Johnson Matthey launches £200m share buyback after battery exit

UK chemical compounds group Johnson Matthey has launched a £200m share buyback in a bid to win again the assist of traders, as chief govt Robert MacLeod defended the “painful” decision to ditch the electric battery business the corporate had pinned its future on.

The FTSE 100 firm revealed on Wednesday {that a} £314m writedown stemming from its cathode supplies division, which provided components utilized in electrical batteries, had worn out first-half earnings.

MacLeod, who has run Johnson Matthey since 2014 and is leaving the group, mentioned the corporate had discovered that its battery materials business proved too capital intensive given the anticipated stage of returns.

“What grew to become clear over the previous yr or so was our capital depth was too excessive in a market that’s commoditising quickly,” mentioned Macleod, who introduced his departure final month alongside the choice to exit the enterprise. “I recognise it was painful for shareholders.”

Excluding the impairment cost, earnings on the group, which makes catalytic converters that scale back air pollution from automotive exhausts, doubled to £293m within the six months to September.

Johnson Matthey’s exit from battery supplies leaves Germany’s BASF and Belgium’s Umicore as the only real large-scale European producers of cathode supplies, the most costly a part of an electrical battery.

MacLeod mentioned that “there’s nonetheless an opportunity for the trade to develop in Europe, however it must be individuals used to coping with large-scale chemical compounds manufacturing”.

Johnson Matthey is switching its focus to supplying elements to hydrogen gasoline cells and electrolysers. The group is banking on producing £4bn in money movement within the subsequent 10 years from supplying catalytic converters to fossil fuel-powered vehicles — a enterprise in structural decline — to assist fund its enlargement into hydrogen.

Analysts say that the incoming chief govt Liam Condon might want to determine whether or not to maintain the group intact or spin-off the hydrogen division

Johnson Matthey additionally agreed to promote its superior glass applied sciences enterprise for £178m to Italy’s Fenzi, the proceeds of which is able to assist fund the share buyback.

In the meantime, the outlook for its well being enterprise, which it’s in discussions to promote, was dimmed by acute labour shortages within the US. Rob Hales, an analyst at Morningstar, mentioned that these points would in all probability lead to a decrease sale worth.

Johnson Matthey launches £200m share buyback after battery exit Source link Johnson Matthey launches £200m share buyback after battery exit

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