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Speciality chemicals group Johnson Matthey has agreed an extension of its metal supply deal with Anglo American Platinum and entered into a new contract, under which it will provide Anglo Platinum with platinum group metal market research services. The new agreement will result in a change to fourth quarter revenue, meaning the full year impact on the group will be a loss of commission income of �35m. The likely cost savings associated with any restructuring are expected to be relatively modest. Neil Carson, Chief Executive of Johnson Matthey, said: "Whilst we are disappointed to lose commission income, we are pleased that we are able to extend our long relationship with Anglo Platinum and secure an extension to our metal supply agreement. This will enable us to continue to service our customers with confidence."
Johnson Matthey: UBS lowers target price from 2285p to 2250p, while keeping a neutral rating. Citigroup reduces target price from 2650p to 2450p and downgrades from buy to neutral.
Mixed outlook The outlook for the Environmental Technologies division is "stable", with the company expecting to perform better in the second half than the first. Weak trading in Europe and Japan will continue but should be offset by "promising prospects" in the US. Meanwhile, the underlying performance of the Fine Chemicals division is expected to slip in the second half. "The group's steady underlying performance is expected to continue for the rest of the financial year and, in line with the guidance in our half year report, we continue to anticipate that the group's performance in the second half will be similar to that for the first six months of the year," the company said.
Speciality chemicals group Johnson Matthey reported that both sales and profits fell in the third quarter, while the outlook for the rest of the year remains mixed. "In a difficult market environment during the quarter, trading across the group was challenging," the firm said in a statement covering the three months to December 31st. Sales excluding precious metals (sales) were down 2.0% at £635m during the period. Meanwhile underlying profit before tax slumped 19% to £84.3m, mainly due to a change in the sales mix and lower volumes in Precious Metals. Johnson Matthey, the world leader in platinum distribution and the sole marketing agent for Anglo American Platinum (Amplats), said that the fall in volumes was partly attributable to Amplats's current restructuring programme announced earlier this month, in which is said that it would close several mines in South Africa. The chemicals group said that while platinum prices have risen as a result of the shake-up at Amplats, the planned reduction in mining volumes will "impact" its business.
Positive Points: Johnson Matthey would benefit from tightening emission legislation which is driving demand for auto catalysts and emission reduction technology. In October, Johnson Matthey acquired the Axeon Group for £40.6 million in cash. Axeon is a specialist in the design, development and manufacture of integrated battery modules and systems. The group reaffirmed its strong balance sheet. A rise in platinum prices would benefit the group's precious metals division.
Negative Points: Johnson Matthey's performance is closely linked to the automotive industry. A stalling of the recent recovery in the US and European autos volumes would negatively impact sales estimates. The group is exposed to foreign exchange fluctuation. The UK and Europe currently account for around 35% of group sales. If precious metal prices fell sharply, it would negatively impact on Johnson Matthey's expected profits.
Financial Highlights: Sales excluding precious metals were 2% lower at £635 million. Underlying pre-tax profits for the period was £84.3 million, down 19% on the same quarter a year earlier. The group's debt increased by £44 million to £739 million in the period, principally due to the acquisition of Axeon.
Third quarter interim statement: Faced with a continued challenging market, Johnson Matthey reported earlier today that sales, excluding precious metals were down 2% when compared with the same period last year at £635 million. Underlying pre-tax profit was down 19% at £84.3 million. The group's emission control technologies arm, which makes catalytic converters for cars and trucks, saw sales fall 6% to £346 million, a situation compounded by a weakness seen in demand for diesel cars in Europe. Within its precious metals division, sales fell 7% to £128 million with lower sales being the contributory factor. "In line with the guidance in our half-year report (Nov 2012), we continue to anticipate that the group's performance in the second half will be similar to that for the first six months of the year," the company said. On balance,
Johnson Matthey: Morgan Stanley increases target price from 2070p to 2298p keeping an underweight rating.
Johnson Matthey: Credit Suisse raises target price from 2300p to 2400p and upgrades to outperform. JP Morgan reduces target price from 2620p to 2350p, neutral rating unchanged. UBS cuts target price from 2300p to 2280p, neutral recommendation kept. HSBC reduces target price from 2700p to 2400p, neutral rating reiterated.
Shares in chemicals group Johnson Matthey rebounded on Thursday morning following a sharp fall the day before, with Credit Suisse providing a lift after upgrading its rating for the stock from 'neutral' to 'outperform'. The stock dropped 5.8% on Wednesday after the company reported a 6% fall in first-half pre-tax profits and said that the performance in the second half will be similar to the first. Credit Suisse said that it recognised some negatives in the statement with low volumes seen in autos and metals, but thinks that the guidance for the second half is "conservative". The broker forecasts a second-half adjusted pre-tax profit some 5% higher than the first half due to seasonality and some improvement in platinum group metals prices. "We think the short-term negatives have now been flagged and are in the share price. Mid-term, we forecast good growth, and believe the shares are at a reasonable price." The shares are trading at 13.1 times full-year earnings, which represents a 19% discount to peer Umicore and an 18% discount to its long-term average of a price-to-earnings multiple of 15.5. The target price for the shares has been lifted from 2,300p to 2,400p.
Tempus in The Times says the warning from Johnson Matthey that hit the market yesterday was not quite as drastic as those that have afflicted other global industrial producers this autumn, but the burden was much the same. The outlook for the global economy, and for key sectors such as American trucks and new investment in Chinese industry, is, at best, uncertain. In addition, about half the group by revenues is involved in the refining and distribution of precious metals, such as platinum and palladium. While plainly these feed into the group’s catalytic convertors and other products that go into vehicles and industrial processes, performance here is driven by the background price of such metals, as well as demand from producers of jewellery and the like. This side has been hit by lower prices, with platinum off 16% in the first half to the end of September. The main concern for the market was that the outcome for the second half of the year, which traditionally is about 10% stronger in profit terms, will be little-changed on the first half. Pre-tax profits will come in, therefore, 10% or so lower this year, at perhaps £385m. This puts the shares, off 135p at £21.90, on about 14 times’ earnings, after a decent run over the past year helped by the special dividend. At that level, and with no prospect of an immediate recurrence of that special payment, it is hard to see any reason for a short-term outperformance.
Positive Points: The group's Environmental Technologies Division, which comprises Emission Control Technologies, Process Technologies and Fuel Cells made positive progress in the first half of 2012/13. In particular, within ECT saw good growth in North America and Asia although sales were lower in Europe. The division's sales were up 3% at £918 million and underlying operating profit was 17% ahead at £106.6 million. Johnson Matthey would benefit from tightening emission legislation which is driving demand for auto catalysts and emission reduction technology. In October, Johnson Matthey acquired the Axeon Group for £40.6 million in cash. Axeon is a specialist in the design, development and manufacture of integrated battery modules and systems. Within the firm's Fine Chemicals Division, whilst sales were 2% down at £138 million, an increase in underlying operating profit by14% to £37.2 million. The division's return on sales in the half year increased from 23.0% to 26.9% due to an improvement in product mix, added the group.
Negative Points: The group's Precious Metal Products division's performance is dependent upon precious metal prices. Whilst prices have improved from a summer lull, Precious Metal Products Division's sales were down by 5% and operating profit was down 33%. Johnson Matthey's performance is closely linked to the automotive industry. A stalling of the recent recovery in the US and European autos volumes would negatively impact sales estimates. The group is exposed to foreign exchange fluctuation. The UK and Europe currently account for around 35% of group sales.
Financial Highlights: Profit before tax was recorded as £191.2 million from £203.0 million a year earlier, a fall of 6%. Environmental Technologies Division reported good progress with sales up 3% and underlying operating profit 17% ahead. Overall, revenues fell 17% to £4.89 billion. The company announced a 3% rise in its half-yearly dividend to 15.5 pence per share. Net debt at 30 September increased by £240.9 million to £695.1 million, partly as a result of a special dividend to shareholders of £212 million in August 2012.
Interim results: Johnson Matthey results broadly in line, outlook weaker. Set against a difficult market environment, Johnson Matthey reported a 6% decline in underlying pre-tax profits to £191.2 million, citing the impact of lower average precious metal prices as a contributory factor. Revenues slipped 17% to £4.89 billion from £ 5.90 billion a year earlier. Chief executive Neil Carson said: "Whilst precious metal prices have improved from their lows during the summer, largely due to the labour unrest in South Africa, the outlook in some of our other markets has weakened and visibility remains limited. We therefore expect that the group's performance in the second half will be similar to the first half of the year."
Company overview Headquartered in central London, Johnson Matthey is a specialist chemicals manufacturer whose activities are divided between three divisions: catalysts (manufacture of automotive catalytic converters, pollution control systems and components for fuel cells), manufacturer of pharmaceutical compounds and refiner and distributor of precious metals such as platinum and gold. Its stock is traded on the London Stock Exchange and is a constituent of the FTSE 100 Index.
Johnson Matthey: Credit Suisse cuts target price from 2304.76p to 2300p, neutral rating maintained
Does anyone know why the SP is suddenly on the move?
Johnson Matthey Sell 14-Aug-12 £86,009.46 W F Sandford 3,774 @ 2,279.00p
Positive Points: Despite current global economic uncertainties, management conveyed its desire to continue to expand its manufacturing capacity around the world and to invest further in R&D, remaining confident of the group's continuing growth potential. Johnson Matthey would benefit from tightening emission legislation which is driving demand for auto catalysts and emission reduction technology. In a statement management confirmed the group's order book for the next few months was "strong". The group's reaffirmed its strong balance sheet. Net debt was £470 million at the end of June.
Negative Points: The group's Precious Metal Products division's performance is dependent upon precious metal prices and should the recent fall in prices continue, this, will impact on the division's services businesses. Overall, sales were down 8% at £139 million. Johnson Matthey's performance is closely linked to the automotive industry. A stalling of the recent recovery in the US and European autos volumes would negatively impact sales estimates. The UK and Europe currently account for around 35% of group sales. Higher rare earth prices can adversely impact profit margins. Worldwide, the group had a net pension deficit of £169.4 million at 31 March 2012 (2011 - £130.4 million).
Financial Highlights: The group posted underlying profit before tax of £99.9 million (Q1 2011/12: £98.2 million). Revenues in the first quarter were up by 6% from the previous year at £657 million, weighed down by weakness in the Precious Metal Products Division. Last month Johnson Matthey said it arranged new long term loans for approximately $250 million in the US private placement market.