Johnson Matthey expects to report full year results in line with market expectations

Johnson Matthey releases a pre-close trading update for the financial year ended
31^st March 2022, ahead of its full year results scheduled for 26^th May 2022.

Liam Condon, Chief Executive, commented:

I am excited to have joined Johnson Matthey, and in my first month as Chief Executive I have been deeply impressed with the people and the quality of our technology. Looking at our full year results, it is pleasing that despite significant market uncertainty these are expected to be in line with current market expectations, with good performances in our core businesses giving a solid base from which to build further.

Together with my team, we are reviewing our strategy and focused on providing a clear pathway to demonstrate how the group will create value from the many exciting opportunities we face as the world transitions to net zero. I look forward to moving at pace and sharing our conclusions with you at our preliminary results on 26^th May.

Robust performance in 2021/22 in a challenging environment¹

In 2021/22, group underlying operating performance is expected to be in line with current market expectations².

Growth was driven by improved performance in Clean Air, where we saw increased activity in autos as end markets partially recovered and support from the continued delivery of our transformation programme. Efficient Natural Resources benefited from higher average precious metal prices. In Hydrogen Technologies, performance reflected our investment and scale up of this business. Health was below expectations and, as previously announced, we have agreed the disposal of this business which is expected to complete in mid-2022.

Clean Air experienced a partial recovery in demand

Clean Air full year operating performance is expected to be above the prior year reflecting a recovery in demand in the first half. However, volumes remain constrained by supply chain disruption across the industry, principally due to the continued shortage of semi-conductor chips which is impacting production across the global automotive market.

Other Markets

Hydrogen Technologies is expected to report an operating loss, due to increased investment to support growth and manufacturing constraints as we scale up the business and utilised capacity to qualify new customer products. Work is ongoing to expand our manufacturing capacity in the UK and China with the first phase expected to commence production in early 2023.

For our Battery Materials business, as expected we will report an operating loss in the year. As previously announced, we have fully impaired the carrying value of our battery materials assets and communicated associated exit costs, which together will result in an exceptional item outside of underlying operating profit of up to £465 million in our full year results.⁴

In Value Businesses overall performance was strong. Medical Devices and Diagnostic Services were stronger as we benefited from actions taken to drive improved business performance and as demand improved following COVID-19. The sale of Advanced Glass Technologies was completed on 31^st January 2022 for a consideration of £178 million, resulting in a profit on sale in excess of £100 million.

Health weaker due to labour shortages and supply chain disruption

On 17^th December 2021, we announced the sale of our Health business to Altaris Capital Partners. We expect the transaction to close in mid-2022. For our results ending
31^st March 2022, Health will be accounted for as a discontinued operation.

In the year, performance in Health was disappointing and we expect a small operating loss for the period.

Looking forward to the year ending 31^st March 2023, we are entering a period of greater political and economic uncertainty with both the ongoing disruptive effects of COVID-19 and the impacts of the conflict in Ukraine.

We expect continued supply chain disruption for our automotive customers, increased cost inflation which we will seek to recover through pricing and efficiencies, and continued near-term market volatility. We are navigating this challenging period with a strong focus on enhancing our overall efficiency and disciplined execution of our strategic priorities. Longer term we expect the current geopolitical situation to drive a significant acceleration towards a net zero carbon economy, with corresponding investment to position us for the significant growth opportunities from our sustainable technology portfolio.