Johnson Matthey – Catalysing the net zero transition to drive value creation

LONDON, May 26, 2022 /PRNewswire/ — 

Reinvigorated strategy and new Leadership Team driving high performance culture

  • Completed in-depth review of the business and strategy, assessing full range of options
  • Simplified business portfolio focused on four businesses enabling the automotive, chemical and energy industries transition to net zero
  • New transformation programme to deliver £150 million annualised cost savings by 2024/25, enhance decision-making pace and exploit synergy potential between sectors
  • New global leadership team to drive high-performance culture and pace of strategic execution
  • Focus on sustainable value creation accelerating to high single digit growth over the medium term, and strong long-term growth, supported by a reliable dividend

Underlying performance – continuing operations

  • Robust underlying results for 2021/22, in line with market expectations
  • Sales of £3.8 billion, up 5%, driven by a partial recovery in Clean Air and good performance in Efficient Natural Resources
  • Underlying operating profit of £553 million, up 21%, driven by good performance in Clean Air and Efficient Natural Resources, higher average PGM prices and efficiencies
  • Underlying earnings per share up 26% due to stronger operational results and lower net finance charges
  • Free cash flow of £221 million, moderately down on the prior year
  • Strong balance sheet with net debt of £856 million reflecting continued strong management of working capital; net debt to EBITDA of 1.2 times

Reported results

  • Revenue up 4% primarily driven by higher average precious metal prices
  • Operating profit declined 17% to £255 million, largely reflecting the one-off impairment and exit costs for Battery Materials
  • Profit before tax declined 13% to £195 million, reflecting lower operating profit which was largely impacted by the one-off impairment in Battery Materials
  • Loss after tax on discontinued operations of £217 million including Health underlying operating profit of £3 million and an impairment and restructuring charge of £242 million relating to its sale that is expected to complete at the end of May
  • Reported loss per share of 52.6 pence
  • Cash inflow from operating activities of £605 million (2020/21: £769 million)
  • Ordinary dividend of 77.0 pence per share, up 10%
  • Share buyback of £200 million now complete

Strategy update from the Chief Executive

Throughout my career I have only ever worked for companies that combine science with a strong sense of purpose. And what tremendous science and purpose Johnson Matthey (JM) has. Since becoming Chief Executive in March 2022, I have been struck by how passionate JM’s people are about using their expertise in metals chemistry, catalysis and process design to create a cleaner, healthier world. However, it is also clear that we have not performed well in recent years and have done a poor job of value creation, which is something that my new team and I are committed to changing.

Reinvigorated strategy to drive value creation

In my conversations with employees and customers, I have heard a consistent message: JM is a great company – with great people and technology. But we need a much clearer strategy that outlines how we will create more value for both shareholders and society as we help the world accelerate progress to net zero, and how we will allocate resources in a more disciplined manner and transform our culture to enable successful strategic execution.

In the past couple of months, three things have become much clearer to me. The first is that we already have the core talent and technology required to help accelerate progress towards net zero. In fact, as the world looks to decarbonise, key markets for our products will increase significantly, opening up tremendous new growth opportunities for JM. We just need to define where we want to focus our energy and resources.

My second observation is that our complex business structure and lack of commercial focus is getting in the way of our ability to create significant value. That’s why we need to simplify and drive a stronger emphasis on accountability and faster decision making.

The third observation is that in new growth ventures, JM needs to focus on where we have a right to win and then we need to play to win. That requires developing a strong performance culture that is disciplined in execution of strategy and delivers consistent results. We have to do better and create significantly more value for shareholders and society, and this is something we are completely committed to. We need to focus, simplify and execute at pace with a high degree of discipline.

Focusing our portfolio on core strengths

Our expertise in (platinum group metals) PGMs chemistry and catalysis, combined with our process technology skills, is the beating heart of this company. It is that expertise that has helped remove harmful emissions from vehicles for almost 50 years. And it is expertise that is essential for decarbonising our world: we are enabling low and zero carbon technologies in Catalyst Technologies and Hydrogen Technologies with a focus on sustainable fuels, fuel cells and green hydrogen electrolysers. Our technology has the potential to transform traditionally carbon-intensive sectors, such as chemicals, energy and transportation.

As part of the strategic review I have considered the full range of options and concluded that focusing on our core strengths offers a much clearer path to value creation than simply splitting up the group. JM has tremendous synergies across the group that can drive competitive advantage and create significant additional value. By using our deep understanding of PGM chemistry, catalysis and process design, JM can be a market leader in sustainable technologies across multiple industries. As a company we are shifting gears and moving from playing not to lose, towards playing to win.

We are focusing our business on four areas to create significant value – Clean Air, Catalyst Technologies, Hydrogen Technologies and our enabling business PGM Services. They are areas in which we already have world-class skills and technologies, and they are all areas in which we can, and are committed to play to win.

PGM Services – the backbone of our business

JM is the world’s largest recycler of PGMs – around twice the size of our nearest competitor. PGM Services provides the flexible precious metal sourcing and price risk management that are necessary to run the rest of JM, and is key to the trust our customers place in us. For example, our Clean Air and hydrogen fuel cell customers depend on PGM Services for access to a reliable supply of sustainable, scarce precious metals, and recycling services to support a circular economy. We have a competitive advantage that is both very hard to replicate and essential for helping the world reach net zero. Our PGM Services backbone supports our other three focused business divisions – Clean Air, Catalyst Technologies and Hydrogen Technologies, which in turn enable PGM Services to maintain its scale and leadership.

1. Clean Air – continuing to play a leading role in the autocatalyst market

Clean Air will remain a significant business well into the next decade even as the world transitions towards lower and zero-carbon technologies. That transition will take time, and in the meantime governments around the world intend to roll out more stringent air quality regulations, which offer new opportunities for our innovative technology. Clean Air will create significant value and we are highly confident that we will generate at least £4 billion of cash over the decade to 2030/31, with more thereafter. 

2. Catalyst Technologies – decarbonising chemicals and creating sustainable fuels

We are already an established, leading provider of process technology and catalysts to the chemicals and energy sectors, especially in synthesis gas (syngas). Our Catalyst Technologies business will strengthen our focus on the syngas value chain, growing our existing business alongside newer opportunities in blue hydrogen, sustainable fuels and low-carbon solutions. Fueled by the net zero transition, we expect these markets to grow rapidly in the medium term as future production needs to decarbonise. We intend to move quickly and strengthen our leading positions across Catalyst Technologies to deliver high single digit growth over the medium term.

3. Hydrogen Technologies – decarbonising transport and energy 

Combining our PGM and catalysis expertise with our fuel cell and green hydrogen activities, our Hydrogen Technologies business will help decarbonise the transport and energy sectors and create very significant growth in the medium-longer term. We already have an established hydrogen business, having been active in fuel cells for over 20 years. Importantly, we already have customer contracts and partnerships today with leading hydrogen players including a major German automotive supplier for the supply of next generation catalyst coated membranes into the global automotive market.

We have taken the next step in our strategic partnership with Plug Power, a leading provider of cutting-edge green hydrogen and fuel cell solutions, with JM bringing extensive precious metals and catalysis expertise and potential to develop a closed-loop PGM recycling system. The partnership extends across advanced components for both fuel cells and electrolysis and embodies a commitment to rapidly scale up to meet accelerating market demand, combining the strengths of both businesses to drive the capacity needed to 2030 and beyond. The collaboration is expected to generate significant value and includes exploring options to develop a multi-GW state-of-the-art manufacturing facility in the US.

In addition, we expanded our presence in green hydrogen by investing into Enapter, a pioneer and commercial leader in anion exchange membrane (AEM) electrolysis. Our partnership encompasses joint development of advanced components, supply of specialist catalysts and we are jointly investigating opportunities for recycling.

We aim to become the market leader in high value performance components that are essential to power fuel cells and green hydrogen electrolysers. We are targeting more than £200 million of sales in Hydrogen Technologies by the end of 2024/25.

Simplifying our business

To successfully deliver our strategy, we need to simplify our business. JM needs to become simpler, more agile, and more cost-effective. Across our entire organisation, we must reduce complexity. This means leaner processes, less duplication and clear lines of accountability. Achieving this will help unlock our potential by increasing speed of decision making, eliminating duplication and reducing costs.

Executing at pace and transforming our culture

Our strategy will be underpinned by a rigorous performance culture. We are launching a transformation programme to drive stronger execution, unlock near-term cost opportunity and position us strategically to more strongly drive growth. We will strengthen our capabilities in two ways:

1. Capital project execution – clear governance, accountability and enhanced capabilities will ensure we are highly disciplined in capital allocation and much stronger in execution

2. Commercial skills – strengthening capabilities and cross-group commercial synergies, with a strong focus on value creation and more strategic partnerships

In respect of the near-term cost opportunity, we will deliver £150 million in annualised cost efficiencies by 2024/25 which reflects simplification of our group functions, procurement and operations including areas such as real estate.

Strengthening our leadership team for a successful future

As part of transforming our culture, we have also strengthened our Group Leadership Team (GLT). We recently appointed Anne Chassagnette as Chief Sustainability Officer, and we are also appointing four new business leads for our four businesses, two of whom are external appointments. Anish Taneja, formerly a €3 billion P&L leader with Michelin will take over as CEO of Clean Air. Anish will also chair the JM cross-group Commercial Council. Alastair Judge, currently interim CEO of Clean Air, will become CEO of our enabling PGM Services business. Jane Toogood, currently CEO of Efficient Natural Resources, will become CEO of Catalyst Technologies. Mark Wilson, formerly of bp amongst others and a highly experienced leader in the energy industry will become the new CEO of Hydrogen Technologies. Christian Günther, an acknowledged leader in transformation, will lead our strategy and transformation work. In addition, the scope of role for our Head of Operations, Ron Gerrard, will be expanded to include all strategic capex, in order to ensure clear accountability for capital projects planning, design and execution. With this mix of new colleagues, and the strong team I inherited, we now have a world-class leadership team capable of driving execution of our strategy at pace and creating significant value.

Disciplined capital allocation to drive success

For the next three years to 2024/25, we expect cumulative capital expenditure to be around £1 billion. This will be focused on our core activities where we have a right to win and need to invest to drive growth: our PGM refineries, Catalyst Technologies and Hydrogen Technologies. We may also consider acquisitions, but we will be highly selective in our approach, with a focus on bolt-on deals to acquire technology or accelerate growth in our core growth businesses. For our shareholders, we will at least maintain and aim to grow the dividend, targeting a c.40% pay-out ratio over the medium term. Our aim is to maintain a strong balance sheet with our target level of net debt to EBITDA of 1.5-2.0 times.

Embedding sustainability into everything we do

JM already has a strong sustainability framework in place, with targets that focus on current and future technologies that we know will be fundamental to addressing the climate challenge. We track progress by measuring the percentage of our sales that come from products that contribute to our four priority UN Sustainable Development Goals (UN SDGs). Further details on our targets can be found in our annual report and accounts.

Strategic milestones to the end of 2023/24

Our strategic milestones will ensure we track and report progress against our plan:


  • Win at least 2 large scale strategic partnerships in Hydrogen Technologies
  • Win targeted Euro 7 business and deliver on £4 billion+ cash trajectory for Clean Air
  • Win >10 additional large scale projects by 2023/24 (across Hydrogen Technologies and Catalyst Technologies)


  • Expand PGM Services refining capacity in China
  • Complete construction of Hydrogen Technologies CCM plant in UK to expand our total capacity from 2GW to 5GW
  • Targeted capacity expansion (fuel cells catalyst, formaldehyde catalyst)
  • Complete divestment of Value Businesses

People: Increase employee engagement score by 1ppt in 2022/23 and 3ppt by 2023/24


  • Achieve c.10% reduction in scope 1+2 CO2e (carbon dioxide equivalent) emissions
  • Help customers reduce CO2e emissions by >1mt p.a. through use of our products

Patrick Thomas, Chair, commented:

This has been a very challenging year for Johnson Matthey and our shareholders. We took important and necessary strategic decisions with the business portfolio, with the exit from Battery Materials and divestment of Health. I know many of our stakeholders were very disappointed, but these were essential actions to enable us to focus on attractive, high growth opportunities that have a vital role to play in the acceleration towards net zero. I, the rest of the board and the executive team are determined that we will restore value to our shareholders.

Looking ahead, Johnson Matthey has a strong foundation from which to build and we have delivered a robust set of underlying results in the year. I am delighted to welcome our new Chief Executive, Liam Condon. Liam is a high calibre, proven business leader with considerable experience who brings a strong commercial focus as we leverage our world-class science and scale our growth opportunities. The board and I are pleased that Liam has settled in quickly and is already executing at pace and driving a more performance-oriented culture. We fully endorse the strategy Liam has proposed and look forward to supporting him in executing this to restore and drive value creation for shareholders.

Liam Condon, Chief Executive, commented:

I am delighted to have joined Johnson Matthey and am very excited about the potential of the group. Since joining in March I have completed an in-depth review of the business and strategy, assessing the full range of strategic options. I am very confident and determined that our reinvigorated strategy and planned cultural transformation will deliver value for all our stakeholders.

As the world decarbonises, Johnson Matthey has a pivotal role to play as a global leader in sustainable technologies. The net zero transition is both disrupting existing markets and, at the same time, creating new and bigger markets which depend on Johnson Matthey’s technology. By helping our automotive, chemical and energy industry customers to decarbonise, we will unlock tremendous growth potential for Johnson Matthey.

I am deeply impressed by the depth of talent and expertise within Johnson Matthey, but significant change is required to create a simpler, more focused group capable of better execution. We have already started executing at pace and I have taken steps to strengthen my executive team. We will continue to simplify our portfolio, focusing on our core activities and exploiting our leading-edge technologies, supported by our PGMs backbone. I am very confident we will create significant value with a faster paced, more customer-focused culture to become a high-performance leader in our important existing and exciting growth markets.                                                          

SOURCE Johnson Matthey

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