TOP NEWS: Johnson Matthey falls to loss on cost of battery metals exit

(Alliance News) - Johnson Matthey PLC on Wednesday sought to placate investors disappointed by ...

Alliance News 24 November, 2021 | 9:44AM
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(Alliance News) - Johnson Matthey PLC on Wednesday sought to placate investors disappointed by its surprise decision to exit its Battery Materials business, for which the FTSE 100 firm had once held out so much hope.

The London-based speciality chemicals company said it has approved a GBP200 million share buyback, after sales in the first half of its financial year benefited from higher average precious metal prices.

Johnson Matthey sank to a pretax loss of GBP9 million in the six months to September 30, compared to a profit of GBP26 million a year earlier. Johnson booked GBP314 million in major impairment and restructuring charges in the period, sharply higher from GBP78 million a year before - largely attributed to its intention to exit Battery Materials.

Russ Mould, investment director at AJ Bell, said: "Johnson Matthey is now under considerable pressure to make hydrogen its new growth engine, now that the battery technology business is being wound down or sold."

Revenue surged 23% to GBP8.59 billion from GBP6.98 billion, with sales excluding precious metals rising 15% to GBP1.94 billion from GBP1.68 billion.

"We delivered a resilient trading performance in what has been a challenging environment, given the supply chain volatility which has affected a number of our end markets," outgoing Chief Executive Robert MacLeod said.

Johnson has declared an interim dividend of 22.0 pence, up 10% from 20.0p a year earlier, and it has approved a GBP200 million share buyback - expected to start in 2022.

MacLeod, who is set to be replaced by Bayer AG's Liam Condon in March next year, said: "Looking forward, the changing world around us means that Johnson Matthey has never been more relevant. Our metal expertise and process technologies are critical to many new markets focused on climate change solutions and give us a strong competitive advantage.

"We have strong foundations in Clean Air and in Efficient Natural Resources and exciting opportunities to drive our future growth in circularity, hydrogen and decarbonisation."

As part of the company's effort to focus on these "core growth opportunities", Johnson said it has decided to exit Battery Materials as well as sell its Advanced Glass Technologies arm, which was announced separately on Wednesday.

Johnson said it has agreed to sell its Advanced Glass Technologies business to Fenzi Holdings SPV SpA for GBP178 million on a cash-free debt-free basis.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "With capital coming back to shareholders through buybacks rather than being reinvested in new 'growth areas' we worry about whether management has a solution to the electric car threat. It may be some years away but it can't be ignored."

Two weeks back Johnson Matthey said it had concluded that the potential returns from its Battery Materials business would not "be adequate to justify further investment", while also announcing MacLeod's departure. The stock dropped 19% that day.

Johnson shares were down 2.4% to 2,130.00 pence each on Wednesday morning in London. The stock is down 12% so far in 2021, after having been up 36% at one point.

By Greg Roxburgh; gregroxburgh@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Johnson Matthey PLC 2,039.00
Bayer AG 44.94

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