Our Strategy.

Johnson Matthey is a leading speciality chemicals company underpinned by science, technology and our people. A leader in sustainable technologies, many of the group’s products enhance the quality of life of millions through their beneficial impact on the environment, human health and wellbeing. The world has changed a lot since Johnson Matthey’s foundation in 1817. From its early days as a precious metals assayer, the company has always sought to build on its strengths and respond to changing global needs. Today the group continues to apply its expertise in science to develop world leading products and technologies that deliver environmental, social and health benefits for customers around the world.

Johnson Matthey’s strategy is central to its success and during 2010/11 the group carried out an extensive examination and review of its business strategy for the next ten years. Full details of the strategy review process are described in our 2011 Annual Report. This important piece of work has established the direction of the group over the next decade and outlines the actions it will take to achieve its goals.

Building a Sustainable Business

Johnson Matthey has evolved its business portfolio over the last decade. Sales excluding the value of precious metals have more than doubled during that time and through a combination of organic growth and a series of key acquisitions and divestments, the group has successfully delivered good growth in shareholder value through its strategic focus on environmental technologies.

Today Johnson Matthey is a world leader in its core markets and has operations across the globe. It has around 9,700 employees, with more than 1,000 of these working in R&D. Over the ten year period to 31st March 2011, compound annual growth in underlying earnings per share (EPS) was 7.8% p.a., demonstrating the group’s resilience against the backdrop of the recent global recession.

As part of the strategy review process, we considered the macro level global drivers impacting the chemical industry (based on trends identified by Goldman Sachs Global Investment Research). The key global drivers we identified as having a major impact on Johnson Matthey’s businesses are:

  • Population growth, urbanisation, increasing wealth
  • Health and nutrition, ageing population
  • Natural resource constraints
  • Environmental factors, climate change, regulation
Global Drivers Impacting the Chemical Industry

The process examined each global driver in turn, identifying firstly which industry sectors would be impacted by the global driver and then mapping each industry sector to the relevant areas of Johnson Matthey’s business. From this a picture was developed connecting the macro level global trends with the group’s current activities as illustrated in the figure on the right.

Many of these global trends that will support growth in our business over the next decade are linked to sustainability and as a result, they will drive the continued development of products that directly benefit the environment, society and human health. All four global level trends provide opportunities for growth across Johnson Matthey’s divisions and case study examples to illustrate these are included in the 2011 Annual Report.

These global trends will drive underlying growth in many of our businesses. However, underpinned by the attributes of our businesses and the group’s key strengths, the board believes that Johnson Matthey is well positioned to deliver superior growth at rates in excess of the underlying growth resulting from the global trends.

Focus on R&D

The strategy review process reconfirmed that R&D is a key element in realising these growth opportunities and over the next few years the group is increasing its annual investment in R&D by around a third. In addition, the review also identified opportunities to leverage the group’s R&D expertise to further accelerate growth in the coming decade. As a result, Johnson Matthey is increasing its focus on new business development and its investment in R&D. We have established a team whose goal is to target further growth from a series of new business areas with the aim of developing a major new division for Johnson Matthey. The process to identify, evaluate and develop these new business areas is now underway and we have initially planned to increase our investment in R&D by up to a further £5 million p.a. to support this work.

This new initiative aligns with Johnson Matthey’s Sustainability 2017 aspirations to build a more sustainable business for the future. A major driver of Sustainability 2017 is to apply our innovation and R&D expertise to develop improved, more efficient products and solutions for our customers. In doing this we can enhance our customers’ performance and reduce their sustainability footprint, which in turn will improve our competitiveness, profitability and deliver growth for Johnson Matthey in the future.

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Q and As.

Q1. What does sustainability mean to you?

To me sustainability means the ability of future generations...

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