Report of the Directors
Business Review

Financial Review of Operations
Precious Metal Products

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Image reproduced courtesy
of Cochlear Limited.

Manufacturing Businesses

Sales in our Manufacturing businesses, which represent 69% of PMPD’s sales, were down 1% to £380 million. Operating profit was also slightly lower.

Noble Metals

Sales in our Noble Metals business fell slightly this year, down 2% to £122 million. Operating profit was significantly down, partly due to costs associated with exiting a small, loss making business which supplied equipment to the semiconductor industry.

Sales of industrial products, which represent 67% of Noble Metals’ sales, were 6% lower at £82 million. Demand for pgm alloy catalysts used in fertiliser manufacture were down after a strong year in 2011/12, although this was partly offset by good growth in demand for N2O abatement technology as new projects came on line. The use of this technology is, however, very sensitive to the carbon price which has collapsed in recent months. Consequently, sales in 2013/14 for this high value technology are likely to be substantially lower. Sales of other industrial products were down slightly reflecting reduced customer demand, particularly in Europe.

Sales of medical components (33% of Noble Metals’ sales) were 6% up on last year at £40 million, ahead of its market growth rates. Sales grew steadily in both the US and European regions and the business saw good demand for its pgm products used primarily in cardiovascular applications.

Colour Technologies

With its largest market being the European automotive glass sector, sales in Colour Technologies were 6% down at £82 million and operating profit also fell. In recent years the business has focused on the manufacture of high performance functional materials and these now represent more than two thirds of the business’ sales compared with 45% five years ago.

Sales of automotive products were broadly flat this year as growth in the US and in particular in Asia compensated for a decline in Europe. Our market share has grown slightly as we benefited from the supply of innovative new products to the sector. During the year we acquired a small business in China that manufactures silver paste and which should provide us with a route to the growing market for silver paste for photovoltaic cell applications. Sales of products to decorative markets continued their long term declining trend.

Catalysts and Chemicals

Catalysts and Chemicals’ sales grew by 3% to £176 million and operating profit was substantially ahead. Demand for catalysts used in the production of a wide range of petrochemicals was strong and the business continued to invest in R&D to support its pipeline of new products. Sales of catalysts for the production of edible oils and oleochemicals were down and whilst we saw a small reduction in volumes, the major impact on sales came from the effect of lower nickel raw material prices, the benefit of which is passed on to our customers. Sales of sponge nickel catalysts, which are used by the fine chemicals industry, were also adversely affected by the lower price of nickel. However, demand for catalysts and chiral technologies grew well in the year.

Sales of chemical products were slightly down on last year as a result of lower demand for pgm chemicals from customers in the pharmaceutical and fine chemical sectors. Demand for pgm salts used in the manufacture of emission control catalysts by external customers and our own ECT business were broadly flat.

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High technology black obscuration enamels for automotive glass applications are produced by Johnson Matthey’s Colour Technologies business.

Developing catalysts and chiral technologies for fine chemical and pharmaceutical applications.

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