Johnson Matthey eyes electric car market as profits set to rise
Chemicals firm Johnson Matthey is expected to post higher profits next week, while the City looks for updates on new opportunities for the firm in the electric car sector.
The company is expected to post pre-tax profits of £500.7 million for the year to the end of March, according to analyst consensus.
It marks a significant turnaround from the same time last year, when profits were down 31% to £320 million due to heft impairment and restructuring charges.
Analysts are also estimating revenues for the year of £14.8 billion.
Underlying profit before tax, the company’s preferred measure, is expected to come in at £518.3 million, compared to £486 million last year.
George Salmon, equity analyst at Hargreaves Lansdown, said the group’s clean air division, which accounts for 70% of operating profits, would be responsible for much of the profit growth.
But he added that investors will also be looking at the new markets division, which has developed a high energy battery material for electric cars.
“The electrification of the automotive sector has the potential to render Johnson Matthey’s core catalysts business redundant,” he said.
“So while investors shouldn’t expect profits from batteries any time soon, updates will nonetheless be pawed over by for signs of potential.”
According to Johnson Matthey, the new cathode material, dubbed eLNO, will enable faster acceleration in electric vehicles compared to standard cars.
Its recharging times will also be quicker.
In March, the group said it had secured a site in Poland for the construction of a new plant where it will produce the product on a commercial scale.
“In a world increasingly concerned with cleaning up its environmental act, its catalytic converter business, the world’s leader, had been well placed and the group still remain geared to demand for cars and trucks,” they said.