Catalysts & Chemicals

Catalysts & Chemicals Division produced a very strong performance with operating profit 17% up on 2000/01 at £94.7 million.

The division consists of the group’s Catalytic Systems, Chemicals and Fuel Cells businesses.

Catalytic Systems
Catalytic Systems, which includes Johnson Matthey’s global car catalyst, heavy duty diesel and stationary source emission control businesses, had another strong year. In North America, sales of new vehicles fell and catalyst volumes declined in our fiscal year. Our business performed well in this more difficult market, benefiting from the introduction of new technology. There was growth in the heavy duty diesel retrofit market during the year and we made gains in market share. The well publicised problems of the US power industry led to increased investment in small turbine generating capacity and growth in the market for catalysts for this application.

In Europe, vehicle sales fell slightly in our fiscal year. Our recent investment in new manufacturing technology has brought the opportunity to develop new, more advanced products with cost effective manufacturing routes. Customer acceptance of these innovations resulted in growth in our market share. As a result the European region’s sales were well up on prior year. The new manufacturing facility, opened last year in Royston, UK, increased its output throughout the year. There was also a considerable increase in demand for catalysts made in South Africa. As a result we have expanded our plant near Johannesburg.

The investment programme to replace our manufacturing capacity with our new production technology, which allows more accurate control of materials and greater flexibility of product design is nearing completion. Production lines incorporating the new technology have now been installed at all of our plants around the world. During the year we completed our ninth manufacturing facility in Shanghai, China. This new plant was opened in June 2001 and is entirely based on our new technology.

Chemicals
The Chemicals business had a good year achieving growth in both revenues and profits in the face of mixed market conditions. The platinum group metal (pgm) refining business performed very well benefiting from strong demand, particularly from primary producers. However, the catalyst and chemical products businesses were affected by a downturn in some of the end markets that they serve. Two novel polymer fibre technologies, resulting from our investment in Oy Smoptech AB in Finland, were commercialised during the year and offer good prospects for growth: Smopex® a range of customised metal scavengers to aid recovery of precious metals and FibreCat® an anchoring technology for homogeneous catalysts. The year also saw the launch of Johnson Matthey Catalytic Services, a new business offering fee based contract development and optimisation of catalytic processes.

The expansion and upgrading of pgm refining facilities on both sides of the Atlantic continues apace. New smelting technology has been installed in the UK that further improves Johnson Matthey’s competitive advantage in insoluble metals refining. An innovative technology for catalyst recovery using a patented processing technique has been developed in collaboration with Chematur AB and will be launched later this year under the trade name Aquacat®.

The Research Chemicals business achieved excellent results with good growth in the Alfa Aesar catalogue business and a strong contribution from the acquisition of Avocado Research Chemicals in February 2002. Avocado, based in Heysham, UK, is a leader in the manufacture and supply of organic compounds for use in research laboratories. Its well established catalogue predominantly serves customers in the fine chemical and pharmaceutical industries as well as in contract and academic research.

Fuel Cells
The Fuel Cells business continues to make excellent progress working in close collaboration with key customers to improve the performance and durability and to reduce the cost of fuel cell components. Early commercial fuel cell products have started to become available for premium back up power and portable applications, and we expect that by the middle of this decade joint efforts with customers will produce commercial products for an increasing number of premium markets in the small stationary sector. At the same time our automotive customers will be producing small fleets of vehicles to validate this new technology in the field. This will lead to mass-produced products for the transport sector at the end of this decade and into the next.

Our worldclass R&D and testing facilities at Sonning Common, UK have achieved dramatic improvements in the performance of our fuel cell products. These advances are placing us in a strong position to command a significant share of this new market as it reaches commercialisation. Work was completed during the year on a new plant for testing and developing fuel processors at West Whiteland, USA. The year also saw good progress on the first phase of our investment in a dedicated Membrane Electrode Assembly (MEA) manufacturing facility at Swindon, UK.

 

Research and Development In Catalytic Systems we continue to invest in research and development and in testing capacity to match our regenerated manufacturing base and retain market leadership. During the year R&D activities have centred on improved three way catalysts for petrol vehicles and the development of products for lean burn engines, especially diesels. Heavy duty diesel engines are a focus for regulation in the coming years and we are investing in R&D to facilitate technical partnerships with the engine makers. R&D programmes in the Chemicals business continue to deliver new products and technologies to customers and more efficient processes at our plants. During the year these efforts resulted in the launch of new ranges of platinum group metal heterogeneous selective oxidation catalysts and highly active platinum on carbon catalysts for a wide variety of hydrogenation and other reactions. The business’ ligand library continues to grow and a novel palladium based homogeneous catalyst has been developed in anticipation of increased demand for catalysts to carry out difficult coupling reactions