* Share price higher in early trade
* Competition in clean vehicle technology will be tough
* Profits slightly ahead of analyst expectations (Adds detail, CEO quotes, share price)
By Barbara Lewis
BRUSSELS, June 2 (Reuters) - Johnson Matthey, aworld leader in making catalysts for car emission-controldevices, forecast higher results in the coming year, saying theregulatory push for cleaner vehicles would spur demand althoughcompetition would be intense.
Its share price rose 1.5 percent in early trading after thefirm predicted better conditions ahead after a 5 percent fall inpre-tax profit for the year ended March 31 to 418.2 millionpounds ($603.3 million). This was just ahead of the averageforecast of 415 million pounds in a Thomson Reuters poll.
Profits for the financial year 2015-16 were hit by actionsto cut costs and exceptional impairment and restructuringcharges of 141 million pounds ($203 million).
However, the ratio of net debt to core profits declined to1.1 times from 1.7. The company said its balance sheet wasstrong and would allow for research and development.
Sales of auto emissions control technology rose 7 percentand underlying profits in the sector climbed by 15 percent.
Robert MacLeod, chief executive of Johnson Matthey, toldReuters the sector should stay strong as global regulatorspushed for tougher emissions reduction following the Volkswagen scandal.
He expected diesel cars, which particularly need platinum toreduce emissions, would account for about 40 percent of themarket in Europe by 2025, down from roughly half now.
The company is also betting on increased battery technologysales following last year's acquisitions in battery materialsand greater sales of hybrid vehicles.
"Hybrids are the perfect answer for Johnson Matthey. Theystill need emission control, but they also need a battery,"MacLeod said in a telephone call.
Competition from rivals Belgium's Umicore andGermany's BASF, which is joint leader with Johnson Matthey in the auto catalyst market, will be tough, however.
"We are all going to be competing intently in the batteryspace. It's a good clean fight," MacLeod said.
Johnson Matthey's business in refining and recyclingplatinum group metals was hit by a roughly 25 percent fall inprices, it said.
The petrochemicals market was also challenging, MacLeodsaid, because of the fall in oil prices.
Analysts were positive.
"The balance sheet is in good shape to support capitalprogrammes for longer term growth," Marc Elliott, analyst atInvestec, said, adding the firm was "transitioning back togrowth". ($1 = 0.6931 pounds) (Additional reporting by Mamidipudi Soumithri; editing byPhilip Blenkinsop)
Johnson Matthey (JMAT)
