Johnson Matthey confident as clean air offsets battery declines
Chemicals group Johnson Matthey said the first quarter saw low single-digit sales growth at constant exchange rates but with the weak pound boosting sales to double-digit growth, resulting in no change to guidance for the full year.
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The FTSE 100 group, which expects to take a £50-65m charge this year as part of the further efficiency changes to those announced in June, said it expects restructuring to generate annual savings of around £25m, with the current year expected to see around £10m of cost savings in the second half.
"We have momentum in sales and expect to build on this through the second quarter and into the second half to deliver our full year guidance," the company said in its statement ahead of its annual shareholder meeting on Friday, maintaining that its segmenting into four sectors has "improved our focus on the key growth trends and we remain confident that through inspiring science and enhancing life Johnson Matthey will create value".
Sales performance was strongest in the Clean Air segment, which focuses on autocatalysts for passenger vehicles and emissions controls for industrial plants, with the period seeing JMAT outperform vehicle production in most markets led by strong growth of the heavy duty diesel catalyst business in Asia and Europe.
Global light duty vehicle production declined although Europe delivered an outperformance as a result of new business wins and sales of higher value technology, which is expected to drive stronger growth in the LDV catalyst business over the rest of the financial year.
Sales in the Efficient Natural Resources business grew more slowly as manufacturing sales declined but are expected to recover in the second quarter.
The Health business was held back by a decline in sales of active pharmaceutical ingredients for the treatment of ADHD, though this was offset by growth in new API products launched last year.
The performance of new API products was said to be "encouraging" and development of a broader API product portfolio is expected to drive improved medium-term performance for the sector.
In batteries, there was a decline in sales in new markets after the changes introduced in China last year affected demand for LFP battery materials.
"Our development of high nickel battery materials continues at pace and in addition, we have seen good growth in medical components as we look to build this business for the future."