Summary Results

• Sales revenue up 5% to £7.8 billion with strong growth in the first half. Much more difficult market conditions in the second half
• Underlying profit before tax up 1%
• Strong cash generation with £96.8 million of net cash flow
• Net borrowings reduced by £76.0 million. Gearing (net debt / equity) reduced to 45%
• Final dividend unchanged. Dividend for full year up 1% to 37.1 pence. Dividend covered 2.4 times by underlying earnings

Business Overview

• Environmental Technologies Division's sales excluding precious metals £4.4 million down at £1,135 million and operating profit before amortisation of acquired intangibles 16% down at £124.3 million
• Emission Control Technologies' (ECT's) sales excluding precious metals down 3% with sharp drop in autocatalyst demand in the second half. Global car production for the second half down 26%
• ECT's headcount reduced by 13%. Actions taken to increase long term efficiency which will reduce costs by £10 million p.a.
• Process Technologies' sales excluding precious metals up 11%. Continued strong demand for syngas catalysts and purification products underpinned by environmental and energy security concerns
• Precious Metal Products Division's revenue up 7% to £5.0 billion, boosted by high average prices for platinum group metals (pgms) in the first half of the year. Sales excluding precious metals up 2% to £314 million and operating profit up 17% to £119.7 million
• Fine Chemicals & Catalysts Division's sales excluding precious metals up 15% to £347 million and operating profit before restructuring charge 8% higher at £72.8 million, benefiting from favourable exchange translation. Good growth in fine chemicals; lower sales of pgm chemicals for automotive catalysts in second half

Business Prospects

• In the first half of 2009/10 demand for autocatalysts is expected to be well down on the same period in 2008/09. Average prices for pgms are significantly below the record levels seen in the first half of last year
• As a result, operating profit for the group is expected to be down on the very strong performance achieved in the first six months of 2008/09
• If global market conditions start to improve the group should return to growth in the second half of 2009/10
• New regulations for heavy duty diesel emissions come into force in January 2010 in North America which will require more catalysts per vehicle. In the European Union all new diesel cars will need to meet Euro 5 standards from 1st January 2011
• In China, regulations on reducing harmful NOx emissions from power stations are anticipated to start in 2011 and we are investing in additional manufacturing capacity there to produce plate catalysts
• Although new project activity around the world has reduced, projects from coal and gas feedstocks in China and the Middle East are much less affected. Process Technologies has a strong order book for catalyst supply

Commenting on the results, Neil Carson, Chief Executive of Johnson Matthey said:

“After a strong performance in the first half of 2008/09 the credit crunch and global downturn had a major impact on the group's second half results. For the year as a whole sales and underlying profit before tax were slightly ahead of 2007/08. Underlying earnings per share of 89.6 pence was at the top end of the range given in our third quarter interim management statement.

Review of Year Ended 31st March 2009
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Howard Lee
The HeadLand Consultancy
+44 (0)20 7367 5225