First published in InFocus: UK Quoted Clean Motoring, July 2007. ©  Cleantech Investor Ltd.

Johnson Matthey released results for the year ending March 2007 in early June. Revenue was up 34% at £6,152 million, pre tax profit rose 18% to £226.5 million and EPS jumped 37% to 96.9p. Johnson Matthey sold its ceramics division in February this year, for £143.8 million. This deal resulted in a profit of £33.3 million. Excluding that gain, EPS growth was 12% to 81.2p, placing the stock on an historic PER of 21.6x. At 33.6p, the dividend was 12% ahead of the previous year, making for a yield of 1.9%.

Johnson Matthey is benefiting from strong growth in precious metals, boosted by buoyant trading for platinum group metals. However, the prospects for the group are underpinned in large part by the growing demand for environmental catalysts and technologies. Autocatalyst sales in Asia saw good growth in the year ending March, as did sales of catalysed soot filters (CSFs) in Europe. The company is benefiting from the emergence of a new market for heavy duty diesel catalysts (HDDs) in both Europe and North America. Management expect global concerns about pollution and climate change to drive sales of both the autocatalyst and process catalyst product ranges. Johnson Matthey is investing in new capacity at Clitheroe in the UK to manufacture new generation synthesis gas catalysts. Despite projections of a 25% fall in North American truck sales, all new trucks sold will need to meet the emissions legislation, which is opening up opportunities for Johnson Matthey. The group divisional structure has been reorganised, with the creation of a new division: Environmental Technologies. This comprises the former Environmental CatalystTechnologies division and the process technologies activities within the former Process Catalyst Technologies and Fuel Cells divisions. The significance of this division to the group is illustrated in the chart below, which is based on restated figures for the year to March 2007. During the period, the divisional businesses accounted for 30% of group sales including precious metals; 62% of sales excluding precious metals and 44% of group operating profit. Management expect further double digit sales and operating profit growth in the Environmental Technology division.