Johnson Matthey records $418 million impairment on battery materials business
Johnson Matthey said it had sales of £1.9 billion, up 21%, for the six months ended September 2021.
The company said that its clear air division, which provides internal combustion engine emission controls, performed well.
"Clean Air recovered strongly. Global sales were up 24% as we saw a strong performance across all regions, despite the impact of OEM supply chain disruption caused principally by shortages of semi-conductor chips," wrote the company. "Underlying operating profit increased 103%. Whilst margins increased materially, driven by operational leverage and benefits from our transformation programme, they were held back by the impact of chip shortages."
Earlier this month the company announced it was exiting the battery metals business, stating that the division would not generate adequate returns. The company said its assets have been impaired by £314 million (US$418 million).
In its outlook, Johnson Matthey warns that supply issues could impact its overall business.
"Demand remains strong in many of our end markets. However, supply chain volatility especially the shortage of semi-conductors is affecting production for a number of our auto and truck customers. Global auto production is now forecast to decline 5% for our fiscal year which is a 14% reduction since our trading update in July4. Consequently, precious metal prices have also declined, largely because of the lower demand from the automotive industry. We are also experiencing acute temporary labour shortages in the US that are adversely impacting our Health business.