Johnson Matthey PLC (LSE:JMAT) is to slash its spending one 'growth' projects after fierce criticism over its performance from activist shareholder Standard Investments.
No further 'growth' spending will go into the Hydrogen Technologies arm. a business highlighted by Standard.
Capex in this business will also be reduced to maintenance levels of no more than £5 million a year. said the chemicals and autocatalyst group,
JM added it expects this business to achieve operating profit break-even by the end of FY2025/26.
Other options are being assessed further to 'de-risk this business', said JM, including setting up an Investment Committee of the board to be chaired by Senior Independent Director, Barbara Jeremiah.
Executive remuneration schemes are also to be reviewed to increase the weighting on cash generation targets.
JM reiterated it expects at least mid-single-digit underlying profit growth this year, despite automotive production remaining well below pre-COVID levels, falls in the platinum price and economic and energy transition headwinds.
“The board fully recognises the need to improve the absolute share price and to deliver increased returns for shareholders,” added the statement.
Cash conversion will also become a greater priority said the statement, and to increase the rate from around 20-30% in 2024/25 to at least 50% in 2025/26 and above 80% in 2026/27 and beyond, the aim.
Achieving this will see at least £2.5bn of Clean Air cash generation (between 2024/25 and 2030/31); PGMS [platinum] delivering cash conversion approaching 100% of underlying operating profit; Hydrogen Technologies becoming cash flow positive in 2026/27 and the capital-light Catalyst Technologies business growing.
Shares rose 1.2% to 1,393p.