Johnson Matthey increases 2014 interim dividend by 10%

DividendMax Ltd.

Johnson Matthey increases 2014 interim dividend by 10%

Summary 

A strong first half with: 

Sales excluding precious metals (sales) 13% ahead at £1.5 billion  

Underlying profit before tax 13% ahead

Underlying earnings per share up 18%  

Return on invested capital (ROIC) at 21.0% 

Free cash flow generation excluding movements in precious metal working capital was £111.2 million; net debt (including post tax pension deficits) / EBITDA of 1.5 times  

Interim dividend up 10% to 17.0 pence 

Business Overview 

A very strong first half for Emission Control Technologies with sales up 13% and underlying operating profit 16% ahead, benefiting from growth in sales across all regions, particularly in Europe for heavy duty diesel vehicle catalysts ahead of the new Euro VI legislation which comes fully into force from 1st January 2014  

Process Technologies grew well in the first half with sales up 15% and underlying operating profit up 17% due to strong catalyst demand and the contribution from Formox which was acquired in March 2013 

A steady first half from Precious Metal Products with sales broadly in line with last year but underlying operating profit increased by 24% as the division benefited from relatively easy comparables following last year's issues at our Salt Lake City refinery 

Fine Chemicals also made a steady start overall with sales up 5% and underlying operating profit up 1% with a good performance in its API Manufacturing business 

New Businesses made good progress driven mainly by its Battery Technologies business

Commenting on the results, Neil Carson, Chief Executive of Johnson Matthey said: 

"Johnson Matthey delivered a strong performance in the first half of 2013/14 driven primarily by good growth in Emission Control Technologies, where global car and truck production increased, and good demand for Process Technologies' products. Precious Metal Products, which had a poor first half last year, recovered and overall volumes in its Services businesses increased. Underlying earnings per share were up 18% at 84.9p. 

The group's results in the first half of the year exceeded our expectations. In the second half, the group's long standing arrangements with Anglo American Platinum Limited (Anglo Platinum) will expire on 31st December 2013 and this will impact profitability in the fourth quarter. At the same time we should benefit from tighter European truck legislation but it is difficult to assess the extent of the pre-buy in the first half and its effect on volumes in the second half. We therefore expect that if the impact of the loss of the Anglo Platinum contracts is excluded, Johnson Matthey's performance in the second half will be in line with that of the first six months."

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