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Johnson Matthey anticipates lower profits from clean air division

By Duncan Ferris

Date: Wednesday 17 Jul 2019

LONDON (ShareCast) - (Sharecast News) - Johnson Matthey on Wednesday reiterated its full year guidance of mid to high single digit growth but warned that profits from its clean air division are set to fall due to higher than expected costs.

The specialty chemicals company said that its largest division's higher costs were related to the "strong growth" in its European light duty vehicles business as well as the impact of a delay to the timing of the implementation of new Chinese emissions legislation for petrol and diesel vehicles.

The European light duty business had outperformed in the first quarter as it achieved double-digit sales growth despite a 6% reduction in vehicle production, helping the overall clean air division to achieve robust sales growth.

Johnson Matthey added that it continues to anticipate sales growth with operating profit growth ahead of sales from its efficient natural resources division, where first quarter sales had edged lower due to strong comparatives and a planned maintenance shutdown at one of the company's plants.

Meanwhile, first quarter health sales were lower than expected, with a weaker performance from the FTSE 100-listed company's generics business only partly offset by increased sales from its Innovators business, though broadly stable sales and double digit operating profit growth are still expected from the division in 2019/20.

Sales in new markets were broadly flat, with full year sales and operating profit growth still expected as the division reported that progress in the testing and commercialisation of eLNO, its portfolio of ultra-high energy battery cathode materials, is continuing according to plan.

Finally, Johnson Matthey announced that John Walker, executive director and sector chief executive of clean air, will retire from the company and step down from the board on 31 March 2020 after serving for more than 35 years.

He will be replaced by Univar Solutions non-executive director Joan Braca, who will join the company from Tate & Lyle, where she is currently president of food & beverage solutions, on 1 October 2019 and initially work with Walker as part of a planned and orderly transition.

Johnson Matthey's shares were down 3.10% at 3,282.00p at 0811 BST.

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