'Significant cost inflation' - Johnson Matthey's profit drops
Johnson Matthey said its operating profit was £222 million (US$268 million), down 30%, due to supply chain constraints in its clean air division, lower average PGM prices and a lag in recovering cost inflation.
The company, which makes catalysts for internal combustion engines, released its half year financial results yesterday.
Free cash flow at Johnson Matthey was £133 million, compared to £190 million in the prior year.
Sales of £2.0 billion, up 5%, with higher prices to partially recover cost inflation, partly offset by lower average PGM prices.
The company is maintaining its outlook. At the clean air division, it expects business conditions to get better.
"In Clean Air, supply chain disruption has eased through the first half and, whilst there is still uncertainty, we expect that automotive production volumes will improve further through the second half," wrote the company.
"For the year 2022/23, external data currently suggests auto production will be 4% higher than 2021/22, with volumes in the second half expected to be 4% higher than the first half. There is a lag in negotiating inflation claims with OEMs, which affected our first half profits. We are focused on further recovery of cost inflation, which we expect to benefit the second half, supported by benefits from our transformation programme. With continued volume recovery, we expect Clean Air operating performance in the second half to be above the first half.