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Friday, August 12, 2022


Johnson Matthey – New CEO, New Strategy But Guidance At The Bottom Half Of Consensus Range

By Anna Peel. Originally published at ValueWalk.

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Johnson Matthey PLC (LON:JMAT)’s full-year underlying sales rose 5%, ignoring the effect of currency changes, to £3.8bn. That was driven by a partial recovery in Clean Air and good performance from Efficient Natural Resources.

Underlying operating profit, which excludes £440m of impairment and restructuring charges related to the disposal of the Health and Battery businesses, rose 21% to £553m.

Q1 2022 hedge fund letters, conferences and more

The group warned “visibility is low and the outcome for the year remains uncertain” and have guided for 2022/23 full year underlying operating profit in the lower half of £491m-£641m.

The board proposed a final dividend of 55p, taking the total for the year up 10% to 77p.

The shares fell 4.9% following the announcement.

Johnson Matthey’s Earnings

Matt Britzman, Equity Analyst at Hargreaves Lansdown

“New CEO Liam Condon had a hefty task joining Johnson Matthey as it sat in a precarious position of having scrapped its plans to become a battery material manufacturer, with no real plan on where the business was heading. A revamped strategy is the new CEO’s answer, focusing on four key areas that leverage the worlds de-carbonising efforts and a restructuring effort aimed at trimming excess costs and streamlining operations to the note of £150m a year.

Truth be told, Clean Air, PGM Services and Catalyst Technologies are already established businesses in the company. The new addition is a focus on Hydrogen Technologies which help decarbonise the transport and energy sectors. This isn’t new ground, but it’s previously only been a small part of the wider business. New partnerships are expected to help propel the division to become the market leader in high value performance components, with £200m in sales expected by the end of 2024/25. Whether the group can execute remains to be seen.

Markets didn’t react too positively to the new strategy, nor to the outlook which sees profits expected at the bottom half of consensus range. The Battery Materials business sale is underway, albeit at a hefty loss it’ll be nice to see the group rid of assets it doesn’t believe in so it can focus on the future. There’s a lot of work to be done before markets become excited about the groups growth prospects, the positive news is that in the meantime the core business components generate decent cash supporting shareholder returns and a solid balance sheet.”

About Hargreaves Lansdown

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