Johnson Matthey says return on capital target tough to meet

LONDON, Feb 4 (Reuters) - Johnson Matthey (LSE: JMAT.L - news) , the world's biggest auto catalyst maker, said on Thursday its 20 percent return on capital target remains, but it will be difficult to achieve in the near term due to market conditions.

"A 20 percent return on capital will be difficult to achieve in the next couple of years," Johnson Matthey's chief executive Robert MacLeod said at an investor presentation.

The company paid out 150 pence a share on Wednesday, as a special dividend after selling its Gold (Other OTC: GDCWF - news) and Silver Refining and Research Chemical businesses last year.

Johnson Matthey makes most of its profits from the sale of platinum-rich catalysts for car emission-control devices. It also refines and recycles platinum group metals (PGMs).

MacLeod said that the refining business remains strategic, despite low metals prices and expectations of further weakness in the fourth quarter.

In its quarterly results on Wednesday, the company said precious metals products' sales fell by 17 percent to 76 million pounds for the three-months to December.

Group sales totalled 736 million pounds ($1 billion), down from 745 million a year earlier.

The company remains positive on the longer-term demand for value added catalysts, due to tighter regulation on emissions around the world.

Johnson Matthey's technology focuses on reducing the precious metals content in its catalysts, among other things.

Due to challenging conditions in several key markets, Johnson Matthey started a restructuring review last year, particularly in its Process Technology division, which sells catalysts and technologies to the oil and petrochemical sector.

The restructuring, which involves job cuts, is expected to cut costs by 30 million pounds annually.

"We are on track with (saving) five million pounds in the fourth quarter," MacLeod said.

($1 = 0.6927 pounds) (Reporting by Clara Denina; editing by Pratima Desai and Alexander Smith)