Report of the Directors
Business Review

Our Strategy

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Supporting Our Strategy

There are five fundamental key enablers to our strategy which impact our business and enable future growth.

1.

Global Drivers

There are four major global drivers which we believe have a major impact on Johnson Matthey’s business:

  • Environmental factors, climate change, regulation
  • Natural resource constraints
  • Population growth, urbanisation, increasing wealth
  • Health and nutrition, ageing population

The figure to the right illustrates how these macro level trends impact the industries into which Johnson Matthey supplies its products, services and technologies.

All four global drivers provide opportunities for growth in many of our businesses. For example:

  • Projected population growth rates and increasing urbanisation and wealth, particularly in emerging markets, will drive an increase in the number of cars on our roads and therefore links through to growth in Johnson Matthey’s automotive emission control catalyst business.
  • Projections on how natural resources will become more depleted provide estimates on demand for recycling which, in turn, will benefit the group’s Pgm Refining and Recycling business.

These global level trends also offer opportunities for the group to leverage its expertise in catalysis and platinum group metals to deliver growth across its businesses, ahead of underlying market rates.

2.

Sustainability

Sustainability is a key element of our strategy for future growth where the resource efficient, environmentally responsible manufacturing of high technology products that deliver sustainability benefits can leverage commercial advantage for the group.

The group’s Sustainability 2017 Vision, launched in December 2007, sets out our direction and aspirations for building a more sustainable business. Our long term sustainability strategy is underpinned by two business drivers, five key elements and six sustainability targets.

Two Business Drivers

There are two key business drivers for sustainability which encourage responsible business practices and support future growth. The first focuses on our internal operations and on designing and manufacturing our products more efficiently, using fewer resources. This approach helps us to reduce our costs and at the same time reduces our impact on the planet. The second driver concerns our products and services and focuses on developing improved, more efficient solutions for our customers. By doing this we can enhance our customers’ performance and improve their sustainability footprint which, in turn, will improve our competitiveness. Together these drivers support the development of high technology products and services which enhance quality of life, be it through health, social or environmental benefits.

Five Key Elements

Growing our business through sustainability is not solely about our operations and products. We are also committed to best practice in governance, to creating a positive working environment for employees and to being a responsible partner for our customers, suppliers, communities and other stakeholders. As such, we manage sustainability across the group according to five elements: financial; governance; social; health and safety; and environment. Delivering good performance in all five areas is vital to our long term success.

Six Sustainability Targets

Our Sustainability 2017 Vision is supported by six challenging targets as illustrated in the figure below. Our progress towards them in 2012/13 is summarised in the Group Performance Review and further details are provided in the Financial, Social, Health and Safety and Environment sections of this report.

Read more on sustainability at Johnson Matthey.

Six Sustainability Targets (from April 2013)

  • At least double earnings per share
  • Halve key resources consumed per unit of output
  • Halve carbon intensity
  • Achieve zero occupational illness cases
  • Achieve zero waste to landfill
  • Achieve a zero ‘greater than three day accidents’ safety target
3.

Research and Development

Continued investment in R&D brings to life the innovation that underpins the future growth of Johnson Matthey. It is this investment, together with our ability to recruit the most talented and creative scientists, that will ensure we maintain the expertise and leadership in the science of catalysis, materials chemistry and pgms that drive the development of high technology products and manufacturing processes.

Around 1,300 of our employees work in R&D representing around 12% of the total workforce and include many highly skilled scientists and engineers. Around 80% of our R&D staff work within the group’s businesses in dedicated R&D and technical centres around the world. In our businesses, work is mainly focused on delivery of shorter term business specific projects or to address particular market developments or customer needs.

Alongside these activities, Johnson Matthey also has central capability on strategic R&D, located at four Technology Centres, which works on behalf of all of the group’s businesses.

We maintain a close link between our central R&D activities and the development work carried out directly by our businesses. This interaction is key in ensuring the rapid transfer of technology to support the continued development of innovative new products and services for our customers. Examples of our current projects are highlighted as ‘Innovation in Action’ case studies throughout this report.

As previously described, major global drivers provide significant opportunities for Johnson Matthey to grow and develop its existing business areas over the years ahead and R&D will play an important role in realising these opportunities.

In 2012/13 Johnson Matthey increased its gross investment in R&D by 6% to £136.0 million.

Read more on R&D at Johnson Matthey.
4.

Manufacturing Excellence

Efficient manufacturing is a key contributor to value creation in Johnson Matthey and will underpin our growth in the future. It is a major part of our business in terms of the group’s global spend and provides jobs for around 60% of our employees. Improving our manufacturing performance can therefore have a significant impact on our business.

Our Manufacturing Excellence programme is a long term investment in our people, manufacturing processes, engineering and technology. Learning and development modules are in place to support our manufacturing employees whilst lean principles are becoming integrated at all sites to increase manufacturing efficiency and improve overall performance. Technical centres of excellence provide opportunities for manufacturing teams around the world to trial and test new equipment and engineering teams are working to identify and develop best practice for our key processes.

The programme realises opportunities for us to increase efficiency, reduce our costs, capture our global expertise and improve our capacity with minimum capital expenditure.

5.

People and Culture

Recruiting the right people, developing them and providing an environment which motivates them to contribute and stay with Johnson Matthey is fundamental to our long term performance. Our focus is on ensuring we can recruit, retain and develop the highly skilled people that will be needed to support our global growth.

The group recognises that our people and culture are a particular strength and, although the culture of an organisation is not easy to define, there is a distinctive culture in Johnson Matthey, irrespective of division, business, function or geographic location. Sustaining, evolving and integrating our culture as we grow the business is a challenge we are embracing on a global scale.

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