RNS Number : 8779M
Johnson Matthey PLC
19 September 2019
Johnson Matthey Capital Markets Day - delivering sustainable growth and value
Today, Johnson Matthey will hold a Capital Markets Day in which it will
provide an update on its strategy for sustained growth and value creation,
at a group level and across its sectors. This growth is underpinned by
use of our world class science to address challenges posed by fundamental
global trends including climate change, energy transition, population
and longevity and resource challenges. Johnson Matthey has leading positions
in high margin, technology driven growth markets and the company expects
to deliver attractive and sustainable growth and returns over the medium
-- Delivering mid to high single digit EPS CAGR
-- Expanding group ROIC to 20%, and
-- Continuing a progressive dividend
Clean Air: sustained growth for the next decade
Our Clean Air business will deliver mid single digit growth in operating
performance to 2025 and sustained growth for the next decade. In the
early years, we expect good growth as we start to see benefits from new
legislation in Asia and tighter legislation in Europe. Over the medium
term, we expect growth to accelerate with the full benefits of the new
legislation in China and India coming through, which will more than double
the size of our Asian business. In the longer term, growth is expected
to moderate assuming penetration of pure battery electric vehicles increases
Efficient Natural Resources: growth accelerating and guidance upgraded
In Efficient Natural resources, we have undergone a period of restructuring,
reorganisation and investment in R&D which has improved efficiency and
built the platform for growth. These changes and the commercialisation
of new technologies as we move into adjacent areas will drive higher
growth for the overall sector. This gives us confidence in upgrading
our financial guidance, to deliver mid to high single digit growth in
operating performance to 2025.
Health: platform built for breakout growth, passed the point of inflection
We have made strong progress on operational improvements in Health and
our increased investment has built a deeper and broader pipeline of new
products. The business has now passed the inflection point and we are
confident of delivering breakout growth with an additional GBP100m of
operating profit from our generic and innovator pipeline by 2025.
New Markets: strong progress in Battery Materials
In New Markets, we are focused on Battery Materials and have made strong
progress to commercialise eLNO(R) , our portfolio of next generation,
ultra-high energy density cathode materials. Customer feedback from testing
remains positive, in particular our ability to provide customised solutions
and we have now moved to full cell testing with two customers. We expect
our first commercial plant to be on stream in 2022 and to be supplying
platforms in production in 2024. Our total investment when we have commercial
production from our plant will amount to circa GBP350m.
Efficiencies remain a strong focus
We remain focused on building a more efficient business to strengthen
our platform for growth and increase our agility. Today we commit to
a further GBP40m in procurement savings over three years beginning 2020/21,
giving total group savings announced of GBP145m since 2017/18. Of the
additional GBP40m, two thirds will benefit the income statement and at
least half will be reinvested.
Expanding return on invested capital to 20%
In order to deliver sustainable growth and value creation across the
group and our sectors, we are investing in a number of strategic growth
projects. The growth capex comprises spend on our new Clean Air plants
in Poland, China and India, the commercialisation of eLNO, modernisation
of our refineries in Efficient Natural Resources and upgrades to our
IT systems. In future, maintenance capex will continue to be c.0.8-0.9x
depreciation and we will further invest in strategic projects if they
meet our disciplined investment criteria.
We continue to have a disciplined approach to our working capital position.
We are targeting an improvement in non precious metal working capital
to 50 days over the medium term, and expect to deliver GBP350m of savings
in precious metal working capital, comprising GBP250m in backlog reduction
and a further GBP100m of refinery efficiencies.
Over the medium term, these investments and the growth and efficiency
they will generate give us confidence in expanding our ROIC to 20%.
Outlook unchanged for first half and full year 2019/20
Our group guidance, at constant rates, for the first half and the year
ended 31(st) March 2020 remains unchanged. We expect growth in operating
performance at constant rates to be within our medium term guidance of
mid to high single digit growth.
-- In terms of phasing, we expect performance to be more heavily weighted
to the second half
-- By sector, Clean Air performance is expected to be slightly below the
prior year. This is expected to be compensated by better performance
in Efficient Natural Resources driven by actions taken to improve efficiency,
and other ongoing efficiencies across the group
We continue to expect capex of up to GBP500m in the fiscal year 2019/20.
At current foreign exchange rates (GBP:$ 1.218, GBP:EUR 1.104, GBP:RMB
8.71) translational foreign exchange movements for the year ending 31(st)
March 2020 are expected to benefit sales by GBP128 million and underlying
operating profit by GBP21 million.
Commenting on the capital markets day, Robert MacLeod, Chief Executive
"Everything we do at Johnson Matthey is about helping to create a world
that is cleaner and healthier. We apply our world class science to address
key global challenges, solving our customers' most challenging and increasingly
complex problems. We are delivering on our strategy and will continue
to execute with determination. As the world changes ever faster, we are
increasingly excited by the significant opportunities we see for sustained
growth and value creation."
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
David Allchurch Tulchan Communications
1. eLNO is a trade mark of Johnson Matthey Public Limited Company
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(END) Dow Jones Newswires
September 19, 2019 02:01 ET (06:01 GMT)