Johnson Matthey FY profit up 3 pct but precious metals business slows

Otmane El Rhazi from The Bullion Desk.

Full-year profits at Johnson Matthey rose despite weakness in its precious metals unit, the world’s largest autocatalysts maker said.

Underlying pretax profit of 440.1 million pounds for the year ending March 31 2015 was up three percent on last year’s 427.3 million pounds, helped in particular by a boost in sales of catalysts in Europe, it said in its financial results statement on Thursday.

But sales in its precious metals production division fell nine percent at constant rates to 379 million pounds, while underlying profit dropped 21 percent to 101.5 million pounds.

The company attributed the drop to general market weakness and a change to its contracts with Anglo American Platinum, which reduced both sales and underlying operating profit by around 30 million pounds.

But excluding the contract change, sales were still down five percent due to lower average precious metals prices over the year and some weakness in the company’s businesses markets.

Platinum averaged $1,333 per ounce in 2014/15, down around seven percent the company said, while palladium was up 12 percent at $820.

But there was a steady decline in the price of both metals during the second half of the year – platinum ended it at $1,126 and palladium at $741.

Sales in the precious metals management unit and refining activities consequently fell 26 percent to 120 million pounds.

“This is due to the loss of income from Anglo Platinum in our Precious Metals Management business where sales declined to 17 million pounds,” the report said.

Weakness may also continue into the first quarter of this year, the company said, after it sold its gold and silver refining business and due to difficult trading conditions in PGM refining and recycling.

“We expect sales in the first quarter to be impacted by the lower refining intake volumes in the final quarter of 2014/15. In addition, with current PGM prices well below those at the start of 2014/15, these could adversely affect performance if sustained throughout 2015/16,” JM said.

“We also expect higher costs in PGM refining this year, and consequently an impact on margins, as we see a shift towards a more complex intake product mix,” it added.

Largely, results outside of the precious metals division were positive – it made “made good progress in 2014/15 and the group remains well placed to deliver long-term growth through the development of value adding sustainable technologies”, it said.

(Editing by Mark Shaw)

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