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Investing.com -- Johnson Matthey on Thursday reported a 38% rise in pro-forma underlying operating profit for the first half of 2025-26, ahead of analyst expectations, as the company continued its restructuring and advanced plans to divest its Catalyst Technologies division for £1.8 billion.
The British specialty chemicals group posted pro-forma underlying EBIT of £142 million, above Jefferies’ estimate of £132 million and matching consensus.
Reported operating profit was £117 million, down from £527 million a year earlier due to prior-period disposal gains. Revenue reached £5.35 billion, while group sales were £1.55 billion compared with Jefferies’ £1.60 billion estimate.
Sales excluding precious metals were £1.28 billion, down from £1.40 billion. Pro-forma sales declined 4% at constant currency.
Basic earnings per share from continuing operations were negative 9.5 pence, compared with 24.0 pence a year earlier.
Underlying EBIT including discontinued and divested businesses was £162 million, below Jefferies’ £170 million estimate and consensus of £173 million.
Underlying pro-forma EBIT margins expanded 320 basis points, while underlying EBIT margins increased 140 basis points.
Clean Air, the emissions-control catalyst division, reported underlying EBIT of £132 million, ahead of Jefferies’ £123 million estimate and consensus of £128 million. Sales were £1.06 billion, compared with Jefferies’ £1.08 billion estimate.
The business posted a 210-basis-point margin expansion, supported by efficiency measures and lower research and development and capital spending.
Clean Air sales fell 7% at constant currency due to lower global vehicle production in European light duty diesel and North American heavy duty diesel, along with market share losses in light duty gasoline from historic platform changes.
The company reiterated full-year expectations for modest operating profit growth and a 14% to 15% margin.
PGM Services generated underlying EBIT of £66 million, broadly in line with Jefferies’ £67 million estimate and above consensus of £62 million. Sales were £226 million, compared with £215 million expected by Jefferies.
Margins increased 550 basis points. Sales rose 7% at constant currency due to growth in refining and trading supported by higher platinum, palladium and rhodium prices.
The company guided full-year operating profit lower for the division, citing reduced metal recoveries.
Commissioning of its new PGM refinery remains planned for the second half of 2025/26, with operations beginning in 2027.
Hydrogen Technologies posted an underlying EBIT loss of £18 million, compared with Jefferies’ estimate of a £17 million loss.
Sales were £23 million, above Jefferies’ £11 million estimate. The company attributed growth to changes in customer volume commitments in fuel cells and higher electrolyser volumes. The division continues to target operating profit breakeven by the end of 2025-26.
Corporate and eliminations reported adjusted EBIT of negative £38 million, better than Jefferies’ negative £41 million estimate.
Catalyst Technologies, classified as discontinued, delivered EBIT of £20 million versus Jefferies’ £38 million estimate. Sales were £272 million compared with £315 million expected.
Free cash flow improved to an inflow of £4 million from a £165 million outflow a year earlier. Cash from operating activities totaled £188 million, compared with negative £44 million.
Net debt rose to £971 million from £810 million at March 31. The company recorded £33 million in impairment and restructuring charges.
The company maintained its full-year outlook, reiterating expectations for underlying pro-forma EBIT growth at the upper end of a mid-single-digit range and estimating a £20 million benefit from spot PGM prices and foreign exchange, compared with prior guidance of £10 million.
Following the planned sale of Catalyst Technologies in the first half of 2026, Johnson Matthey intends to return £1.4 billion of net proceeds, comprising a £1.15 billion special dividend with share consolidation and a £250 million buyback.
Leadership changes included the appointment of Alastair Judge as chief financial officer effective Jan. 1, 2026, with current CFO Richard Pike becoming chief operating officer. The group leadership team is being reduced from nine to six members.