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Welcome to Johnson Matthey’s Sustainability Report.

At Johnson Matthey, sustainability is a key element of our strategy for continued growth. We believe that the resource efficient, environmentally responsible manufacturing of products that deliver sustainability benefits for our customers can leverage commercial advantage for the group.

2010/11 was a good year for Johnson Matthey and marked a return to strong growth. Underlying profit before tax was up 36% on the prior year and sales excluding precious metals (sales) were 21% ahead as we experienced increased demand for our products across most of our businesses. We also made two acquisitions to support future growth and several of our newly constructed facilities ramped up their production this year to meet the increased demand. However, despite this expansion in numbers of facilities and business volumes, our carbon dioxide (CO₂) emissions and consumption of key resources (water, energy) all increased at rates below the rate of growth in sales, highlighting the increased efficiency of our operations, partly as a result of our group wide sustainability initiative.

During the summer and autumn of 2010 we carried out a comprehensive review of Johnson Matthey’s business strategy for the next ten years. This revealed that many of the key global trends that will support growth in our business over the next decade are linked to sustainability and thus will drive the development of products that directly benefit the environment, society and human health. The review also reconfirmed that R&D is a key factor for us in realising these growth opportunities and over the next few years we are planning to increase our annual investment in R&D to target further growth. This investment will support the delivery of products and technologies for existing and new markets that are driven by global sustainability trends.

This year, our businesses around the world have continued to focus on their sustainability efforts. Our Sustainability 2017 Vision, which sets out our direction and aspirations in this area, includes challenging targets to support business growth. It is now just over three and a half years since the launch of our vision and in February 2011 we undertook a detailed review of our sustainability strategy. The review confirmed support throughout the company for Sustainability 2017 and highlighted several areas where we are now working to evolve the strategy.

We have continued to make steady progress towards our Sustainability 2017 Vision during 2010/11 with five of our seven targets on track or progressing very well. We are now at the stage in our sustainability journey where incremental resource efficiency savings are becoming harder to find and so we are shifting our emphasis further towards applying our innovation to develop sustainable solutions, both in manufacturing technology and products. We are working on innovative new ways of processing in our manufacturing operations, as well as the development of new, more sustainable products and technologies that will help our customers to be more resource efficient.

During the year we have continued to realise considerable savings through our sustainability programme and maintained our focus on developing the next generation of products to enable our customers to improve their sustainability footprint and their competitiveness. Many of Johnson Matthey’s products and technologies have a beneficial impact on the environment, resource efficiency, human health and wellbeing and these products generated a major proportion of Johnson Matthey’s profit this year. The sustainability benefit of our products is an important aspect of our sustainability strategy and work is underway to better assess the impact of our products in the market place.

Growing our business through sustainability is not only about our operations and products. Protecting the health, safety and wellbeing of our employees is a key priority for Johnson Matthey and it is their contribution that will underpin our future growth. By April 2010 our lost time accident rate had fallen to its lowest reported level but during the remainder of 2010/11 our performance reached a plateau and we saw a small increase in accident rates towards the end of the year. Work is underway to address this trend with programmes being piloted at sites around the world which focus on safety at site level and on ways to improve local health and safety culture. For Johnson Matthey any accident is unacceptable and we remain focused on our target of zero accidents. We have seen the benefits of our efforts to reduce the incidence of occupational illness cases this year and have beaten the target we set in 2008 to reduce the annual incidence of occupational illness cases by at least 30% by 2013/14. As ever, we need to remain vigilant about health and safety throughout the organisation and this year we have developed a ten year group strategy in this area to support continued improvement.

Our employees continue to show great enthusiasm for sustainability and there are a huge number of initiatives underway at sites around the world. Thanks to their efforts we have continued to make steady progress towards our Sustainability 2017 aspirations and remain committed to building a sustainable business for the future.

Neil Carson
Chief Executive