The drivers for market growth and the attractions of investing in a leader in sustainable technologies
Introducing Johnson Matthey
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 around the world 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 for customers around the world. The company is focused on delivering double digit growth in earnings per share (EPS) through strong organic growth. Selective mergers and acquisitions activity could help to accelerate this growth further.
Market Growth Drivers
The group benefits from four fundamental market growth drivers:
Environmental factors, climate change and growing regulation around the world
A good example of this, that is currently a major driver of growth in our Emission Control Technologies business, is the spread of heavy duty diesel (HDD) emissions regulations around the world. This market is currently worth about US$ 800 million in sales excluding the value of precious metals but it will grow to be worth about US$ 2.5 billion by the end of 2015 as legislation tightens and covers more types of equipment in developed markets and as legislation spreads to the developing markets of China, India and Brazil.
Natural resource constraints
Driving demand for alternatives to oil and natural gas for making transportation fuel, key petrochemical intermediates and even pipeline gas using coal and biomass derived from waste materials. These all use catalysts and technologies supplied by our Process Technologies business.
Population growth, urbanisation and increasing wealth, particularly in developing countries
All drivers of demand for cars and other light duty vehicles. Johnson Matthey is one of the leaders in emission control catalysts and other high technology components for cars, producing about 30% of all the light duty catalysts made each year.
Improving health, nutrition and an aging global population
Driving growth in the use of generic pharmaceuticals and pain management drugs. Johnson Matthey is a world leading supplier of controlled substance active pharmaceutical ingredients, mainly to generic pharmaceutical companies.
The Bottom Line
Johnson Matthey has attractive business fundamentals:
- A strong culture of innovation
- Leading market positions across all of its major areas of activity
- A strong return on capital, ahead of its target rate of 20%.
It provides strong bottom line rewards for shareholders with a 14.5% CAGR in EPS and a 10.7% CAGR in dividend per share (DPS) over the last five years.
Download our investment case factsheet (PDF, opens new window).