Johnson Matthey hit by price fall in precious metals



Johnson Matthey (EUREX: JMAF.EX - news) , the specialist chemicals and precious metals group, has been hit by falling platinum prices and warned that it expected the rest of the year to be tough.

The shares fell 5.8pc to £21.90 after the group reported a 6pc fall in first-half profits to £183.4m pre-tax, on revenues 17pc lower at £4.9bn.

The company, which makes catalytic converters for cars and processes platinum for industrial use, said its performance was dragged down by its precious metals products business, after a sharp fall in prices.

Neil Carson, chief executive, said: "Whilst precious metal prices have improved from their lows during the summer, largely due to the labour unrest in South Africa, the outlook in some of our other markets has weakened and visibility remains limited.

"We therefore expect that the group's performance in the second half will be similar to the first half of the year."

The company said revenue within its precious metal products division fell 22pc to £3.8bn, with lower average precious metals prices, low volumes, and operational issues all acting as a drag.

The average price of platinum was 16pc lower than the corresponding period last year, at $1,500 (£940) an ounce. Johnson Matthey said that while prices fell sharply over the period until the middle of August, the violent strikes at Lonmin (LSE: LMI.L - news) 's Marikana mine which spread to the wider South African mining industry, saw prices rise on supply fears.

"The platinum market is expected to move into deficit in the calendar year 2012, with global demand broadly flat but supply expected to fall sharply due to labour disruption in South Africa," the group said.

Analysts at Credit Suisse (NYSEArca: CSMA - news) said that while the first half numbers were in line with expectations, the guidance that the second half would be similar was "disappointing".

The interim dividend, payable on February 5, was increased from 15p to 15½p.


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