Johnson Matthey grows underlying profits, unveils US power generation bolt-on deal

(Sharecast News) - Johnson Matthey delivered operating profits in line with previously upgraded guidance on Thursday, as it announced a $360m acquisition to beef up its presence in the growing US power generation market.

Underlying revenues at the speciality chemicals firm totalled £2.56bn over the year to 31 March when excluding the sales of precious metals to customers, down 10% over the year before, driven by an 8% sales decline at the larger Clean Air Solutions business and a 13% drop in the PGM (platinum group metal) services top line.

Johnson Matthey, which classes its Catalyst Technologies division as a discontinuing operation ahead of its planned sale to Honeywell in August, said underlying operating profits were up 14% over the year at £340m. The company had said in November that it expected growth at the "higher end of a mid single digit percentage range".

However, reported operating profits were down 65% year-on-year at £161m due to significant profits on disposals the previous year.

The company maintained its final dividend at 55p per share, taking its total payout for the year to 77p per share, in line with the prior year.

Following completion of the £1.33bn Catalyst Technologies sale to Honeywell, Johnson Matthey plans to return £1bn to shareholders by way of a special dividend and share buyback.

Separately, the company announced a deal to acquire Cormetech, a US manufacturer of so-called selective catalytic reduction catalysts, which emissions control for stationary power generation and industrial applications.

The $360m deal, which includes an additional earn-out consideration of up to $100m based on certain financial performance targets in 2028 and 2029, values the firm at 10.3 times estimated 2026 EBITDA.

Johnson Matthey said there was a "compelling strategic rationale" for the deal to materially enhance the scale of its Clean Air Solutions business, as well as "meaningful" annualised run-rate synergies of at least $20m expected by 2030.

"The sale of Catalyst Technologies is on track and the acquisition of Cormetech represents another important milestone in JM's development," said chief executive Liam Condon. "Together with the progress we are making on strengthening our core businesses, we are on track to achieve our medium-term targets and deliver enhanced shareholder returns."

The stock was down 1.9% at 2,136p by 0853 BST.

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