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| Outlook |
Johnson Matthey achieved good results in the six months to 30th September 2008 with sales and profits well ahead of last year despite the slowdown in US and Western European car markets and the fall in the price of platinum in the second quarter.
Global car sales are expected to show a significant decline in the second half of our financial year compared with last year which will reduce sales of autocatalysts. Actions have been taken to reduce costs which will benefit operating profit. Despite the recent fall in the oil price Process Technologies continues to see good demand and has a strong order book.
The price of platinum has recently fallen sharply, in line with the general sell off of commodities by investors. Profits from our Platinum Marketing and Distribution business will be lower in the second half of the year than the very strong result achieved in the first half of 2008/09, but the business will still continue to benefit from pgm price volatility if current market conditions persist.
The Fine Chemicals & Catalysts Division is likely to be less affected by the economic downturn than the other two divisions and is expected to deliver steady growth in the second half. The group will also benefit from much more favourable exchange translation if rates stay at current levels.
Assuming pgm prices and exchange rates remain at current levels, and with a drop in global car production of around 11% compared with last year, we would expect underlying profit before tax for the second half of Johnson Matthey’s financial year to be around 5% – 15% below the level achieved in 2007/08. On that basis we would expect underlying earnings per share for the year as a whole to be in the range 90p to 94p (1% – 5% up on 2007/08).
Looking beyond our year end, it is more difficult to predict how the global economy will develop. However, we have strong market positions, leading technology and our finances are in good shape. The long term drivers for our businesses remain firmly in place and we believe that Johnson Matthey is well positioned to weather the current economic downturn. |
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