Johnson Matthey battles lower profit at its biggest unit

By Yadarisa Shabong

(Reuters) - Johnson Matthey <JMAT.L> on Wednesday lowered the profit outlook for its largest unit that makes pollution filters for cars and trucks and announced the departure of the unit's head, sending its shares down more than 3%.

Shares of the FTSE 100 company was the biggest loser on London's blue-chip index.

The moves follow scrutiny of Johnson Matthey's catalytic filters for trucks, which have been linked to emission issues at truckmakers Volvo <VOLVb.ST> and Cummins <CMI.N>.

A document from AB Volvo seen by Reuters in January showed the chemicals and metals group supplied catalytic converters to the Swedish truckmaker, an issue that could result in fines for both companies.

Johnson Matthey had said in its annual report in May that it had been informed by two customers of failures in certain engine systems, for which the group supplied a component.

The Clean Air unit was the biggest contributor to profit last year as it benefited from Europe's stricter emission rules and developing nations' move to control pollution generated by rapid urbanisation.

But it has also been recently battling higher than expected costs from its growing European car business and China's delay in the implementation of emission control rules.

It said Joan Braca, president of Tate & Lyle's <TATE.L> food and beverage solutions, will replace John Walker, who will retire after 35 years with the company, as head of the unit.

It kept its full-year forecast unchanged and said it expected a better performance in the second half of the year.

The company is one of the three suppliers for catalytic converters used in emission control systems along with Umicore <UMI.BR> and BASF <BASFn.DE>.

(Reporting by Yadarisa Shabong in Bengaluru; editing by Arun Koyyur and David Evans)