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| BUSINESS REVIEW |
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| Strategy and Objectives |
Johnson Matthey’s strategic intent is to achieve consistent growth in earnings by concentrating on the development of high added value products and services in areas where our expertise provides a competitive edge, particularly in catalysis, precious metals, fine chemicals and process technology.
The group’s financial objectives are: |
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To continue to achieve consistent and above average growth in underlying earnings per share. |
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To grow dividends in line with underlying earnings while maintaining dividend cover at about two and a half times to ensure sufficient funds are retained to support organic growth. |
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To deliver a return on investment above the group’s cost of capital. We estimate Johnson Matthey’s post tax cost of capital is currently about 8% (11.3% pre-tax). In addition we have a long run pre-tax target rate for the group of 20%. |
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| The board’s strategies to achieve these financial objectives are: |
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Focus the business on the group’s core skills in catalysis, precious metals, fine chemicals and process technology. |
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Position the group in growth markets where our core skills are applicable. Catalysis is a key technology in many developing markets for the 21st century, particularly those concerned with protecting the environment such as in emission control, cleaner fuel, more efficient use of hydrocarbons and the hydrogen economy. Environmental Technologies Division, which combines our skills in catalysts and process technology, is well positioned to serve these emerging markets. Catalysis is also important in the manufacture of fine chemicals where Johnson Matthey has a number of strong niche market positions. Johnson Matthey’s expertise and international strength in precious metals, particularly platinum group metals, was the starting point for many of our businesses. The market for platinum has grown steadily for many decades and demand is expected to grow significantly over the next ten years. |
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Differentiate ourselves by using our world class technology. We will continue to invest significantly in research and development to develop new products and manufacturing processes. Technology is the key driver for most of our businesses and Johnson Matthey has a strong science base with technical centres located in all our major markets. |
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Maintain strong relationships with our major customers, suppliers, government bodies and other stakeholders by investing resources on joint projects to ensure the group is well positioned for future market development. |
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Continue to invest in Johnson Matthey’s employees to ensure they are well trained, motivated and encouraged to meet the challenges of the future. |
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Ensure the business is run in a sustainable way by using resources efficiently, minimising waste in our manufacturing processes and designing new products that help our customers to be more sustainable and competitive. |
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