Half year results for the six months ended 30th September 2017

Strong operational momentum continued and full year outlook confirmed.

Underlyingperformance 2018 2017 % change % change continuing businesses2 at constant rates3
Sales excluding precious metals (Sales) £million 1,853 1,676 11 5
Operating profit £million 250.3 236.1 6 -1
Profit before tax £million 233.1 219.6 6 -
Earnings per share pence 99.8 96.4 4


Group Performance in the half year


Financial highlights

  • Reported revenue up 15%, driven by higher pgm prices and a £179 million translational FX benefit
  • Reported operating profit down 2%, with £18 million translational FX benefit offset by one-off charges related to our restructuring programme
  • Reported EPS down 5% to 87.9 pence
  • Underlying sales growth 5% at constant rates2 and full year sales growth guidance is unchanged
  • Underlying operating profit down 1% at constant rates, impacted by the US post-retirement medical plan credit in the prior period. Excluding this, operating profit grew in line with sales growth. Full year outlook confirmed
  • Underlying EPS up 4% to 99.8 pence
  • Interim dividend up 6% to 21.75 pence reflecting confidence in medium term outlook
  • Cash inflow from operating activities of £7.8 million. In September, we guided to an outflow of precious metal working capital due to higher metal prices and lower liquidity.
  • This amounted to £156 million in the half and negative free cash flow was £90.4 million
  • Return on invested capital (ROIC) was maintained at 17.5%
  • Strong balance sheet with net debt to EBITDA of 1.4 times


Operational highlights

  • Strong sales growth was sustained in Clean Air led by double digit growth of Heavy Duty Diesel catalysts in every region. Sales of Light Duty Vehicle catalysts were in line with global production
  • Good sales growth in Efficient Natural Resources, ahead of the average medium term growth rates of our markets, with higher sales of refill catalysts and continued strong performance in PGM Services, although operating profit declined, primarily driven by negative sales mix in Catalyst Technologies
  • Good growth in Health and continued investment in the development of our pipeline of new generic and innovator products to drive future break out growth
  • Significant progress in the development of our high energy battery material, eLNOTM


Robert MacLeod, Chief Executive, commented:

"We had a strong start to the year with sales growth of 5% and guidance for the full year is unchanged. We made further investments in line with the strategy we outlined at our recent capital markets day which continues to strengthen our business.

We will grow our Clean Air business over the next ten years with growth in Europe, through share gains supported by our technology leadership, and by meeting the challenges of tighter legislation across the world, particularly in China and Europe. Our growing pipeline in Health will deliver significant growth over the medium term. We will deliver outperformance through targeted investment in Efficient Natural Resources and build our New Markets business primarily through our presence in battery materials.

We are building a stronger platform from which we will achieve our goal of attractive returns to shareholders over the medium term: mid to high single digit EPS growth, expanding ROIC to 20% and a progressive dividend."


The results in detail

Full results are available to download from our results archive.



1 Underlying is before amortisation of acquired intangibles, major impairment and restructuring charges, profit or loss on disposal of businesses, significant tax rate changes and, where relevant, related tax effects. For reconciliation see note 4 on page 26

2 Growth at constant rates excludes the translation impact of foreign exchange movements, with H1 2016/17 results converted at H1 2017/18 average exchange rates

3 For definitions and reconciliations of other non-GAAP measures see the full results announcement.