November 19, 2015 / 11:31 AM / 4 years ago

UPDATE 2-Johnson Matthey to pay out $466 mln to shareholders, cut costs

* To pay 305 million stg or 150p/shr as special dividend

* Also to pay regular interim dividend of 19.5p

* H1 underlying pretax profit 208.3 million stg

* Starts restructuring process to cut costs

* Shares up more than 8 percent (Adds background, analyst comment, updates shares)

By Olivia Kumwenda-Mtambo and Jan Harvey

JOHANNESBURG/LONDON, Nov 19 (Reuters) - Johnson Matthey , the world’s biggest maker of metal catalysts for car emission-control devices, will pay 305 million pounds ($466 million) to shareholders as a special dividend after selling two businesses.

Reporting a dip in half-year profits, the company said on Thursday it would make a special payout of 150 pence a share, on top of an regular interim dividend increased 5 percent to 19.5p.

The company had said in July it might return cash to shareholders after making 380 million pounds from the sale of its Gold and Silver Refining and Research Chemicals businesses, provided it did not make any major acquisitions.

The shares were up 8.4 percent by 1121 GMT, making the company the biggest gainer in the FTSE 100 index which was up 1.4 percent.

The company, which also refines and recycles platinum group metals, posted a 4 percent fall in underlying pretax profit to 208.3 million pounds for the half year through September, as a poor performance in its precious metal products business due to low prices offset strong growth in emission control technologies.

Platinum prices hit their lowest in nearly seven years this week.

Johnson Matthey said as a result of challenging conditions in several key markets, it had started a restructuring review particularly in its Process Technology division, which sells catalysts and technologies to the oil and petrochemical sector.

It said the restructuring was expected to cut costs by around 30 million pounds annually and had an associated one-off charge of around 40 million pounds. The process would also involve job cuts, Finance Director Den Jones said.

“We are just starting employee consultations so it’s difficult to say how many people, but we are looking at a couple of a hundred people and it’s mainly in the Process Technology but also in the Precious Metal Products divisions,” Jones said.

Johnson Matthey has a group workforce of around 13,000 people, according to its website.

JM Chief Executive Robert MacLeod said in a webcast on the company’s website that the cost-cutting programme should enable the company to return to growth next year.

Analysts said the results were generally positive given the headwinds JM has faced, including higher pension contributions, the impact of dilution from disposals, lower platinum group metals prices, and the reduction of licensing activity in its Process Technologies division.

“The market’s been pleased by the special dividend,” Numis Securities analyst Charles Pick said.

“All in all this is quite good. Debt is down over half a billion from the first half compared to end March, and they’re talking about the cost-cutting potentially getting them back into a growth situation in the next financial year.”

Johnson Matthey has benefited in recent years from tighter European regulation on emissions, boosting demand for more value-added catalysts. But its market dominance is being challenged by competitors such as Belgium’s Umicore and its precious metals products division is suffering from a plunge in prices.

To counter worries over the falling market share of platinum-rich diesel vehicles in Europe, the company is betting on its newly acquired battery business.

Automobile emissions-control system makers are also expected to gain from the Volkswagen emissions-cheating scandal, seen likely to lead to tighter regulation to make cars more environmentally friendly.

$1 = 0.6547 pounds Reporting by Olivia Kumwenda-Mtambo in Johannesburg and Jan Harvey in London; Editing by Greg Mahlich, David Holmes and Adrian Croft

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