23rd Jul 2020 09:58
(Alliance News) - Johnson Matthey PLC on Thursday said it expects operating performance to be heavily weighted to the second half of financial 2021, with first-half operating performance materially below last year, largely due to weaker activity in its Clean Air division.
The London-based speciality chemicals company, however, added that it is seeing a recovery in consumer demand and automotive production across its Clean Air arm. The unit is the company's biggest division and makes pollution filters for motor vehicles.
In his annual general meeting statement, Chief Executive Officer Robert MacLeod said: "Visibility on demand remains limited and we cannot provide financial guidance for the current year."
The FTSE 100-listed company said sales in the first quarter were down materially due to Covid-19 pandemic.
Clean Air division, which provides emissions control, saw a 50% drop in sales as a result of lower consumer demand and temporary customer shutdowns.
The unit, however, saw improvement with April, May and June sales across Clean Air down 75%, 60% and 20% respectively.
Johnson Matthey expects July sales of Clean Air to be down 20%, with improvement through the remainder of the second quarter.
The London-based company said it remains on track to deliver initial benefits of at least GBP30 million in the year ending March 31, 2021 from its recently announced efficiency initiatives, weighted to the second half.
Looking forward, the firm anticipates July sales to be down 20%, with improvement through the remainder of the second quarter. Johnson Matthey said it continues to make progress in commercialising its eLNO material for fuel cells and anticipates soon having five customers in full cell testing.
MacLeod said: "Over three years, these initiatives are expected to result in a headcount reduction of 2,500. We have begun some consultation processes and anticipate completing around 50% of the targeted reduction within the next 12 months.
"We expect to deliver total annualised cost savings of GBP225 million by the end of 2022/23 and continue to evaluate ways in which we can delayer, simplify and focus the group further."
In the first half of financial 2021, the company expects net debt to be higher than at March 31 due to normal seasonality and increasing activity in Clean Air.
Johnson Matthey shares were down 0.9% at 2,242.00 pence each in London on Thursday morning.
By Tapan Panchal; [email protected]
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