A specially developed advanced materials handling system controls the preparation of all the materials used in the production of the latest generations of autocatalysts at Johnson Matthey's new manufacturing plant at Royston, UK

Analysing platinum group metal chemical products at Johnson Matthey's facility in West Deptford, USA

From its extensive facilities in Devens, USA, Pharm-Eco Laboratories provides world class chemistry outsourcing services to the pharmaceutical industry

Zero emissions vehicle legislation and the drive to improve fuel economy are stimulating rapid progress in the development of fuel cell cars (photo courtesy of Ford Motor Company Limited)

Catalysts & Chemicals Division had a very good year with operating profit 17% up on 1999/00 at £98.9 million. Both the Catalytic Systems and Chemicals businesses achieved very strong growth. Pharmaceutical Materials made good progress though profits were largely unchanged from last year. Once again, the year saw a great deal of activity in fuel cells.

Catalytic Systems
Catalytic Systems, which encompasses Johnson Matthey's global autocatalyst, heavy duty diesel and stationary source emission control businesses, had a very successful year. In North America, vehicle sales in calendar 2000 surpassed 1999's record but then fell sharply in the first quarter of 2001. As a result there was a 1% decline for our fiscal year as a whole. In Europe, vehicle sales were down 2% over the same period, while in the rest of the world they increased by around 6%. Overall, global vehicle sales advanced by 1% but the autocatalyst market grew by around 6% benefiting from tightening standards and the geographical spread of regulations to control emissions. Johnson Matthey, supported by strong catalyst technology and the introduction of a new production process, maintained momentum in the second half, gaining market share and increasing sales volume by 8%. For the year as a whole unit sales were up 9% on 1999/00.

The substantial capital investment programme commenced in 1999/00 continued throughout the year. The new high technology European autocatalyst plant at Royston, UK is in full production and was officially opened in March 2001. In the USA a new production line was added at the Devon plant. The new Indian plant, which opened in November 2000, and the new facility in Shanghai, which will open in June 2001, place Johnson Matthey in a strong position to compete in these two important emerging markets. In addition to adding capacity, the division's capital expenditure programme has enhanced its production capability to allow the manufacture of better performing catalysts, often with lower precious metal loadings, benefiting customers and strengthening its competitive position.

Chemicals
Chemicals had an excellent year with all of its businesses achieving good growth in revenues driven by strong demand for products and services and high metal prices. Platinum group metal (pgm) refining had a very good year benefiting from high volumes of both secondary material and increased intake from primary producers around the world. There was also good growth in sales of process catalysts to the pharmaceutical and speciality chemicals industries and robust demand for pgm chemicals. Sales to the growing fuel cell industry were also encouraging. There continues to be strong interest in homogeneous catalyst products, particularly in the pharmaceutical industry to manufacture single enantiomer molecules for new drugs. The year also saw the business entering into agreements with major pharmaceutical companies to use its high throughput screening technology to rapidly identify catalysts for their processes. Alfa Aesar, the research chemicals business, benefited from expansion into organic compounds and growth in its e-commerce activities. Chemicals has embarked on a significant programme to expand and upgrade its pgm refining facilities on both sides of the Atlantic.

Pharmaceutical Materials
In Pharmaceutical Materials good growth from established products such as Carboplatin and controlled drugs as well as from several new products in development, was offset by an expected decline in revenues from methylphenidate. The major expansion of the West Deptford, USA manufacturing facility has made good progress and will be completed late this year. This project will deliver a major increase in capacity and capabilities to coincide with the expected approval of several important new products in the development pipeline. In April 2001 we acquired Pharm-Eco Laboratories, Inc., a provider of chemistry outsourcing services to the pharmaceutical industry. This business is primarily focused on supporting pharmaceutical companies from the early to middle phases of drug discovery and development. As such, Pharm-Eco fits well with the West Deptford business, which is focused on manufacturing pharmaceuticals that are near or have already received approval for commercial sale, enabling Johnson Matthey to offer pharmaceutical manufacturing services throughout a drug's life cycle.

Fuel Cells
During the year Johnson Matthey Fuel Cells was formed as a stand alone business unit within Catalysts & Chemicals with locations in the UK, USA and Japan. Business offices have been established in Reading, UK, and a Gas Processing Technology business formed in the USA. Products include stack catalysts, electrodes, membrane electrode assemblies (MEAs), small-scale stationary fuel processors and catalyst-coated parts for automotive fuel processors. In 2000/01 the business continued to work with target customers and has secured agreements with key suppliers. Its exclusive agreement with James Cropper PLC to develop key components for MEAs has made excellent progress. The major investment in R&D and testing facilities at Sonning Common, UK, has been completed and now represents a 'best in class' capability. The business is also moving forward with production facilities, expanding its catalyst plant at West Deptford, USA, moving to a new fuel processor facility at West Whiteland, USA, and finalising plans for a MEA mass manufacturing plant in the UK.