Johnson Matthey, one of Europe’s leading producers of autocatalysts, today announced massive cost cuts as it battles the COVID-19 impact on its business.
The company is to slash 2,500 jobs over the next three years, accounting for 17% of its global total. These measures are part of a new plan to target annualized savings of at least £80 million ($101 million) over the next three years. Johnson Matthey said costs cuts would come from consolidating plants in its main Clean Air division, which accounts for about 60% of sales, and by using better technology to simplify the organization.
Announcing its preliminary results for the year ended 31 March, Johnson Matthey said it would accelerate its growth strategy by investing £400 million in 2021 with a focus on climate change and sustainable technology. “Following automotive OEM shutdowns earlier in the year, we are now seeing our customers gradually reopen their plants. However, visibility on the path of recovery remains low,” the company said.
Operating profit for the year dropped 27% to £388 million as the company booked a restructuring charge of £140 million and took a COVID-19 hit of £60 million. Pretax profit was down 38% to £305 million on revenue, excluding precious metals, down 2% to £4.17 billion. Johnson Matthey said it would propose a final dividend of 31.125 pence, or half the level for the previous year.
“COVID-19 has brought unprecedented challenges to the world and Johnson Matthey…Our business is resilient and diverse, serving a range of end markets and geographies. We made good progress in 2019/20 and delivered operating performance slightly ahead of market expectations, excluding the effects of COVID-19 which adversely impacted underlying operating profit by around £60 million. We took immediate and decisive action to protect our business, and to maintain good liquidity and a strong balance sheet,” said Robert MacLeod, CEO.
He added that, given the ongoing uncertainty, the company is unable to provide financial guidance for 2020/21. “In Clean Air, our customers are gradually ramping up their plants but visibility on the path of recovery remains low. Efficient Natural Resources is later cycle and we anticipate an impact as lower demand begins to affect the industries it serves. Health is relatively unaffected by the macroeconomic environment and should benefit from new customer contracts. In Battery Materials, the commercialization of eLNO remains on track. The company broke ground on its first commercial plant at Konin, Poland, which is expected to be on stream in 2022 and supplying platforms in production in 2024. The total investment will amount to about £350 million. Johnson Matthey is in the process of securing sources of renewable energy for the Konin site.
By: Natasha Alperowicz
Source: Chemical Week
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