Good news is needed for Johnson Matthey PLC (LSE:JMAT), as it delivers interim results on Wednesday, November 24, though it is not clear whether it will be forthcoming.
A week ago the FTSE 100 group delivered a shock profit warning, revealing plans to sell the battery metals business that it has been talking up enthusiastically for several years.
There was a disappointing lack of detail in the group’s announcement, said stockbroker Hargreaves Lansdown, specifically around opportunities and financial costs.
“Johnson Matthey really needs to deliver some good news next week,” Hargreaves analyst Nicholas Hyett said in a note. “Not least because there could be significant impairments associated with the move, which negatively affect profit.
“The numbers themselves are unlikely to provide what the group is looking for, having already said half year results are set to be ‘in-line with market expectations’. And full year is even weaker, at 'the lower end of market expectations' as the pandemic disrupts automotive manufacturing – the group’s key end market.
“Instead, it’s commentary around future investment opportunities that will be closely watched.”
Elsewhere, analysts at UBS noted that JMAT’s current share price “would appear to discount a long-term earnings decline” in the Clean Air catalytic converter business but also a “significant net present value (NPV) for the hydrogen opportunities” - at least £400mln, according to the Swiss bank – along with “a high multiple for the group’s health business that’s under strategic review and was part of the earnings’ warning for FY22.
Last week, Berenberg analysts predicted that the appointment of Liam Condon as JMAT's new boss makes a break-up of the group likely.
“We would speculate that the splitting from battery materials will put the company on course for another set of break-ups to extract value,” Berenberg said.