Review of Results

The more difficult economic environment in which the group operated in the first half of 2009/10 was significantly worse than that in the same period last year. Global light duty vehicle production and average platinum prices, two key drivers of the group’s profitability, which had held up well in the first half of last year, fell by 16% and 33% respectively. Johnson Matthey was impacted by these factors as well as the general slowdown of industrial activity with sales excluding the value of precious metals down by 5% and underlying profit before tax by 21%.

In the context of a more difficult economic environment, the group’s focus on cash generation was reflected in net cash flow from operating activities of £77.6 million and a strong balance sheet, with modest net debt of £584.3 million at 30th September 2009.

Revenue fell by 18% to £3.6 billion, primarily as a result of lower precious metal prices, particularly when compared with the first quarter of last year. Sales excluding the value of precious metals fell by 5% to £883 million, with Environmental Technologies down 5% and Precious Metal Products 13% lower. Fine Chemicals’ sales excluding precious metals were up 22%, helped by the launch of the generic version of ADDERALL XR®. At constant exchange rates sales excluding precious metals for the group fell by 13%.

Underlying operating profit (before amortisation of acquired intangibles) fell by 25% to £123.9 million with reduced activity in Environmental Technologies and Precious Metal Products being partly offset by growth in Fine Chemicals. At constant exchange rates underlying operating profit was down by 31%.

The group’s net finance costs reduced by £9.7 million to £10.2 million as a result of both lower average borrowings and the effect of lower interest rates. Underlying profit before tax (before amortisation of acquired intangibles) was 21% lower at £114.4 million. After amortisation of acquired intangibles, profit before tax decreased by 22% to £109.5 million.

Total earnings per share fell by 20% to 37.4 pence. Underlying earnings per share, which excludes amortisation of acquired intangibles, fell by 19% to 39.1 pence.


The interim dividend is unchanged at 11.1 pence. Our long term policy remains to increase dividends in line with earnings growth. Although earnings in this period were lower than the first half of last year, we recognise the importance to shareholders of a stable dividend. In maintaining the interim dividend, we have taken into account the group’s long term prospects, strong cash flow and sound balance sheet.

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