Johnson Matthey ((JMPLY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Johnson Matthey revealed a generally positive sentiment, highlighting a strong financial performance with notable improvements in operating profit and cash flow. The company is making strategic moves, such as the sale of Catalyst Technologies, which are progressing well. Despite some challenges, including delays in the new refinery and weaker performance in Catalyst Technologies, these issues are being managed effectively.
Strong Operating Performance
Johnson Matthey reported a 38% increase in underlying operating performance, driven by an 11% increase in Clean Air and a 33% increase in Platinum Group Metals. This strong performance underscores the company’s ability to capitalize on market opportunities and improve operational efficiencies.
Cash Flow Turnaround
The company achieved a significant turnaround in cash flow, transitioning from a substantial cash outflow last year to a small inflow this period. This improvement is expected to continue, reflecting Johnson Matthey’s effective financial management strategies.
Sale of Catalyst Technologies On Track
The sale of Catalyst Technologies to Honeywell is on schedule to close in the first half of 2026. Upon completion, GBP 1.4 billion will be returned to shareholders, marking a significant milestone in the company’s strategic realignment.
Strong Performance in Platinum Group Metals
Platinum Group Metals Services reported a 33% increase in underlying operating profit, supported by higher metal prices and improved efficiencies. This segment continues to be a strong contributor to Johnson Matthey’s overall financial health.
Clean Air Margin Improvement
The Clean Air segment achieved a 200 basis point increase in margin, keeping the company on track to reach a 14% to 15% margin by the end of the fiscal year. This improvement reflects the company’s focus on enhancing profitability in key business areas.
Positive Customer and Employee Feedback
The company reported a 15-point increase in the Net Promoter Score and improved employee engagement, indicating positive sentiment among customers and employees. This feedback is crucial for sustaining long-term growth and operational success.
Delays in New Refinery Project
A small delay of a few months has occurred in the new PGM refinery project. However, this is not expected to impact the company’s guidance or customer delivery, demonstrating effective project management.
Weaker Performance in Catalyst Technologies
The Catalyst Technologies segment experienced a significantly weaker performance compared to the prior year, attributed to challenging market conditions. The company is addressing these challenges to stabilize this segment.
Increased Net Debt
Net debt increased due to cash outflows from Catalyst Technologies, dividend payments, and significant stock build in the U.S. refinery. This increase is being managed as part of the company’s broader financial strategy.
Forward-Looking Guidance
Johnson Matthey provided comprehensive guidance for the upcoming periods, highlighting a robust 38% increase in underlying operating performance. The company anticipates continued improvements in cash flow and aims to achieve a 16% to 18% margin in Clean Air by 2027-2028. The sale of Catalyst Technologies is expected to close in the first half of 2026, with GBP 1.4 billion to be returned to shareholders. The new PGM refinery is on track for commissioning by March 2026, and the company aims for a run-rate breakeven for Hydrogen Technologies by the same period.
In summary, Johnson Matthey’s earnings call reflected a strong financial performance with strategic initiatives progressing well. While there are challenges, such as delays in the new refinery and weaker performance in Catalyst Technologies, these are being effectively managed. The company’s forward-looking guidance is optimistic, with expectations of continued improvements in operating performance and cash flow, positioning Johnson Matthey for future success.