Precious Metal Products



Half Year to 30th September




at constant









£ million


£ million











Sales excl. precious metals









Underlying operating profit









Return on sales (ex pms)









Precious Metal Products Division’s revenue increased by 25% to £3,175 million. Precious metal prices were significantly higher than in the same period last year when they were affected by the global recession. Sales also increased by 25% to £258 million, with good growth across all of the division’s businesses. Operating profit was 65% ahead of the first half of last year at £81.2 million.

The division’s Platinum Marketing and Distribution business achieved good growth, with sales up 40%, broadly in line with the improvement in platinum group metal (pgm) prices.

The platinum market is forecast to be in a small surplus in calendar year 2010, with recovering industrial demand largely offset by increased recycling, whilst mine production remained relatively flat. In this environment, supply-demand fundamentals were of secondary importance to the activity of investors who reacted to other events such as the soaring gold price, sovereign debt issues and the strength of the US dollar. The average price of platinum in the first half was $1,595/oz, up 32% compared to the same period last year.

The palladium market is expected to be close to balance in 2010, a significant change in the market after many years of substantial surpluses. Net demand is forecast to increase by 12% supported by strong automotive and industrial demand. The strong car market in China is particularly supportive of palladium demand as it is dominated by gasoline engines that use palladium based emission control catalysts. Industrial consumption has benefited from the modest recovery of global demand for consumer products, particularly in the electronics sector where palladium is a key component. Supply is expected to remain almost flat, with Russia continuing to sell significant quantities of palladium from state stocks. The price of palladium has responded to these favourable market fundamentals, averaging $497/oz for the first half of the financial year, up 95% compared to the same period last year.

The rhodium market is anticipated to be in modest surplus in 2010 as demand from the automobile industry has increased. Rhodium supply from mine sources is expected to fall, which has helped to tighten the market. Although the average rhodium price has increased by 63% to $2,460/oz compared to the same period last year, the market has not seen the volatility which took the price over $10,000/oz in 2008.

The division’s fabrication business, Noble Metals, grew its sales by 20% benefiting from strong industrial demand for its products. Sales to the agrochemical sector, for products used in the production of nitric acid for fertilisers which account for about 20% of Noble Metals’ sales, showed good growth as did sales to the medical components industry which represent approximately a third of sales. Noble Metals’ results also benefited from the acquisition of the fabricated products business of our Australian partnership, AGR Matthey, on the dissolution of that partnership in March 2010. Colour Technologies’ sales were also well ahead of the same period last year, up 19%, reflecting strong automotive demand. Automotive products account for over 40% of Colour Technologies’ sales. Sales of decorative enamels were also robust. Overall, operating profit for the division’s manufacturing businesses was significantly higher than in the first half of last year.

The performance of our Pgm Refining and Recycling business is affected by metal prices. When metal prices are high, intakes and refining margins increase as customers seek to recover metal that is in demand; the reverse is true when metal prices fall. Our Pgm Refining and Recycling business performed well in the first half of this year, with sales up 35% to £27 million, as the higher pgm prices seen in the first half boosted intakes, continuing the upward trend that commenced in the second half of 2009/10. Material from autocatalyst scrap continues to be a major part of our refining intake and while car scrappage schemes around the world have now largely come to an end, intakes of this material have remained strong.

For the division’s gold refineries based in North America, the continued rise in gold and silver prices (up 29% and 32% respectively over those in the first half of last year) has meant that sales have continued to grow, up by 30% to £21 million, with good growth both from primary (mining) refining customers and from the secondary (jewellery scrap) refining market. A number of new gold and silver mines are scheduled to come on stream over the next five years which will support future growth of our business. Operating profit for all our precious metal refineries was well ahead of that in the first half of last year and initiatives are underway to improve plant efficiency and to make their performance more robust in the face of changes in metal prices.

Our Catalysts and Chemicals business manufactures precious and base metal catalysts and chemicals for a wide range of customers across many industries including automotive, chemical and pharmaceutical. During the first half, with growth in many of its end use markets, sales grew by 15% to £67 million and operating profit was substantially higher than the equivalent period of last year. This growth has been helped, in part, by restocking by some of our customers.

© Johnson Matthey Plc. Disclaimer and copyright notice.