PGM producer impacted by lower metal prices and Anglo contract losses.
Johnson Matthey’s precious metal sales were impacted in 2012 according to its preliminary results for the year ended March 31, released today.
The precious metal and specialist chemical company, which processes and recycles platinum group metals, reported overall company revenue down 11% to £10.7 billion.
Its underlying profit before tax and underlying earnings per share reduced by 9% and 2% respectively.
Johnson Matthey reported a "very disappointing year" for its Precious Metal Products Division, particularly its Services businesses, with sales 6% down and underlying operating profit 27% lower.
Lower average precious metal prices, lower volumes and operational issues at its Salt Lake City refinery all contributed to the substantial reduction in profitability.
As previously announced by the company, its loss of current contracts with Anglo American Platinum is anticipated to impact from Q4 2013 to 14.
Johnson Matthey chief executive Neil Carson said of this year’s results: “Johnson Matthey had a challenging year, but nevertheless we remain very well positioned to grow our business over the medium and long term.
"After two very strong years, continued growth in [the] Environmental Technologies Division in 2012/13 was more than offset by a poor performance from our Precious Metal Products Division. Although underlying earnings per share in the year were 2% lower than 2011 to 12, the board is recommending an increase in the full year dividend of 4% reflecting its confidence in the medium term prospects for the group."
Carson described 2013 to 14 as "a year of transition" as, on January 1 2014, Johnson Matthey’s new arrangements with Anglo Platinum will commence.
"Overall, we expect that the group will make steady progress in 2013 to 14 notwithstanding the loss of revenue from Anglo Platinum. In the medium term, growth is expected to accelerate in 2014 to 15 and beyond. We are confident that our long term market drivers will enable Johnson Matthey to deliver continued growth which will be further enhanced by our ongoing investment in R&D and new business development."
The company’s Precious Metal Products Division had a difficult year particularly in its Services businesses.
Sales in its platinum group metals refining and recycling business were 2% down on 2011 to 12 and volumes were lower across all types of refining feed. Volumes began to recover in the second half of the year and have continued to improve into 2013 to 14.
Sales from Johnson Matthey’s mining customers for primary refining services were also down, due to both the lower metal prices and the well publicised supply issues in South Africa.
Its gold and silver refining business reported "a very difficult year" with sales down 13%. The operational issues at its Salt Lake City refinery in the first half of the year which had an adverse impact on results of some £10 million, owing to mitigating circumstances.
Johnson Matthey says action has been taken to address the root causes of these issues at Salt Lake City and to improve the operational efficiency of the refinery. As a result of these additional costs, together with lower volumes and slightly lower average metal prices, the business generated a small operating loss in the year.
A "stagnant gold price" and lower silver prices impacted demand for refining services and bullion products at Johnson Matthey’s US and Canadian refineries although intakes of primary material did increase towards the end of the year.
Looking ahead Johnson Matthey says it remains "very well positioned to grow business over the medium and long term". It anticipates that its Precious Metal Products Division will make progress in 2013 to 14 albeit from a relatively low base.
The company said: "Our refining businesses have started the year well as higher intake volumes in the fourth quarter of 2012 to 13 are processed. Precious metal prices have fallen in recent months and if maintained these lower prices will likely lead to a reduction in our refining volumes. Our manufacturing businesses are expected to continue to make steady progress during 2013 to 14".