Johnson Matthey Earnings: 2023 EBIT Declines Mainly Driven by Lower Platinum Group Metal Prices

Narrow-moat Johnson Matthey reported second-half EBIT of GBP 243 million, around 4% ahead of Vara consensus. However, EBIT for fiscal 2023 at GBP 465 million was down 21% and below the EUR 487 midpoint guidance. The decline was due to lower average platinum group metal prices with the remainder largely due to cost inflation and lower volumes in PGM services and clean air. This was partly offset by transformation benefits of GBP 45 million. Management remains confident over its 2025 targets. We don’t expect to make a material change to our GBX 2,200 fair value estimate. At current levels, shares look fairly valued.