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LONDON (Alliance News) - FTSE 100-listed chemicals firm Johnson Matthey PLC said Thursday it had a "good" year as revenue increased but profit dipped.
For the financial year ended March 31, Johnson Matthey posted a 17% revenue increase to GBP14.12 billion from GBP12.03 billion last year. The company's pretax profit decreased 31% to GBP320 million from GBP462 million the year before.
The speciality chemicals and platinum company said the revenue increase was driven primarily by higher precious metal prices.
The profit drop, according to Johnson Matthey, is due to a GBP50 million impairment charge and GBP90 million in restructuring costs occurred during the year.
The GBP 90 million came from GBP43 million in restructuring costs; GBP36 million for the closure of its Riverside plant in the US; and GBP11 million from "impaired goodwill" from its Water Technologies business, reflecting lower growth assumption.
In February, the FTSE 100-listed company paid GBP50 million after a contract dispute with an automotive original equipment manufacturer was settled with no admission of fault.
The company's Clean Air business had "strong" sales growth of 9%. Its Efficient Natural Resources business had sales growth of 4%. And its Health business posted "good" sales growth of 6%.
Johnson Matthey is recommending a 7% increase in its final dividend to 58.25 pence per share. As a result, its total dividend will be 80.0p per share, 6.7% increase from 75.0p last year.
Looking ahead, the company expects its operating performance growth to meet its medium-term guidance of mid to high single digits.
Johnson Matthey expects its sales and underlying profit to be "adversely impacted" in the next financial year at current foreign exchange rates, by GBP41 million and GBP6 million respectively.
Interactive Investor believes there is a "great deal going on under the bonnet" at Johnson Matthey due to its "cash generative ability allowing further reinvestment into new technologies".
However, Richard Hunter, head of markets at Interactive Investor, stressed there "will continue to be bumps in the road along the way". He pointed to the return on capital being down 16% as cause for concern.
Hunter said: "The company is well positioned at the moment. The Clean Air division, which accounts for 64% of sales, continues to benefit via its catalytic converter expertise as emissions become even more of a focus for governments worldwide. Meanwhile, the New Markets arm, whilst only currently contributing to 8% of sales, is home to its electric car battery development. Here, a significant shift towards electric cars could well benefit the company, let alone the exponential growth it may enjoy should hybrid vehicles fall fully into fashion, with both Clean Air and New Markets becoming beneficiaries."
Johnson Matthey Chief Executive Robert MacLeod said: "We had a good year. We have made significant progress in executing our strategy and delivered a financial performance in line with our expectations at the start of the year.
"Clean Air had another strong year, delivering strong top and bottom line growth. We improved the quality of our Efficient Natural Resources business and in Health we continued to progress our substantial API pipeline and are better positioned as we optimise our manufacturing footprint. The further development of eLNOTM, our next generation battery material, was a highlight of the year and I am excited about the speed of progress we are making and the plans we have to commercialise this product.
"We have taken significant steps in running our businesses more effectively, delivering cost savings and becoming more agile and responsive to our customers. Our strong balance sheet continues to give us the flexibility to invest in our business, to maintain and extend our science and technology leadership supported by an optimised manufacturing footprint."
Shares in Johnson Matthey were up 2.0% Thursday to 3,466.00 pence each.
