Weak demand still weighing on Johnson Matthey

21st Jul 2009 07:01

Car catalyst provider Johnson Matthey expects second quarter results to be similar to those in the first quarter as the downturn in the car industry continues to hits demand for autocatalysts. The group said demand for automotive products was well down on the same period last year, though sales in other parts of the business were less affected by the recession. On the positive side, results were helped by favourable exchange translation and a lower interest charge compared with last year. Sales excluding precious metals for the three months to 30 June were 11% below the same period in 2008, when market conditions were much more favourable. Revenue was 21% lower and profit before tax and amortisation of acquired intangibles was also 21% below last year. Sales volumes of autocatalysts in April and May continued at the same level as in the previous three months and were more than 30% below last year. Sales improved in June in both Europe and Asia, but were unchanged in North America. By contrast, demand for process catalysts and technologies continued to be encouraging throughout the quarter with good growth in China. Overall, Environmental Technologies Division's sales excluding precious metals were 15% lower than in the first quarter of last year. The Precious Metal Products Division's performance in the first quarter was also below the same period last year, while demand for autocatalyst scrap recycling was weak which has affected the results of the platinum group metal refining and recycling business. The Fine Chemicals Division was well ahead of last year in the first quarter. "We have maintained our strong focus on cash generation and net debt was further reduced in the quarter," said chairman John Banham."If activity picks up in the next three months we would expect borrowings to rise a little by the end of September as we put in additional working capital to support growth in sales," he added.