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(Alliance News) - Johnson Matthey PLC on Wednesday said it expects its exit from the Battery Materials business to cost it around GBP150 million after plans to sell the arm have not not materialised.
The London-based chemical and technology company announced in November plans to quit its once-promising Battery Materials business.
It had held discussions with a number of parties about a sale of the entire business, but a full sale of the segment never materialised - leaving the company with a limp arm.
"Consequently, we are announcing today that we are commencing consultation with our employees about our proposed closure of the Battery Materials business, and we are pursuing the sale of its individual assets," Johnson Matthey said.
The outcome of the individual assets sale process is uncertain, the company said, but a full or partial closure will result in additional impairment charges, the settlement of contractual liabilities, redundancy, closure and abandonment costs.
Johnson Matthey said that it estimates the cash costs after the asset disposal proceeds to amount to GBP150 million, which will be recorded as an exceptional item outside of underlying operating profit in its full-year results.
In December, Johnson Matthey was demoted from the FTSE 100 index to the FTSE 250 after the company's shares suffered since announcing plans in November to quit the Battery Materials business.
The stock fell 19% in one day early November after the announcement and is down 27% over the past 12 months. On Wednesday afternoon, Johnson Matthey shares were down 2.7% to 1,987.00 pence each in London.
Johnson Matthey said in November that, after a detailed review, it had concluded that the potential returns from its Battery Materials business would not "be adequate to justify further investment".
The Battery Materials unit housed Johnson Matthey's eLNO technology. The material is intended to offer more energy density and use less cobalt compared to traditional electric vehicle batteries.
Back in May of last year, Johnson Matthey had said capital expenditure would amount to up to GBP600 million in the financial year, as it sought to ramp up investment in battery materials and hydrogen technology in a bid to serve Europe's growing electric vehicle market.
"Whilst demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers. Consequently this is rapidly turning into a high volume, commoditised market," Johnson Matthey said in November.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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