Johnson Matthey (JMAT)

QUOTE AND NEWS
Financial Times  Aug 17  Comment 
Risks of phase-out in Europe ‘blown out of proportion’, say analysts
Financial Times  Jul 10  Comment 
Umicore, Johnson Matthey and BASF race to power battery driven vehicles of future
Motley Fool  Jul 10  Comment 
It was another busy month for the synthetic biology company.
Automotive World  Jun 15  Comment 
An ambitious multi-year programme to breathe fresh life into, and cleaner air from, Transport for London’s fleet of thousands of buses is built on technology from Johnson Matthey, a global leader in science that makes the world cleaner and...
Financial Times  Jun 1  Comment 
Revenues jump 12 per cent to £12bn and pre-tax profits rise 19 per cent to £461m
newratings.com  Feb 2  Comment 
LONDON (dpa-AFX) - Johnson Matthey plc (JMAT.L) reported that its trading for the group in the third quarter was in line with its expectations. Sales were 876 million pounds, 2% up on last year supported by good demand across many of its markets....




 
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Johnson Matthey Plc (LON:JMAT) is a global specialty chemicals company that supplies products in environmental related initiatives, platinum group and precious metals, and pharmaceutical ingredients. It has three operating divisions: Environmental Technologies, Precious Metal Products and Fine Chemicals and operations in over 30 countries. In 2010, it acquired Intercat, Inc. and X-Zyme Biotechnology GmbH.[1] Its revenue is impacted by rising commodity costs, which lower profit margins for its precious metals division, and increased emissions trading regulation, which creates business for its environmental technologies division.

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 industrial 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]

Increases in 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 prices and continuing to increase.[5] Manmade and natural disasters can also disrupt the 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.[1]

Competition

Johnson Matthey has a diversified portfolio of services so no one business competes directly with all of its services. However, its "green" initiative approach to its products, unlike that of BASF and DuPont, allows it a niche position in the market, especially as there is increased pressure to move towards more environmentally friendly products.

References

  1. 1.0 1.1 1.2 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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