Johnson Matthey Annual Report and Accounts 2013
About Johnson Matthey
Johnson Matthey is a leader in sustainable technologies. We focus on clean air, clean energy and low carbon technologies and are experts in the application and recycling of precious metals.
We create value from innovating world leading, high technology products that enhance quality of life.
How We Create ValueClick to enlarge
Technology leadership forms the basis of our strategy to deliver superior value to our stakeholders and during the year we have continued to invest in our people, our R&D efforts and our operations around the world to support the future growth of our business.
Our Strategic IntentClick to enlarge
Building a Sustainable Business
Must be profitable to be sustainable
Sustainability initiatives can be
cost efficient too
Health and Safety
customers and communities
Well run business
Our Progress in 2012/13
Johnson Matthey had a challenging year in 2012/13 however the group has made continued progress in building a sustainable business and in delivering innovative high technology products that enhance quality of life.
After two years of very strong financial performance, further progress this year was impacted by headwinds in some of our markets and our operations. Our environment, health and safety performance has continued to steadily improve.
For the group as a whole, revenue decreased by 11% to £10.7 billion but our sales excluding precious metals (sales) were unchanged at £2.7 billion. Underlying operating profit reduced by 8% to £414.8 million.
Underlying earnings per share fell by only 2% to 150 pence, despite the reduction in underlying profit before tax of 9% to £389.2 million.
In 2012/13 the division grew slightly and improved its return on sales.
The Emission Control Technologies business was impacted by the weak European automotive market which held back growth in its light duty vehicle catalyst business. However, its heavy duty diesel catalyst business continued to grow and overall its operating profit was slightly ahead.
Process Technologies’ sales were also a little ahead and operating profit increased significantly, supported by a good result from Davy Process Technology.
Sales £1,904m up 2%
Precious Metal Products
The division had a difficult year particularly in its Services businesses. Lower average precious metal prices, reduced volumes and previously reported operational issues at our Salt Lake City refinery all contributed to a substantial reduction in profitability.
The loss of our current contracts with Anglo American Platinum Limited, announced in February 2013, will impact the performance of this division from Q4 2013/14.
The performance of its Manufacturing businesses, which represent nearly 70% of the division’s sales, was similar to last year.
Sales £548m down 6%
The underlying results from our Fine Chemicals Division were in line with last year but increased competition at our UK active pharmaceutical ingredient (API) manufacturing business constrained the division’s growth.
In response, we have restructured our global API manufacturing business to better position it to return to growth.
The US API manufacturing business and the division’s Research Chemicals business both performed broadly in line with last year.
Sales £277m down 3%
For Johnson Matthey, good performance is not just about profit. It’s about running our business in the most sustainable and responsible way.
In 2012/13 we have made further progress towards building a sustainable business.
2012/13 was a challenging year for Johnson Matthey, but nevertheless we remain very well positioned to grow our business over the medium and long term.
However, 2013/14 will be a year of transition as on 1st January 2014 new Euro VI legislation comes into force for heavy duty diesel vehicles in Europe and on the same date our new arrangements with Anglo American Platinum Limited will commence.
Overall, we expect that the group will make steady progress in 2013/14. In the medium term, growth is expected to accelerate in 2014/15 and beyond, driven particularly by tighter vehicle emissions legislation and demand for Process Technologies’ products, especially in China.
We are confident that our long term market drivers will enable Johnson Matthey to deliver continued growth which will be further enhanced by our ongoing investment in R&D and new business development.
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The Business Review and certain other sections of this annual report contain 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 the group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated.