Johnson Matthey's H1 beat should underpin forecasts, says Liberum

20th Nov 2014 12:38

First-half results from Johnson Matthey came in well ahead of consensus estimates and should reassure investors who were worrying about full-year forecasts, according to broker Liberum.Revenue totalled £4.8bn in the six months to 30 September, down 25% on a reported basis, mainly owing to a 32% drop in revenue at the precious metals division.However, group underlying pre-tax profit (PTP) totalled £216.4m, up 2% on last year and 4% (£10m) ahead of what the market was expecting.Liberum estimated that second-quarter underlying PTP alone was £121m, 23% ahead of a "disappointing first-quarter result"."The principal reason for the profit beat is better-than-expected results from the emission control technologies (autocat) division where constant-currency sales growth was 15% and constant-currency underlying operating profit growth was 37%," the broker said."Overall these results will underpin current consensus for this year and next which was looking questionable given an anticipated slowdown in European car and truck markets which account for 50% of light duty vehicle catalyst profits and 30% of truck profits."Nevertheless, Liberum retained a 'hold' stance on the stock, pointing out that the stock trades at 18 times estimated current-year earnings.