LONDON (Alliance News) - Platinum and chemicals company Johnson Matthey PLC affirmed on Wednesday its expectations for its full financial year after revenue across its divisions was boosted by a weaker pound which helped to offset mixed constant currency trading.
The FTSE 100 constituent, which makes emission control systems, catalysts and fine chemicals, said sales grew 6.0% year-on-year in its first quarter to the end of June. In constant currencies, sales rose just 2.0% as sales at actual rates benefited from the strength of the dollar against sterling.
Johnson Matthey said underlying profit, in constant currencies and stripping out one-off acquisition and restructuring-related charges, was broadly in line year-on-year in the quarter. It continues to expect its results for the 2017 financial year will outpace the previous year, albeit weighted to the second half.
If current exchange rates remain as they are, in particular with the pound weak against the dollar following the UK's vote to leave the European Union, the group said it expects it will get a translational boost to profit for the full year.
Johnson Matthey said its full-year outlook in constant currencies remains unchanged. It added that, while too early to forecast the long-term impact of Brexit, it does not believe the UK leaving the EU will have a significant effect on its business, and its strategic plans are unchanged.
Shares in Johnson Matthey were up 1.1% to 3,183.00 pence Wednesday.
Emission Control Technologies was the star performer in the quarter, with sales up 9.0% year-on-year. Light duty vehicle catalyst sales grew 14% year-on-year, driven by growth in all regions but a particularly strong period in Europe helped by robust car production volumes in key markets.
Heavy duty catalyst sales were more subdued, up 1.0% and down 5.0% in constant currencies. A slowdown in demand for Class 8 trucks in North American held back sales growth and production of these trucks continued to weaken through the quarter, though Johnson Matthey still expects this segment to stabilise later in its financial year. Heavy duty sales in Europe were strong, helped by good growth in truck production in western Europe.
Sales for the Process Technologies division, which supplies catalysts and absorbents to the petrochemical, oil refining and gas processing industries, grew 3.0% but fell 1.0% in constant currencies. Growth in sales to chemical industry customers helped to offset soft demand for the group's oil and gas businesses, Johnson Matthey said.
Chemical sales were boosted by good demand for specialty products in the petrochemicals sector, which offset weakness in technology licensing activity. Oil and gas demand was weaker against a strong comparator for the year prior and as market conditions remained tough in the industry.
Precious Metal Products, where the company refines and recycles precious metals into new products, saw revenue grow 6.0% in the quarter and by 1.0% in constant currencies. Sales increased for Johnson Matthey's Precious Metals Management unit due to volatility in platinum group metals prices in the quarter, while intake volumes for its refining and recycling business were stable.
Sales in the manufacturing unit within Precious Metal Products were slightly lower, with a weaker first quarter for Noble Metals, partly offset by better demand for Advanced Glass Technologies.
In the Fine Chemicals arm, sales in the quarter were flat and fell 5.0% in constant currencies. Active pharmaceutical ingredient sales were slightly down due to order timings, but the Catalysis and Chiral Technologies benefited from strong demand for homogeneous catalysts.
Johnson Matthey's other unit, New Businesses, saw sales rise 14% and by 11% in constant currencies. The division, which houses new areas of interest adjacent to the company's existing operations, saw good demand for battery materials and contributions from the Water Technologies acquisitions the firm made in April and May.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Johnson Matthey (JMAT)