Johnson Matthey is using the end of a long-standing precious metals supply agreement with Anglo American Platinum as a means to kick its 150-year-old platinum habit.
The British maker of cancer-drug ingredients and catalysts for methanol plants would outline the potential for new markets at an investors’ meeting tomorrow, finance director Robert MacLeod said yesterday.
Opportunities for Johnson Matthey, with a market value of £6.7 billion (R123bn), existed in shale gas, as well as treating industrial wastewater, he said.
Having enjoyed a discount rate for platinum group metals (PGMs) from the Anglo American unit for 21 years, in return for marketing duties, Johnson Matthey is buying supplies on the spot market this year.
The end of the accord will result in £35 million in lost annual sales, and Johnson Matthey used a strategic review three months ago to focus more on markets less tied to its platinum past.
“The word I would use is liberating,” MacLeod said. “We’re taking a broader perspective. Rather than focus on PGMs we have to focus on Johnson Matthey.”
Shares of the company advanced 1.8 percent to £33.02 as of 8.55am in London.
Evgenia Molotova, an analyst at Berenberg, increased her earnings estimate for this year by 4.9 percent, and by 2.5 percent for next year, ahead of its capital markets day tomorrow.
The company would benefit from a recovery in the European vehicle market, and investors underestimated the potential for catalyst demand in petrochemical markets, Molotova said. Additional prospects lay in food packaging and purification.
The company started out as a gold assayer in 1817. Its tie to platinum came in the 1860s, and Johnson Matthey went on to create the first catalyst to control car pollution in 1974.
The company competes with BASF, Albemarle and Umicore, and has about a third of the catalytic converter market.
Chief executive Neil Carson is looking at four or five new business areas, including battery materials and fuel cells.
Target markets were characterised by complex chemistry that provided high barriers of entry, with the potential to generate at least £200m in sales, MacLeod said. – Bloomberg