Transcript No Slide Title
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Johnson Matthey
Presentation of Results for the half year ended 30 th September 2003 27 th November 2003
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Johnson Matthey
Overview
Operating profit up 13% to £103.1 million
PBT up 4% to £97.5 million, EPS up 5% to 31.8p
Strong growth in Catalysts with good contribution from former Synetix businesses
Good performance from Pharmaceutical Materials
Renewed long term contracts agreed with Anglo Platinum
Group to divest Structural Ceramics and Speciality Coatings
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Johnson Matthey
Summary Results
1H 2003 Turnover Sales excluding precious metals £m 2,165 625.1 1H 2002 restated £m 2,247 562.1
Operating profit* Interest Net return on pension Profit before tax* Exceptional items Goodwill amortisation EPS * Dividend 103.1
(8.5) 2.9
97.5
(9.9) 31.8p
8.2p
% -4 +11 91.0 (4.3) 7.0
93.7 +13 +4 (4.8) 30.4p 7.8p
+5 +5 * Before goodwill amortisation
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Operating Profit
1H 2003 £m 1H 2002 restated £m Catalysts Precious Metals 56.5
21.9
Colours & Coatings 11.8
Pharmaceutical Materials 20.7
Corporate (7.8) 103.1
44.0
24.2
11.6
19.1
(7.9) 91.0
% +28 -10 +2 +8 +13 1H 2003 at 1H 2002 exchange rates* £m 58.1
22.3
11.0
21.5
(7.8) 105.1
% +32 -8 -5 +13 +15 *Excluding South African rand
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1H 2003 £103.1m
15%
Geographical Split
Operating Profit 1H 2002 restated £91.0m
16% 7% 37% 12% 28% 49% 36%
Europe North America Asia Rest of the World E
Financial Gold & silver leases
Interest
1H 2003 £m (8.0) (0.5) (8.5) 1H 2002 £m (3.7) (0.6) (4.3)
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Net Return on Retirement Benefits Assets and Liabilities
1H 2003 £m 1H 2002 restated £m Expected return on scheme assets Interest on scheme liabilities 18.8
23.3
(15.9) (16.3) 2.9 7.0
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Taxation
Underlying tax Tax on goodwill amortisation Underlying tax rate 1H 2003 £m 1H 2002 restated £m 29.2
(1.2) 28.0 29.9% 27.8 27.8 29.7%
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Net Cash Flow
Operating profit Depreciation and amortisation Working capital / other
Cash flow from operations
Interest / tax / dividends Capex Acquisitions / disposals Shares issued / (bought)
Net cash flow 1H 2003 £m 93.0
41.0
8.4
142.4
(66.2) (62.4) 2.2
3.5
19.5
1H 2002 restated £m 86.2 29.9 (0.4) 115.7 (60.5) (58.3) 1.0
1.7
(0.4)
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Net debt Equity and minorities Capital employed
Capital
Sep 03 £m 380 860 1,240 Mar 03 restated £m 402 811 1,213 Gearing (debt / equity + minorities) Interest cover 44% 12x 50% 14x
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Catalysts Division
ECT ahead with growth in Asia and HDD Strong performance from PCT £m 640 480 +13% +28% 593 56.5
526 44.0
1 £m 60 45 320 160 0 1H 2002/03 1H 2003/04 1H 2002/03 1H 2003/04 1 Sales Operating Profit Restated for FRS 17 0 30 15
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Environmental Catalysts and Technologies
US light vehicle sales 1% down, production more than 7% lower
European sales slightly up, production 2% down on last year
Car sales in China strongly ahead spearheading good growth in Asia
Excellent progress in heavy duty diesel catalysts
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Global HDD Legislation
0.20
0.18
0.16
0.14
Japan 2003 US 2004 0.12
0.10
0.08
0.06
JM current technology 0.04
Japan 2005 0.02
0 0 US 2010 0.5
1 EU V (2008) US 2007 1.5
2 EU IV (2005) 2.5
3 3.5
4 NOx emissions (g/kW-hr) EU III (2000) 4.5
5 5.5
6
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Heavy Duty Diesel
Full portfolio of HDD technologies
Strong market position, proven durability
Retrofit programmes in cities around the world
Opportunities in light duty diesel markets
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Process Catalysts and Technologies
Successful integration of Synetix
Good growth in process catalysts
PGM refining business continues to be affected by weak palladium prices
Research Chemicals business again performs well
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Process Catalysts and Technologies
Focus on seven catalyst markets
Leading positions in each of these segments
Major strategic growth opportunity in GTL
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Fuel Cells
Numbers of pre-commercial small stationary fuel cells almost double
Vehicle test fleets continue to expand
Growing demand for MEA products from Swindon
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Precious Metals
Fall in palladium and rhodium prices Platinum demand remains robust £m 1,800 1,500 1,200 - 9% -10% £m 30 1,523 1,380 24.2
1 21.9
24 18 900 600 12 6 300 0 0 1H 2002/03 1H 2003/04 1H 2002/03 1H 2003/04 1 Sales Operating Profit Restated for FRS 17
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Platinum, Palladium and Rhodium Prices
US$ 1,000 900 800 700 600 500 400 300 200 100 0 March 2002 September 2002 March 2003 September 2003 Platinum Palladium Rhodium
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Precious Metals
PGM basket price very similar to last year
Strong platinum price offset by much weaker palladium and rhodium
Continued decline in trading activity
Fabricated pgm businesses continue to perform well
Gold refining business down. Margins remain under pressure
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Precious Metals
Renewed Anglo Platinum contracts
Carries relationship well into next decade
Short term fall in group income
Income will grow as pgm sales increase
Underpins longer term growth of division
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Pharmaceutical Materials
Good growth in profits Strong performances from West Deptford and Macfarlan Smith £m - 2% +8% 75 66 65 20.7
60 19.1
1 £m 25 20 45 30 15 10 15 0 5 0 1H 2002/03 1H 2003/04 1H 2002/03 1H 2003/04 Sales Operating Profit 1 Restated for FRS 17
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Pharmaceutical Materials
West Deptford – increased sales of controlled substances and platinum drugs
Macfarlan Smith – profits well ahead with good growth in sales of specialist opiates
Pharm-Eco – weak market in first quarter, however gained new business and market since recovered
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Pharmaceutical Materials
New opiates facility at West Deptford completed. In production by end of fiscal year
New production capacity for specialist products at Macfarlan Smith
Significant progress on prostaglandins
New product pipeline increased to 71 compounds in development, with several new products introduced this year
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Colours & Coatings
Good progress despite mixed markets Glass performs well £m 150 100 - 4% +2% £m 15 132 127 11.6
1 11.8
10 50 5 0 1H 2002/03 1H 2003/04 1H 2002/03 1H 2003/04 1 Sales Operating Profit Restated for FRS 17 0
Colours & Coatings
Good growth in Glass business
Structural Ceramics down in weak markets
Speciality Coatings benefits from lower costs
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Colours & Coatings
Strategic review by Board
Invite offers for combined Structural Ceramics and Speciality Coatings businesses
Retain businesses with close links to rest of Johnson Matthey
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Outlook
Further growth from Catalysts and Pharmaceutical Materials
PMD impacted by renewed Anglo Platinum contracts
Currency effect – impact of weak US dollar
Confident of growth in earnings and dividends
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Longer Term Outlook
Major growth opportunities in Catalysts, Fuel Cells and Pharmaceutical Materials
Renewed Anglo Platinum contracts underpin long term growth of Precious Metals
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