Johnson Matthey growth continues despite markets

Preliminary results for the year ended 31 March, 2003, showed operating profit at Johnson Matthey up 6% to £205.7m (€292m), despite the adverse effects of exchange rates which were put at £10m (€14.2m). Profit from the catalyst business was up 10% to £104.4m (€148.2m), despite a 17% fall in sales to £1.083bn (€1.538bn), largely caused by a sharp fall in the price of palladium.

Synetix, acquired last November, contributed a profit of £9.2m (€13.2m) over the five months. 'Since acquisition, Synetix has performed in line with our expectations when the business was acquired, despite weakness in some end markets,' said Chris Clark, ceo of Johnson Matthey.

The Synetix business has now been brought together with the chemicals division to form the Process Catalysts and Technologies business of Johnson Matthey, which will trade under the new brand name of Johnson Matthey Catalysts. 'The change is further reinforcement of Johnson Matthey's long-term commitment to strengthen its position in catalysts and related technologies,' said Larry Pentz, division director, process catalysts and technologies at Johnson Matthey Catalysts.

There was also strong growth in the pharmaceutical materials division - which became a stand-alone division in 2001/02 following the acquisitions of Pharm-Eco and Macfarlan Smith - with sales up 21% to £128m (€182m) and profits up 18% to £36.9m (€52.4m). Macfarlan Smith achieved good growth in sales of bulk opiates and improved its margins with the successful introduction of capacity to extract morphine and codeine direct from poppy straw.

A programme of capacity expansion has begun at the Cork facility of Cascade Biochem, a small company focused on the manufacture and supply of prostaglandins and other complex molecules as active ingredients for the pharmaceutical industry, which was acquired by Johnson Matthey last October 'Market interest in prostaglandin products is high and the division is in the process of negotiating commercial relationships for its key products,' said Clark.

'We are continuing to invest in the division to develop future growth opportunities,' Clark added. 'At our facility at West Deptford in the US we are putting in capacity to manufacture morphine and codeine, which we plan to be in place by the end of this fiscal year. At Pharm-Eco, the US-based contract research business, we are building additional laboratories and small-scale manufacturing suites to meet increasing demand. At Macfarlan Smith we are investing in new capacity and in infrastructure to meet the projected future growth in demand. Our Edinburgh factory has just received a successful inspection by the FDA, which will enable us to sell some products manufactured in Scotland into the US.

'Market conditions will remain challenging in 2003/04 but the group's investment in its growth businesses leaves us well positioned for the future.'