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5. Johnson Matthey Plc Business Report FY ended Mar. 2019

Johnson Matthey Plc Business Report FY ended Mar. 2019

Factors
1) Net Sales
-In the fiscal year ended March 31, 2019, the Company had net sales of GBP 10,745 million, an increase of 4.6% over the previous fiscal year. The increase in sales was primarily driven by growth in the Clean Air sector.

2) Operating Profit
-The Company’s operating profit in the fiscal year ended March 31, 2019, increased by 47.9% from the previous year to GBP 531 million. The increase in profit was caused by special charges in the previous fiscal year of GBP 90 million in major impairment and restructuring charges and a GBP 50 million charge in February 2018 due to a legal settlement.

3) Clean Air
-The Company’s Clean Air sector’s sales totaled GBP 2,720 million in the fiscal year ended March 31, 2019, an increase of 10.8% over the previous year.

<Light Duty Vehicle (LDV) Catalysts>
-Sales of light duty vehicle catalysts increased by 11.1% over the previous year to GBP 1,738 million. Sales in Europe and Asia increased by 21% and 3%, respectively. These gains offset the decrease in sales in the Americas, which had decreased by approximately 4%.

<Heavy Duty Diesel (HDD) Catalysts>
-Sales of heavy duty diesel catalysts totaled GBP 938 million, an increase of 10.9% over the previous year. Heavy duty catalysts sales were driven by growth in the Americas, primarily due to strength of sales of catalysts for Class 8 trucks.

4) Efficient Natural Resources
-In the fiscal year ended March 31, 2019, the Company’s Efficient Natural Resources sector had revenues of GBP 991 million, an increase of 3.7% from the previous year.

<Advanced Glass Technologies>
-Sales in the Advanced Glass Technologies business decreased by 8.5% to GBP 75 million primarily due to a slowdown in global car production and specifically, weaker sales in China.

5) New Markets
-The Company’s New Markets division had sales of GBP 362 million in the fiscal year ended March 31, 2019, an increase of 16.0% over the previous year.

<Alternative Powertrain>
-The Alternative Powertrain business unit had sales of GBP 206 million, an increase of 32.1% from the previous year. The increase in sales was driven by strong demand for non-automotive battery systems and fuel cells.

Recent Developments

-The Company has agreed to a ten-year agreement with Nemaska Lithium for the supply of lithium hydroxide used in the manufacturing of eLNO. The agreement gives the Company access to lithium hydroxide for eLNO with the volumes and phasing aligned to its production plans. (From a press release on March 28, 2019)

-The Company and CAMX Power LLC have announced that the Company has obtained a license under the intellectual property of CAMX relating to the GEMX platform of nickel-based high-energy high-power cathode materials for use in lithium-ion batteries, especially for electric vehicles. GEMX spans a broad class of cathode materials, overarching the high nickel material classes NMC, NCA and LNO, the chemistries currently used, and expected to be used in the future in lithium-ion batteries. This license improves and extends the Company’s intellectual property protection and supports the commercialization plans for its market leading eLNO technology. (From a press release on November 21, 2018)

Outlook

-For the fiscal year ending March 31, 2020, the Company expects its sales to grow by mid to high single digits.

R&D Structure

-As of March 31, 2019, the Company has more than 1,500 employees working in research and development.

R&D Facilities

-The Emission Control Technologies division has research and development facilities in the following eight countries:

• Brazil
• China
• Germany
• Japan
• Korea
• Sweden
• UK
• U.S.

-The Company’s research and development activities for fuel cells takes place in Sonning Common, UK.

Product Development

eLNO cathode matterial for high energy battery applications
-In September 2017, the Company announced its investment in automotive battery materials development as well as enhanced lithium nickel oxide (eLNO), a new cathode material for use in high energy battery applications. The Company developed the material across nine of its locations. eLNO enables a significant increase in energy density that will improve performance and cost of electric vehicle applications.

 
-The Company’s capital expenditure of GBP 323 million in the fiscal year ended March 31, 2019 included investments in the following projects:

• Investments in manufacturing plants for the Company’s Clean Air sector in Poland, China and India. The investments will increase capacity, thus improving efficiency and flexibility to respond to demand in Europe and Asia.
• Investments for the development and commercialization of eLNO, the Company’s ultra-high energy battery cathode materials
• Improvement in the efficiency and resilience of platinum group metal refineries in the Efficient Natural Resources sector

-The Company expects to invest up to GBP 500 million in capital expenditure for the fiscal year ending March 31, 2020. Investments during the fiscal year are expected to include the following:

• Continuing investments in Clean Air plants in Poland, China and India
• Continuing investments in eLNO

Investments in UK

-The Company announced that it is building a demonstration scale plant in Clitheroe, UK to manufacture next-generation battery materials to power electric vehicles. The new, multi-million-pound plant will have a capacity of 1,000 tons per year and will be used to provide sample quantities of eLNO battery material to its global customers. Work is also underway on the design of the Company’s first full-scale commercial manufacturing plant for eLNO. This will be located in mainland Europe and is due to begin production in the fiscal year ending March 31, 2022. (From a press release on July 2, 2018)

Investments Outside UK

<Poland>
-The Company announced two major strategic developments in the commercialization of eLNO, its portfolio of market-leading ultra-high energy battery cathode materials. First, the Company announced that its first commercial scale eLNO manufacturing plant will be located in Konin, Poland. The Company has entered into an agreement to purchase a 43 hectare plot, giving it the potential to expand eLNO manufacturing capacity to up to 100,000 metric tons per year. The site is close to major customers in the battery electric vehicle supply chain. The Company has also agreed to a ten-year agreement with Nemaska Lithium for the supply of lithium hydroxide used in the manufacturing of eLNO. The agreement gives the Company access to lithium hydroxide for eLNO with the volumes and phasing aligned to its production plans. (From a press release on March 28, 2019)

-The Company announced the groundbreaking ceremony for its new factory in Gliwice, Poland, which is being built to manufacture modern automotive catalysts. The new, multi-million-pound factory located in Gliwice, Poland, will be larger than 25,000 square meters, becoming the largest factory in the region. Ultimately, more than 300 jobs will be created due to its development. The plant will be commissioned in the middle of 2019. (From a press release on July 24, 2018)

<China>
-A cornerstone ceremony for Johnson Matthey (Zhangjiagang) Environmental Technology was held in July 2018 to kick off the construction of its automotive catalyst project. The ceremony took place at the Yangtze River International Chemical Industrial Park of Zhangjiagang Free Trade Zone. The project, covering an area of 50,000 square meters, was also an investment encouraged by national policies and in line with the green manufacturing concept proposed by Made in China 2025. Due to stricter automotive exhaust emission standards, a stronger presence in this field and city means, the Company will be in position to help customers meet the requirements of the National VI Emission Standards for China's automotive market. (From a press release on August 10, 2018)