- Sale of Catalyst unit for £1.8 billion
- Focus on Clean Air and metals
- £1.4 billion shareholder payout
It has been a momentous 12 months for the 200 year-old specialty chemicals group Johnson Matthey (JMAT), starting with the sale of its Medical unit last year and culminating with the news of the sale this month of its Catalyst unit.
The shares, which have been in a sustained downtrend since 2018, jumped as much as 500p or 36% at one stage to £18.88 before settling at £17.90 for a gain of 29% and a new year-high.
HIGHER SHAREHOLDER RETURNS
The group, which has been under pressure since the end of 2024 from its largest shareholder, Standard Investments, to take ‘decisive action’ to unlock what it called the firm’s ‘unrealised promise’, announced today it had agreed to sell its Catalyst Technologies division to US industrial giant Honeywell (HON:NASDAQ) for an enterprise value of £1.8 billion.
Net of one-off payments and associated costs of £200 million, the sale – which is expected to complete in the first half of 2026 – will bring in £1.6 billion of proceeds, of which Johnson Matthey has pledged to return £1.4 billion to shareholders while retaining £200 million for ‘general corporate purposes’.
Once finalised, the UK group will be ‘a more highly-focused, lean and agile business’ with leading market positions in Clean Air and PGM (platinum group metals) services.
Moreover, by lowering costs, increasing cash generation and limiting its gearing to a maximum of 1.5 times EBITDA (earnings before interest, tax, depreciation and amortisation), the firm says will ‘materially enhance’ shareholder returns.
It plans to grow its annual cash returns to shareholders from at least £130 million for 2025/26, equivalent to the total dividend for 2024/25, to at least £200 million for 2026/27 ‘and beyond’.
UNDERLYING RESULTS IN LINE
For the year to the end of March, the firm posted underlying revenue of £3.47 billion, down 11% on a headline basis but down just 2% excluding divestments and on a constant-currency basis.
Operating profit was down 5% on a headline basis to £389 million, but up 5% on an adjusted basis, while EPS (earnings per share) were up 6% to 149.2p.
Chief executive Liam Condon, who has engineered the turnaround, described the results as ‘in line with guidance and market expectations against challenging market headwinds’ and flagged the cumulative £200 million contribution from the group’s transformation programme begun in 2021.
For the year to March 2026, which will include a contribution from Catalyst Technologies, Condon is expecting mid-single-digit growth in underlying operating profit at constant currencies, much like last year, with performance weighted to the second half again.
