* Profit before tax for 2013/14 rises by 12 pct
* End of Amplats contract will cost the company 30 mln
* Not too concerned by S. Africa strike as metal still
(Adds CEO comments on South Africa strike, divisions
By Silvia Antonioli
LONDON, June 5 Johnson Matthey, the
world's biggest maker of catalytic converters used to control
car engine emissions, said it expected no annual profit growth
this year due to the loss of a supply contract and adverse
foreign exchange rates.
The UK-based speciality chemicals company posted a slightly
better-than-expected profit for the year ended March 31 on
Thursday, helped by stricter EU vehicle emission rules which
boosted sales of its catalytic converters.
However, it said it expected results in its current
financial year to be unchanged from 2013/14, as growth would be
offset by the impact of the loss of commission revenue from
Anglo American Platinum (Amplats), and by the strength
of Britain's sterling currency.
"The underlying business is strong," said exiting Chief
Executive Neil Carson, who is stepping down on Thursday after a
decade at the helm of the company. "The thing that will hold us
back next year is the loss of the Anglo Platinum contract but
also the foreign exchange rate."
A long-standing deal with the world's No.1 platinum producer
Amplats - which had involved Johnson Matthey buying the metal at
a discount under a marketing arrangement - came to an end last
year. The two companies have agreed a new supply contract this
year, but it will not involve a discount.
Johnson Matthey said this would hit revenue by about 30
It also said the strength of the sterling exchange rate
would cut its underlying profit before tax this year by over 20
million pounds. Most of its costs are in sterling while its
sales around the world are in other currencies. A stronger
sterling makes that revenue worth less when converted to pounds.
The company, which in addition to its vehicle emission
controls business also refines and recycles platinum group
metals, said it was not overly concerned about the four-month
old South African mining strike which is cutting output from the
top three platinum producers.
"It has limited impact on us yet because we are still able
to get the metals we need. That's partly because there is plenty
of metal around but also we are the largest secondary refinery
in the world so we have access to metals ourselves," Carson
"There is still a fair amount of mining going on in South
Africa and platinum from the ETFs (exchange traded funds) is
available. And for palladium, the Russian mines are still
Johnson Matthey reported an underlying pretax profit of
427.3 million pounds ($716 million) for 2013/14, up 12 percent
on the year before. Analysts on average had been expecting 417
million pounds, according to Thomson Reuters I/B/E/S Estimates.
Liberum analyst Adam Collins said the company's forecast for
this year meant analysts would need to revise down their profit
estimates. "That is not because conditions in underlying terms
have deteriorated but it's due to a slightly more cautious view
on headwinds. Analysts were looking for too high a growth in
underlying terms this year."
Johnson Matthey's Emission Control Technology division,
which makes catalysts for trucks and cars, was the strongest
performer among its five business units, with underlying
operating profit up 25 percent.
The division, which accounts for more than half of the
company's sales, benefited from stronger demand for its
higher-value catalysts for diesel trucks, driven by emission
control legislation introduced in Europe this year.
The company expects more legislation of this type due to be
implemented on vehicles in Europe and China, and a recovery in
car sales in Europe, will continue to boost its sales.
The other divisions also grew but at a more moderate pace.
The weakest performance was in the Precious Metal Products
division, which refines, processes and recycles platinum group
metals, with underlying operating profits up 5 percent, hit by
the Amplats contract change.
Finance director Robert MacLeod will replace Carson after
Thursday's results presentation.
($1=0.5969 British Pounds)
(Editing by Pravin Char)