Catalytic converter maker Johnson Matthey begins second half of £200m share buyback programme
- The firm began buying its first £100m tranche of its shares just before Christmas
- It declared the share buyback programme when publishing its first-half results
- Johnson Matthey is well-known for producing catalytic converters for cars
Chemicals maker Johnson Matthey is commencing the second part of its £200million share buyback scheme from today.
The company began repurchasing the first £100million tranche of its shares just before Christmas before finishing it at the end of January and said it should complete the subsequent £100million share repurchase by 20 May.
It originally disclosed its intention to undertake the buyback programme at the publication of its first-half results in November alongside a 10 per cent hike in its interim dividend.
Share repurchase: Johnson Matthey originally disclosed its intention to undertake the £200million buyback programme at the publication of its first-half results in November
Johnson Matthey also reported its revenue climbing 23 per cent to £8.6billion, thanks mainly to higher average precious metal prices, resulting in a 94 per cent jump in underlying operating profit.
In addition, it revealed it had agreed to sell its Advanced Glass Technologies, a supplier of specialist glass enamels to the automotive sector, for £178million to Italian group Fenzi Holdings.
The FTSE 250 firm has been divesting a significant part of its portfolio as part of plans to simplify its business and focus on developing more environmentally-friendly technologies, such as green hydrogen and fuel cells.
In mid-December, it agreed to sell a 70 per cent stake in its health business, which manufactures specialist medical ingredients for pharmaceutical and biotechnology companies, to Altaris Capital Partners for £325million.
Most of the company’s income comes from selling catalytic converter devices – about one-third of all vehicles worldwide are estimated to have one of Johnson Matthey’s converters attached.
Yet the growing move to battery-powered cars and incoming bans on petrol and diesel vehicles has encouraged it to pursue more eco-friendly alternatives.
Transition: Johnson Matthey has been divesting a significant part of its portfolio as part of plans to simplify its business and focus on developing more eco-friendly technologies
However, a fortnight before publishing its results, it said that it was exiting the battery materials market due to high costs and the strength of its Chinese and South Korean competitors, causing it £314million in impairment charges.
‘Electric vehicle battery technology was meant to represent the future of Johnson Matthey,’ Russ Mould, an investment analyst at AJ Bell, remarked at the time.
‘It underpinned the company’s growth plans and showed that the business, whose fortunes have historically been pinned to the combustion engine, was moving with the times.
‘The decision to pull out of this market is a shock, and it looks to have cost Robert Macleod his job as chief executive.
‘It takes a lot of guts to say something is not worth pursuing because the economics don’t stack up, but it’s the right thing to do if the business is to avoid spending more money that might not generate a positive return.’
It initially sought to sell its entire battery materials business, but after failing to secure a buyer, it announced last month that it would consult employees about the closure and try to sell the division in individual chunks.
Shares in Johnson Matthey were down 3 per cent to £17.24 during the mid-morning on Monday, meaning their value has fallen by 44 per cent over the last 12 months.