Johnson Matthey PLC Johnson Matthey pre-close trading statement
RNS Number : 9555H
Johnson Matthey PLC
30 March 2020
Pre-close trading update
Johnson Matthey releases a pre-close trading update for the financial
year ending 31(st) March 2020, ahead of its full year results scheduled
for 28(th) May 2020. The company also provides an update on the impact
of the COVID-19 pandemic on its business, along with the measures it
is taking to actively manage the risks to its people, operations and
Robert MacLeod, Chief Executive, commented:
In these unprecedented times, our priority is to ensure the health
and safety of our people, customers and suppliers as well as the communities
in which we operate. I am extremely grateful to our employees around
the world for their dedication to our business in the face of COVID-19.
Whilst there is significant ongoing uncertainty around the full impact
of COVID-19 we are taking steps to manage our costs and cash flow.
We have a high quality, resilient and diverse business portfolio; a
strong balance sheet and good access to liquidity, and are further
strengthening our financial position.
In 2019/20, we have made good strategic progress and were on track
to deliver results in line with market expectations this year, prior
to developments with COVID-19. The ongoing pandemic has led to a deterioration
in some of our end markets and consequently we now expect to deliver
group operating performance below market expectations. Looking beyond
the current environment, given our leading market positions, strong
technology offering, and operational and investment discipline, we
remain confident in our medium term strategy.
Results for the year ended 31(st) March 2020 impacted by COVID-19
Strategic progress in the year has been good. Prior to the ongoing
uncertainty around COVID-19, the business was on track to deliver group
operating performance in line with market expectations for the year
ended 31(st) March 2020. We currently expect an impact of around GBP50
million on our trading performance from COVID-19. This was due to a
combination of reduced demand in Clean Air and around GBP20 million
of delayed shipments caused by logistics challenges across our other
businesses. As a result, we now expect to deliver group operating performance
below current market expectations.
Operational update and actions to protect our business
We have a high quality, resilient and diverse business portfolio which
is exposed to a range of end markets and geographies. We are closely
monitoring the ongoing developments in relation to
COVID-19 and taking rapid and decisive action to maintain the health
and safety of our people and to ensure business continuity.
Recently, a number of our automotive customers globally have announced
temporary closures of their manufacturing facilities because of lower
consumer demand and some governments are mandating the temporary cessation
of non-critical business activities, which includes automotive production.
As a result, we have taken the decision to temporarily close most of
our Clean Air plants across the world. This is with the exception of
our operations in China which are ramping back up as the region starts
to recover from COVID-19.
In Efficient Natural Resources, currently we have not seen a material
fall in demand, although some customers in Catalyst Technologies have
delayed orders due to supply chain challenges. In China we are seeing
demand starting to improve. The vast majority of our Catalyst Technologies
plants are running, although we are monitoring events closely and are
ready to take action if demand changes. Our pgm refineries continue
to operate, albeit at lower capacity due to reduced availability of
A number of our other businesses provide critical products and services
into the health, pharmaceutical and agricultural sectors and are relatively
resilient to macroeconomic weakness. They are therefore maintaining
operations but we have experienced some delays to shipment of orders
following increased border controls. This includes operations in our
Health and Medical Device Components businesses.
We have a flexible cost base, especially in Clean Air where c.75% of
costs are variable. Given the considerable uncertainty around demand
and the duration of our site closures, we are tightly managing our
cash position and costs, with a focus on lowering our inventory, collecting
accounts receivable and reducing our cost base. We will give more detail
on the cost reduction actions we are taking with our full year results
planned for 28(th) May 2020.
Outlook for the year ending 31(st) March 2021
For the year ending 31(st) March 2021, given the high levels of uncertainty
we are not able to reasonably forecast the impact on our operations
and financial performance. We will provide a further update at our
full year results.
Strong balance sheet and good access to liquidity
The group has a strong balance sheet and good access to liquidity with
substantial cash resources and significant undrawn bank facilities.
We have c.GBP250 million of unrestricted cash and a GBP1 billion Revolving
Credit Facility in place to March 2025 and extendable on its first
and second anniversary by a further one year, of which
GBP400 million is currently drawn. We also have around GBP130 million
available under other committed facilities. This means our overall
liquidity is c.GBP1 billion. Committed facilities are renewed regularly
to maintain a balanced maturity profile across different lenders. There
is no material refinancing due in 2020 or 2021.
Our leverage ratio (net debt to EBITDA) is well within our covenant
level. In the second half of our financial year, we have made substantial
progress in managing our precious metal working capital against a backdrop
of rising pgm (platinum group metal) prices, with volume reductions
c.GBP200 million. At 30(th) September 2019, net debt to EBITDA was
2.1x and we anticipate being at a similar level at 31(st) March 2020,
despite the impact of COVID-19 on EBITDA.
Confident in our strategy
The world is facing unprecedented challenges but we are taking steps
to ensure we are in the best possible position to navigate this period.
We remain focused on protecting our people and our financial position,
so that we are able to meet demand and serve our customers when conditions
We continue to invest for the future and remain committed to our strategic
growth projects, including our new world class Clean Air plants, our
Battery Materials commercial plant and upgrading our precious metal
refineries. As we manage cash, we will postpone a number of discretionary
With our leading positions in high margin, technology driven growth
markets, we remain confident in our strategy. We will continue to apply
our world class science to address the challenges posed by key global
megatrends and in doing so we will drive value for our shareholders
Full year results: We currently plan to announce our full year results
for the year ended 31(st) March 2020 as scheduled on Thursday 28(th)
Investor Relations Director of Investor Relations 020 7269 8241
Martin Dunwoodie Senior Investor Relations Manager 020 7269 8235
Louise Curran Investor Relations Manager 020 7269 8242
Media 020 7269 8407
Sally Jones Director of Corporate Relations 020 7353 4200
Simon Pilkington Tulchan Communications
1. Precious metal working capital volume reduction at 30(th) September
2019 metal prices
2. Vara consensus for full year underlying operating profit in 2019/20
is GBP581 million (range: GBP562 million to GBP593 million)
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(END) Dow Jones Newswires
March 30, 2020 02:00 ET (06:00 GMT)
Grafico Azioni Johnson Matthey (LSE:JMAT)
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Grafico Azioni Johnson Matthey (LSE:JMAT)
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