Chemical technology company Johnson Matthey’s share price rose by 14.3 per cent today after it posted a strong rise in profit in its half year results.
The company, which develops emissions control technologies such as catalytic converters, reported double digit year-on-year growth across several key metrics and said it expected its full year performance to be towards the upper end of those indications.
Johnson Matthey’s operating profit increased by 19 per cent for the six months ending 30 September, from £222m to £264m, while revenue rose by 10 per cent to £7.11bn, up from £6.48bn.
Why it’s important
The firm has taken advantage of a global appetite for lower carbon emissions, with a sales jump of 11 per cent in its clean air division. The heavy duty segment of this was particularly strong, it said, supported by a thriving haulage truck market in the US.
Meanwhile sales growth of three per cent in the efficient natural resources sector reflected improved efficiency and higher precious metals prices.
In June, the company’s board approved initial investment in its first commercial demonstration plant in Clitheroe to manufacture its cobalt-light battery material for electric cars, eLNO.
What Johnson Matthey said
Robert MacLeod, chief executive, said: “I am pleased with the progress we are making on implementing our strategy and delivering solutions for our customers through the application of our strong science and technology.”
“The interim dividend was increased by seven per cent in line with medium term guidance, reflecting our continued confidence in the group’s future prospects. We now expect full year operating performance towards the upper end of our guidance of mid to high single digit growth.”
What analysts said
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Ever stricter rules around air pollution mean catalytic converters are commanding an increasing share of total automotive spend, and with Johnson Matthey also gaining market share the result is some very healthy profit growth in the dominant Clean Air division. The economic boom in the US provides another helpful tailwind, with heavy duty sales ticking along nicely.”
“Longer term it’s the batteries business that’s got investors excited. It’s a bet that needs to come off, since electric vehicles don’t need the catalytic converters that are JMAT’s bread and butter. The ball’s rolling on commercial production, but we’ve still got years to wait before it’s at scale.”