 change 2012/13 2011/12 change thousands thousands % thousands thousands % Sales 221.4 192.3 +15.1 221.4 212.5 +4.2 North America Production 236.3 215.6 +9.6 236.3 241.1 ‐2.0 Sales 137.2 150.2 ‐8.7 137.2 147.4 ‐6.9 EU Production 184
Slide 18: Emission Control Technologies: Heavy Duty Diesel Catalyst Sales £234m up 19%
Emission Control Technologies Total sales 1H 2012/13 Johnson Matthey’s Heavy Duty Diesel Catalyst Sales £234m up 19% £ million 350 300 250 200 £165m 150 £129m 100 £83m +28% £41m £56m £55m 50 -2% 0 1H 2010/11 1H 2011/12 1H 2012/13 1H 2010/11 1H 2011/12 1H 2012/13 North America Europe • Strong sales i
Slide 19: Heavy Duty Diesel Vehicle Sales Outlook
Emission Control Technologies Heavy Duty Diesel Vehicle Sales Outlook (calendar years) thousands EU Truck Sales thousands US Class 4‐8 Truck Sales 450 500 400 350 400 300 300 250 200 200 150 100 100 50 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 Euro
Slide 20: Process Technologies
Process Technologies Catalyst Businesses (AMOG) Davy Process Technology • Sales down 5% at £114m • Predicted slowdown in new plant licences • Good demand for ammonia catalysts, purification • Four new projects won in first half products and additives • Sales flat at £52m • Slower sales of hydrogen a
Slide 21: Process Technologies: Oxo Alcohols Technology Licensing
Process Technologies Oxo Alcohols Technology Licensing Market leading technology from 40+ year Two routes to oxo alcohols DPT / Dow collaboration Traditional route from propylene • 50th licence signed in first half Butanols • 12 licences in last five years, three in 1H 2012/13 syngas (for paints and
Slide 22: Process Technologies: Oxo Alcohols Technology Licensing
Process Technologies Oxo Alcohols Technology Licensing Why DPT / Dow? Outlook for Oxo Alcohols • Technology constantly improved • Global demand growing at circa 3% p.a., faster • Higher selectivity and yield, lower capital in China investment and operating cost etc. • New projects from 1H to make sa
Slide 23: Environmental Technologies: Looking Ahead
Environmental Technologies Looking Ahead Emission Control Technologies Process Technologies • Light duty catalysts • Sales of hydrogen catalysts expected to • Outlook in Europe has weakened remain weak • Prospects for further growth in Asia remain • Expect this to be offset by growth in other cataly
Slide 24: Precious Metal Products Division
Precious Metal Products Division
Slide 25: Precious Metal Products Division
Precious Metal Products Division Half year to 30th September 1H 1H % % at £m 2012 2011 change constant rates Sales (excluding precious metals) 282 298 ‐5 ‐4 Underlying operating profit 71.8 107.1 ‐33 ‐32 Return on sales 25.5% 35.9% Return on invested capital (ROIC) 42.2% 59.2% Sales Services Manufac
Slide 26: Precious Metal Products: Services Businesses
Precious Metal Products Division Services Businesses Platinum Marketing and Distribution Business Refining Businesses • Average prices impact demand • Poor performance in first half • Pt $1,500/oz down 16% • Lower intakes resulting from weak average precious metal prices • Pd $622/oz down 18% • Oper
Slide 27: Precious Metal Products: Manufacturing Businesses
Precious Metal Products Division Manufacturing Businesses • Sales down 2% to £195m Sales (£195m) • Noble Metals (down 4% to £62m) • Demand for industrial products impacted by slowdown Noble Metals in Europe 32% • Medical device components business grew slightly Catalysts and • Colour Technologies (d
Slide 28: Precious Metal Products: Looking Ahead
Precious Metal Products Division Looking Ahead Services Manufacturing • Short term outlook for precious metal • Trading in line with last year prices remains uncertain • Short term volumes from South Africa difficult to assess • Despite improvement in prices from lows in the summer, yet to see a sub
Slide 29: Fine Chemicals Division
Fine Chemicals Division UME) Johnson Matthey
Slide 30: Fine Chemicals Division
Fine Chemicals Division Half year to 30th September 1H 1H % % at £m 2012 2011 change constant rates Sales (excluding precious metals) 138 142 ‐2 ‐3 Underlying operating profit 37.2 32.5 +14 +14 Return on sales 26.9% 23.0% Return on invested capital (ROIC) 17.4% 14.6% Sales API Manufacturing • Sales
Slide 31: Fine Chemicals: Business Performance and Looking Ahead
Fine Chemicals Business Performance and Looking Ahead API Manufacturing Research Chemicals Business Performance Business Performance • Sales down 3% to £99m • Sales broadly flat at £39m • OP boosted by replacement of lower margin • OP ahead with improved product mix legacy business by speciality pro
Slide 32: New Business Development: Acquisition of Axeon
New Business Development Acquisition of Axeon About Axeon First Step for New Business Development • Specialist in design, development and • Growing trend towards electrification of manufacture of integrated battery modules automotive drivetrains • Serves automotive and other high performance • Axeon
Slide 33: Outlook (1)
Outlook (1) Pt Environmental Technologies: Precious Metal Products: • Outlook for light duty catalysts in Europe has • Slight increase in precious metal prices although yet weakened but growth prospects in Asia remain to see substantial improvement in volumes in Services businesses • Limited visibil
Slide 34: Outlook (2)
Outlook (2) Fine Chemicals: Group: • Business remains relatively stable • Whilst precious metal prices have improved from their lows during the summer, outlook in some other • Expect sales growth to return in second half markets has weakened • Expect performance in second half to be similar to that
Slide 35: Key Messages
Key Messages EPS maintained in difficult market environment Good performance from Environmental Technologies and Fine Chemicals Results impacted by lower precious metal prices Similar performance expected in second half 35
Slide 36: Questions and Answers
Questions and Answers Neil Carson Robert MacLeod Larry Pentz Chief Executive Group Finance Director Executive Director, Environmental Technologies Bill Sandford Nick Garner Geoff Otterman Executive Director, Group Director, Corporate Division Director, Precious Metal Products and Strategic Developme
Slide 37: Key Messages
Key Messages EPS maintained in difficult market environment Good performance from Environmental Technologies and Fine Chemicals Results impacted by lower precious metal prices Similar performance expected in second half 37
Slide 38: JME
JME Johnson Matthey
Slide 39: 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 40: 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 V (HDD) China Euro III Euro IV (HDD) (HDD) Japan LTS Japan Japan (HDD) (HDD) Russia Stage IIIB Stage IV European (non‐road) (non‐