Steady outlook at Johnson Matthey

Steady sailing was the theme for Johnson Matthey on Thursday morning, as it released its half-year results to 30 September 2015.

Underlying revenue at the specialty chemicals firm was up 20% on the previous period, to £5.755bn, with sales up 5% to £1.588bn.

The company’s underlying profit before tax, however, was down 4% to £2.083bn.

In its report, Johnson Matthey pointed to strong growth in its emission control technologies business, but tough conditions in process technologies and precious metal products.

The company’s platinum group metal business was especially impacted as a result of a more than 20% decline in average platinum prices.

Chief exective Robert MacLeod remained optimistic.

“Despite the current environment of low platinum group metal and oil prices, and the more muted outlook in the chemicals markets that we supply, we expect the underlying performance of the group's continuing businesses4 in 2015/16 to be similar to 2014/15”, he said.

“The full year outlook for the group is in line with current market expectations.”

Johnson Matthey said it will work to shore up its struggling businesses through a cost reduction programme, and indicated an anticipated £30m cost saving by the end of the fourth quarter.

“Johnson Matthey remains well placed to benefit from major global sustainability drivers such as the continued drive to improve air quality, energy security, urbanisation and the increasing need for healthcare”, MacLeod said.

“The restructuring actions we are taking in the second half will benefit the group's results towards the end of our financial year and this, together with attractive key end markets, position the group to return to growth in 2016/17.”

Investors will be looking forward to an interim dividend of 19.5p per share, up 5%, as well as a special dividend of 150p per share following the £305m sale of its research chemicals business and gold and silver refineries.

Whitman Howard analysts echoed the sentiments of the Johnson Matthey report, describing the results as "better than feared".

"Process technologies and precious metals products were challenging, the former due to poor times in the oil patch reducing demand for process plant catalysts, the latter due to lower precious metals prices."

"Lower precious metal prices did have one benefit, namely a £386m squeeze on working capital."

As of 12:15 on Thursday, shares in Johnson Matthey were up 9.44% to 2689.0p.