Johnson Matthey to reveal catalytic impact as pandemic stalls new car sales

Babcock International and Talktalk Telecom are also among the notable names in the corporate diary for Thursday

Johnson Matthey PLC - Johnson Matthey to reveal extent impact as pandemic stalled new car sales

Johnson Matthey PLC (LON:JMAT), which makes key components for catalytic converters, will publish its results for the year to end-March, 2020, on Thursday, after previously flagging that profits will take a £50mln hit due to the coronavirus pandemic.

The chemicals group is experiencing reduced demand for its Clean Air division and a further £20mln impact from delayed shipments. Analysts expect underlying pre-tax profit of £466mln, down from £523mln a year ago.

While the FTSE 100 group has three other divisions - Efficient Natural Resources, Health and New Markets - the automotive catalytic converters segment accounted for about two-thirds of group operating profits last year, so the recent pandemic impact is expected to be severe.

As indicated with the drop in UK new car registrations over the past two months, car sales have collapsed around the world, and the group's Clean Air division has had to shutter most of its factories.

In a preview, analysts at Hargreaves Lansdown said their main concern is what the current disruption does to longer-term demand.

“Car sales are cyclical, meaning they rise and fall with the wider economy. It increasingly feels like a nasty recession is on the way, regardless of the speed lockdowns come to an end. Given the likelihood that electric cars, which don’t need catalysts, ultimately replace traditional fuels anything that pushes demand out into future years is very unwelcome,” they pointed out.

Babcock looks to recover after Italy fine

Defence contractor Babcock International Group PLC (LON:BAB) is also due to report its final results on Thursday, around three weeks after it lost an appeal against a €51mln fine from Italian regulators for breaching anti-trust laws in relation to a tariff list produced by a trade association.

The company also suffered difficulties earlier this year amid contract delays, higher competition and a slower oil and gas market, warning in February that it's full-year underlying profits will be £540mln, at the lower end of guidance.

As a result, investors will likely be on the lookout for any silver linings in the company’s outlook, as well as how it may boost its marine business to continue to offset the decline in its aviation segment.

TalkTalk to talk on crisis

Thursday will bring finals too from Talktalk Telecom Group PLC’s (LON:TALK), where investors may hear about how the coronavirus crisis has hit the firm.

There have not been any updates on current trading from TalkTalk as of yet, and the telecoms group may also be shaken by the Virgin Media/O2 merger announced early last month which could reshape the UK industry.

With a third-quarter update, released in January, the FTSE 250-listed firm maintained its full-year guidance as costs saving had offset a fall in sales.

Headline revenue for the three months to December 31, 2019, had dipped by 1% to £383mln, while new fibre subscriptions had inched up 1% to 148,000, although they were down 15% on the second quarter.

Significant events expected on Thursday:

Finals: Babcock International Group PLC (LON:BAB), Johnson Matthey PLC (LON:JMAT), Talktalk Telecom Group PLC (LON:TALK), Halma Plc (LON:HLMA), CMC Markets PLC (LON:CMCX), JLEN Environmental Assets Group Ltd (LON:JLEN), Syncona Limited (LON:SYNC)

Trading updates: Fuller, Smith & Turner PLC (LON:FSTA)

FTSE 100 ex-dividends to knock 5.43 points off the index: Vodafone Group PLC (LON:VOD), 3i Group plc (LON:III), Severn Trent PLC (LON:SVT)

Economic data: US weekly jobless claims, US PPI

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