Johnson Matthey PLC

Johnson Matthey shares rise as underlying full-year sales slightly beat expectations, dividend up 7%

Tthe FTSE 100-listed automotive catalysts manufacturer saw its underlying sales at constant currency rates grow by 7% to £3.846bn, with 8% growth in the second half

Catalyst manufacturing
Johnson Matthey is hiking its final dividend by 7% to 80p, up from 75p a year earlier

Johnson Matthey PLC (LON:JMAT) saw its shares rise on Thursday after the specialty chemicals firm saw its underlying full-year sales come in slightly ahead of expectations and it hiked its dividend by 7% reflecting confidence in the outlook.

In results for the year ended 31 March 2018, the FTSE 100-listed automotive catalysts manufacturer saw its underlying sales at constant currency rates grow by 7% to £3.846bn, slightly ahead of the company’s expectations, with 8% growth posted in the second half.

READ: Johnson Matthey to take £50mln hit as it settles engine lawsuit

The firm reported a 1% rise in underlying pre-tax profit to £486mln, up from £482mln a year earlier, with operating profit up 2% to £525mln.

Robert MacLeod, Johnson Matthey’s chief executive, commented: “We have made significant progress in executing our strategy and delivered a financial performance in line with our expectations at the start of the year.”

He added: “In the coming year we expect mid to high single-digit growth in operating performance.

“The changes we are making as we continue to develop our business give me confidence in our strategy to deliver, over the medium term, mid to high single-digit EPS CAGR, expanding ROIC to 20% and, as a result, a progressive dividend."

The group proposed an increase in the final dividend of 7% to 80p, up from 75p a year earlier, which, the CEO said, “reflects our confidence in the prospects of Johnson Matthey.”

In early morning trading, Johnson Matthey shares were up 2.6% at 3,486p.

“Great deal going on under the bonnet”

Richard Hunter, head of markets at Interactive Investor commented “There is a great deal going on under the bonnet at Johnson Matthey, with its cash generative ability allowing further reinvestment into new technologies.”

He added: “There will, however, continue to be bumps in the road along the way. The Return on Capital figure moved in the wrong direction, down to 16.4%, making the 20% target rather more of a stretch.”

“Nonetheless,” Hunter concluded, “the potential is clear for the company and the initial positive reaction to the results builds on a 10% spike in the share price over the last three months alone.

“During the last year, the shares have added 8.3%, outperforming the wider FTSE100 which has risen 2.1%, and this update is likely to consolidate the general market view of the shares as a buy for the long term.”

Quick facts: Johnson Matthey PLC

Price: £31.60

Market: LSE
Market Cap: £6.12 billion

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