Johnson Matthey (JMAT)

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===Increased commodity prices negatively impacts JMAT's profitability in its Precious Metal division === ===Increased commodity prices negatively impacts JMAT's profitability in its Precious Metal division ===
-The price of energy and commodity raw materials (such as platinum group metals, steel, aluminum, copper, zinc, etc.) has risen in the past few years. For example, due to increased demand and less production, the cost of European hot-rolled steel coil rose 25% in the first quarter of 2010.<ref>http://www.bloomberg.com/news/2011-05-11/arcelormittal-posts-1q-ebitda-of-2-6-billion-beating-estimates.html</ref> In addition, due to turmoil in the Middle East in 2011 and reduced oil production, energy prices have increased drastically, rising 28% from 2010 and continuing to increase. Manmade and natural disasters can also disrupt supply of commodities and increase prices. Because JMAT is reliant on commodity supplies for its precious metal products, a disruption in the supply and price of commodities can decrease its profitability as JMAT isn't able to immediately pass on higher costs to its consumers.SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDA5NTAxMjMtMTEtMDE0NTc2L3htbA%3d%3d#D78823104</ref>+The price of energy and commodity raw materials (such as platinum group metals, steel, aluminum, copper, zinc, etc.) has risen in the past few years. For example, due to increased demand and less production, the cost of European hot-rolled steel coil rose 25% in the first quarter of 2010.<ref>http://www.bloomberg.com/news/2011-05-11/arcelormittal-posts-1q-ebitda-of-2-6-billion-beating-estimates.html</ref> In addition, due to turmoil in the Middle East in 2011 and reduced oil production, energy prices have increased drastically, rising 28% from 2010 and continuing to increase.<ref>http://www.bloomberg.com/news/2011-04-18/fed-s-fisher-lockhart-say-rising-oil-prices-threaten-growth.html</ref> Manmade and natural disasters can also disrupt supply of commodities and increase prices. Because JMAT is reliant on commodity supplies for its precious metal products, a disruption in the supply and price of commodities can decrease its profitability as JMAT isn't able to immediately pass on higher costs to its consumers.SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDA5NTAxMjMtMTEtMDE0NTc2L3htbA%3d%3d#D78823104</ref>
==Competition== ==Competition==

Revision as of 18:53, July 31, 2011

Johnson Matthey Plc (LON:JMAT) is a global specialty chemicals company that supplies products environmental related initiatives, platinum group and precious metals, and pharmaceutical ingredients. It has three operating divisions: Environmental Technologies, Precious Metal Products and Fine Chemicals. It has operations in over 30 countries. On November 1, 2010, it acquired Intercat, Inc. and its subsidiaries. On July 2, 2010, the Company acquired X-Zyme Biotechnology GmbH.[1]

Business Growth

  • Revenue: In FY2011, revenue increased 27% from £7.84 billion in 2010 to £9.99 billion.
  • Net income: In FY2011, net income increased 14% from £228 million in 2010 to £261 million.[2]

Trend and Forces

Rise of emissions trading regulation and climate policy positively impacts JMAT's Emission Control Technologies division

With attention on the possibility of global warming, lawmakers are considering placing regulations on the amount of emissions to be produced from an organization or state. For example, in emissions trading (or a cap-and-trade scheme), companies or countries would face a carbon limit and would have greater incentives to reduce their emissions instead of buying excess emission credits. Established schemes include the Kyoto Protocol, European Union Emissions Trading Scheme, and Northeast US states' Regional Greenhouse Gas Initiative. However, as consumers demand more green products, more regulations are being considered.[3] This would benefit JMAT's revenues as it is a large manufacturer of catalyst systems for the reduction of emissions from natural processes and for vehicle exhaust emission control. In 2011, JMAT's environmental technologies division made up 67% of its sales and increased demand for this division's products could have a significant impact on JMAT's sales.[1]

Increased commodity prices negatively impacts JMAT's profitability in its Precious Metal division

The price of energy and commodity raw materials (such as platinum group metals, steel, aluminum, copper, zinc, etc.) has risen in the past few years. For example, due to increased demand and less production, the cost of European hot-rolled steel coil rose 25% in the first quarter of 2010.[4] In addition, due to turmoil in the Middle East in 2011 and reduced oil production, energy prices have increased drastically, rising 28% from 2010 and continuing to increase.[5] Manmade and natural disasters can also disrupt supply of commodities and increase prices. Because JMAT is reliant on commodity supplies for its precious metal products, a disruption in the supply and price of commodities can decrease its profitability as JMAT isn't able to immediately pass on higher costs to its consumers.SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDA5NTAxMjMtMTEtMDE0NTc2L3htbA%3d%3d#D78823104</ref>

Competition

References

  1. 1.0 1.1 Johnson Matthey 2011 Annual Report
  2. Johnson Matthey 2011 Financial Statements
  3. http://www.reuters.com/article/2011/07/11/us-carbon-schemes-idUSTRE76A2GJ20110711
  4. http://www.bloomberg.com/news/2011-05-11/arcelormittal-posts-1q-ebitda-of-2-6-billion-beating-estimates.html
  5. http://www.bloomberg.com/news/2011-04-18/fed-s-fisher-lockhart-say-rising-oil-prices-threaten-growth.html
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