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Johnson Matthey profit drops 21% on inflation, low PGM prices

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(Kitco News) - Johnson Matthey reported sales of £4.2 billion (US$5.17 billion), representing a 6% increase in its preliminary results for the year ended 31 March 2023, which were released today.

The company's underlying operating profit stood at £465 million (US$572 million), reflecting a 21% decline. The decrease was primarily attributed to lower average PGM prices, as well as cost inflation and reduced volumes in PGM Services and Clean Air segments.

Underlying earnings per share also decreased by 16% to 178.6p due to the lower underlying operating profit.

In terms of cash flow, Johnson Matthey generated £74 million in free cash flow, down from £221 million (US$272 million) in the previous year. This decline was mainly driven by lower underlying operating profit and changes in working capital.

For the year ahead, the company expects at least mid-single digit growth in operating performance at constant precious metal prices and constant currency.

The company forecasts limited vehicle sales but better margins.

"In Clean Air, we expect strong growth in operating performance. Whilst external data suggest limited growth in vehicle production for 2023/24, margin expansion should mainly be driven by efficiency benefits. PGM Services’ performance will be largely driven by precious metal prices, with recycling volumes expected to be subdued. We expect strong growth in operating performance for Catalyst Technologies. This reflects an improvement in licensing income and a significant uplift in margins, benefiting from pricing and efficiencies. We expect sales to grow strongly in Hydrogen Technologies and we will continue to invest for growth resulting in an operating loss at a similar level to 2022/23," wrote the company.

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