Johnson Matthey PLC JMAT
Q2 2013 Earnings Call Transcript

Transcript Call Date 11/21/2012

Unidentified Company Speaker: Good morning everybody. As usual, would you mind please switching off your mobile devices as this is being live webcast. Thank you very much over to Neil.

Neil Carson - Chief Executive: Good morning everybody and welcome to our results presentation for the half year ended the first year of September 2012. So the format for today you’ll recognize it, a one slide summary from me and then into the financial review by Robert MacLeod. I’ll then deliver the operating review and conclude with the outlook.

As usual, we have the senior management team on hand here to answer your questions at the end. Having delivered a strong performance last year, we've experienced a more difficult environment in some of our markets in the first half of this financial year.

However, we have maintained earnings per share in this difficult market environment. On a couple of our divisions, Environmental Technologies and Fine Chemicals have done well and they've grown their profits.

This, of course, has been offset by a decline in profits from PMPD with lower precious metal prices impacting. On balance, we expect more of the same in the second half.

With that I’ll pass you over to Robert.

Robert MacLeod - Group Finance Director: Thanks, Neil and good morning everybody. I’ll just quickly go through a few slides on the performance and start with the underlying results. You can see that in the half year compared to last year, sales were up 1%, but operating profit down 6%. But that was made up of growth as Neil just said, both growth in Environmental Technologies up 17%, Fine Chemicals up 14%, but then significant reduction in Precious Metal Products division down 33%.

Profit before tax then was down 6% at GBP191.2 million, but earnings per share were flat at GBP72.9 million. How do we do that? Well, the tax rate came down from 24% last year in the first half, 23.5% it was for the full year to 21% in the first half and that’s pretty good guide I think for the full year and that rate is sustainable and should continue as I said before to come down a bit. But also we benefited little bit from the share consolidation that happened following the special dividend in August.

Just to help you for modeling purposes, the numbers of shares we used in the first half was 208 million on a basic basis. For the full year, as a consolidation effect comes through, I’ll reckon then numbers of shares will be about 205 million. Then for next year, when obviously we’ll have a full year benefit of the share consolidation, it’ll run about 202.5 million shares. That’s on a basic basis other than diluted basis clearly than we about 1.5 million or 2 million shares more. The Board also decided to increase the dividend. We increased that by 0.5 pence to 15.5p in the first half.

Turning now looking at cash, reasonable position in cash in the first half, GBP143 million, slightly lower than last year, impacted slightly by the reduction in operating profit but also by an increase in working capital. Although working capital days reduced by 4 compared to the first half of last year, they were somewhat higher than the year end and that’s quite a normal price as we know we have low working capital days at the year-end than we do at a half year-end.

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