Johnson Matthey announces CEO departure, to sell battery materials business

Following a detailed review, the company has concluded that the potential returns from the battery materials unit will not be adequate to justify further investment.

"In recent months, as JM has been exploring strategic partnerships, it has also become clear that our capital intensity is too high compared with other more established large scale, low cost producers,” it said.

"The board has therefore decided to pursue the sale of all or parts of this business with the ultimate intention of exiting. We will move swiftly to determine the best outcome for all of our stakeholders and intend to make a further announcement as soon as possible."

Johnson Matthey also said that Robert MacLeod plans to retire as chief executive after nearly eight years in the role and will step down in February. He will be succeeded by Liam Condon, who is currently a member of the board of management of Bayer and president of the Crop Science Division, a role he has held for nine years.

The group, which is due to announce its first half results on 24th November, said the trading outlook for the full year ending 31st March 2022, assuming current precious metal prices and foreign exchange rates, is towards the lower end of market expectations.

"This is primarily due to the wide-spread supply chain shortages affecting the automotive industry and the consequential impact on precious metals prices, together with acute labour shortages in the US that are adversely impacting our health business, which is subject to strategic review," it said.

At 0930 GMT, the shares were down 17% at 2,278.0p.

Russ Mould, investment director at AJ Bell, said electric vehicle battery technology was meant to represent the future of Johnson Matthey.

"It underpinned the company’s growth plans and showed that the business, whose fortunes have historically been pinned to the combustion engine, was moving with the times," he said. "The decision to pull out of this market is a shock, and it looks to have cost Robert Macleod his job as chief executive. It takes a lot of guts to say something is not worth pursuing because the economics don’t stack up, but it’s the right thing to do if the business is to avoid spending more money that might not generate a positive return.

"The battery technology story has been the backbone of Johnson Matthey’s sales pitch for quite a few years and there will be a lot of disappointed investors on today’s news.

"The company currently makes most of its money from catalytic converters - it’s estimated one in three cars on the road worldwide has a Johnson Matthey catalytic converter. But this is arguably a part of the market heading towards terminal decline as the world transitions to electric vehicles.

"With battery technology no longer part of its growth plans, its future will now be more dependent on hydrogen where it will be under pressure to scale up existing interests. Fortunately, this is already a profitable part of the business, generating sales from fuel cells and hydrogen production technologies."