(Alliance News) - Shares in Johnson Matthey PLC slipped early Thursday as the firm said interim profit was hit by problems in its Clean Air division.
The shares were 5.9% lower in early trade at 3,028.00 pence each, making it the worst performer in the FTSE 100 index.
Pretax profit fell 8% to GBP225 million for the half-year to September, and the underlying figure also declined by 8% to GBP231 million.
The specialty chemicals firm said profit was hit by around GBP15 million of one-off costs in the Clean Air division due to higher freight costs and manufacturing inefficiencies. This, Johnson Matthey continued, stemmed from the phasing of the completion of a new plant in Poland.
The company's revenue rose 37% to GBP6.82 billion due to higher precious metal prices. Excluding this, sales climbed 6%, or 3% at constant currency, to GBP2.12 billion.
Johnson Matthey has increased its interim shareholder return by 5% to 24.50 pence per share.
"I was pleased with the continued good sales growth, demonstrating our broad based growth drivers, although operating profit was slightly down as a result of one-off costs associated with manufacturing inefficiencies in Clean Air in the first half," said Chief Executive Robert MacLeod.
Clean Air managed to deliver 6% revenue growth to GBP1.39 billion, with the next biggest unit, Efficient Natural Resources, achieving 7% growth to GBP496 million. Health revenue fell 6% to GBP111 million, and New Markets climbed 7% to GBP186 million.
Looking ahead, Johnson Matthey expects full-year performance to meet the market's expectations. A second half is forecast due to the absence of one of costs, it added.
"We expect to deliver a stronger second half, primarily driven by the absence of the one-off costs and seasonality in Efficient Natural Resources. For the full year, we expect to deliver group operating performance in line with market expectations," said CEO MacLeod.
"Given our clear strategy, the strong foundations we have put in place and the ongoing investment into the business for the longer term, we remain confident about the future growth prospects across all of our sectors, which will together drive mid-to-high single-digit growth in earnings per share over the medium term."
"Our focus remains on executing our strategy, delivering on the ambitions that we laid out at our recent capital markets day and continuing to drive towards our vision to create a cleaner, healthier world," he concluded.
At the September capital markets day, Johnson Matthey outlined three medium-term targets: mid-to-high single digit compound annual growth rate in earnings per share, a return on invested capital of 20%, and a continued "progressive" dividend.
By George Collard; georgecollard@alliancenews.com
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Johnson Matthey (JMAT)