JMAT Johnson Matthey Plc

TIDMJMAT

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 
 term: 
 
--  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 
 substantially. 
 
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 
 said: 
"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." 
 

Ends

 
Enquiries: 
 
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 
 Jane Crosby 
 
 Media                                                      020 7269 8407 
  Sally Jones         Director of Corporate Relations        020 7353 4200 
  David Allchurch      Tulchan Communications 
 
 
Note: 
1.  eLNO is a trade mark of Johnson Matthey Public Limited Company 
 

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