Johnson Matthey proposes a special dividend as profit lifts

JOHNSON Matthey, the world’s largest supplier of catalytic converters, yesterday posted larger than expected profits and proposed its first ever special dividend.

The company was buoyed by sales of trucks in North America and more diesel cars in Europe.

Johnson Matthey, which makes catalysts to convert toxic engines emissions, sells pharmaceutical ingredients and refines platinum, said its underlying profit before tax, for the year to the end of March rose 23 per cent to £426m.

That was above a consensus analyst estimate of just over £411m and came on the back of a 20 per cent rise in revenues as sales of catalysts outpaced growth in global car and truck production.

Johnson Matthey said its balance sheet, combined with a strong outlook even with uncertainties in Europe and weak precious metals prices, had prompted the group to recommend its first ever special dividend, of 100p per share, on top of a full-year dividend of 55p, up 20 per cent.

“We feel the company is in good shape and the long-term prospects of the group remain strong,” finance director Robert MacLeod said, despite the impact of softer prices on its precious metals division.

He said the group had “plenty of firepower” remaining to finance its increased research and development and capital spending plans, as it moves into new areas and tries to keep up with growing catalyst demand, particularly for trucks.

The group will consolidate its share count after the £212m one-off payout, at a ratio to be announced to shareholders later this month.

Johnson Matthey has been a major beneficiary of rules to tighten car and truck emissions, helping it outpace the market, and it expects to gain even from new carbon emissions rules, which will require not catalysts but improved engines.

“We are not complacent ... We are uncertain exactly what is going to happen in Europe, exactly how many cars are going to be sold, how many petrochemicals plants will be built,” MacLeod said.

Sales of heavy duty diesel catalysts jumped almost 50 per cent, driven by the North American market.