Report of the Directors
Business Review

Financial Review of Operations
Precious Metal Products

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Manufacturing Businesses

Sales in our Manufacturing businesses, which represent 66% of PMPD’s sales, were up 6% to £383 million. Operating profit was well up on prior year.

Noble Metals

Following last year’s strong recovery, Noble Metals’ sales grew 4% to £125 million. However, operating profit was well ahead of last year with a trend towards higher added value products for the automotive and medical device sectors and improved market share following the success of several new product introductions.

Sales of industrial products, which represent 70% of Noble Metals’ sales, grew by 4% to £88 million. The business has developed a range of new higher performance pgm alloy catalysts used in fertiliser manufacture. This has enabled us to increase our market share and outperform market growth.

Carbon trading opportunities continue to be the main driver for the use of N2O abatement systems in the nitric acid production industry. Noble Metals continued to see good demand for these products during the year and, despite recent falls in the market price for carbon, sales continued to grow. Further growth opportunities will depend upon the legislative environment as developed countries tackle the threat of climate change. The business is well placed to respond.

The business has also developed a range of high technology pgm alloys used in manufacturing spark plugs designed to meet the automotive industry’s demand for improved performance and fuel efficiency. During the year the business has invested in increased production capacity to serve this growing market.

Sales of medical components (30% of Noble Metals’ sales) were 6% up on last year at £37 million driven by record demand for products used primarily in the cardiovascular markets. Government healthcare initiatives and an ageing population in the US are resulting in a higher number of medical procedures. This, together with increasing wealth in China, India and Southeast Asia, is driving demand for our products. During the year the business invested in high technology fine hole cutting equipment at its San Diego, USA operation to support growing demand for micromachined parts. It also expanded its facility in San Jose, USA to service increased demand for nitinol tubing which is used in nitinol stents to treat peripheral vascular disease.

Colour Technologies

Colour Technologies’ sales were 6% up on last year at £87 million and operating profit grew ahead of sales. The year saw good growth in sales of obscuration enamels for the automotive glass industry, particularly in China and the Americas, supported by the introduction of innovative new products. High precious metal prices continued to adversely impact demand for decorative precious metal products but had little impact on functional applications of these materials, for example in the aerospace industry. The year also saw a strong increase in sales of conductive silver pastes to the automotive glass industry resulting from a combination of improved products, successful collaboration with customers and market growth.

Catalysts and Chemicals

Catalysts and Chemicals’ sales grew by 8% to £171 million. Demand for our catalysts was good, supported by new product launches for solvent manufacturing and growth in sales of newly developed pgm catalysts for the petrochemical market. The business also saw good growth in sales of catalysts for the production of oleochemicals, particularly in Asia, and in sales of platinum coated discs used in contact lens disinfecting systems. During the year the business commissioned its new pgm catalyst plant in Shanghai, China mainly to service customers in the pharmaceutical and fine chemical sectors.

Sales of chemical products, which include pgm salts used in the manufacture of autocatalysts, were down on prior year mainly due to the impact, particularly in the first half, of the Japanese earthquake and tsunami on demand from Japanese automakers. The year saw the introduction of ‘It’sFresh!’ sheets, which contain our e+™ ethylene remover, to major UK supermarkets to extend the shelf life of fruit. Whilst current sales are relatively modest, we are optimistic that our sales will exceed £10 million per annum within the next few years.

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