* Profit drops 9 percent after "challenging year"
* Sees "steady progress" in year ahead
* Shares climb hit all-time high
By Clara Ferreira-Marques
LONDON, June 6 A recovering U.S. auto market
cushioned catalyst maker Johnson Matthey's drop in
annual profit, sending its shares to an all-time high as it
forecast steady progress due to tougher rules on vehicle
Johnson Matthey, the world's largest maker of catalysts that
control vehicle emissions, was badly hit by the impact of weaker
metals prices on its division that refines, markets and
distributes platinum - used in catalytic converters - and other
But that was offset by better-than-expected progress in the
division that makes catalysts for cars, trucks and the chemicals
U.S. auto sales have seen a recovery as consumer confidence
improves, and sales in May were boosted by construction workers
and oil drillers snapping up pickup trucks to meet demand for
Johnson Matthey posted a 9 percent drop in underlying pretax
profit to just over 389 million pounds ($599 million) for the
year to the end of March. The fall was smaller than analysts had
The company had warned of a tough year for its precious
metals unit - normally the largest contributor to its bottom
line - and investors had fretted over the impact of changes to a
distribution deal with Anglo American Platinum, the
world's largest platinum producer.
On Thursday, Johnson Matthey forecast profit growth, helped
by chemicals processing, the impact of bolt-on acquisitions and
"We'll be growing. We should do better in both the first and
the second half than last year. It is going to be modest growth,
but growth nonetheless," Finance Director Robert MacLeod said.
Johnson Matthey stock was up 6.6 percent at 2,756 pence by
1220 GMT, off an earlier high of 2,817p but outperforming a
virtually flat FTSE 100 index.
"The outlook statement has helped sentiment considerably.
Steady progress in the current year is probably better than most
people had expected," said analyst Charles Pick at brokerage
Underlying operating profit at the group's environmental
technologies division, which makes catalysts for cars and
trucks, climbed 7 percent - despite weaker sales of catalysts
for cars in Europe where the outlook remains uncertain.
Even with lacklustre consumer demand there, Johnson Matthey
expects to benefit from tighter emissions legislation in Europe
from January. New rules are coming into force that will require
improved catalysts for trucks and buses, resulting in a three to
four times increase in catalyst sales value per vehicle.
"We feel good that we will get growth in Europe - for our
business - because of the structural drivers," MacLeod said.
China and India are also expected to adopt similar emissions
As expected, the precious metals products division was hit
by low platinum and palladium prices and smaller volumes feeding
through to its distribution business due to strikes across the
South African mining industry last year.
That unit reported a 27 percent drop in underlying operating
profit, although the group said it was seeing improvement.
Johnson Matthey paid a full-year dividend of 57 pence.