Global downturn reduces Johnson Matthey's profit, but fine chemicals & catalysts grow

Johnson Matthey reported good sales growth at its Fine Chemicals & Catalysts division for the year ended 31 March 2009. Revenue increased by 16% to

Johnson Matthey reported good sales growth at its Fine Chemicals & Catalysts division for the year ended 31 March 2009. Revenue increased by 16% to £606m, sales excluding precious metals rose by 15% to £347m and operating profit grew by 8% to £73m.

Sales of catalysts to the pharmaceutical industry were strong throughout the year with good demand for platinum group metals (pgm) based heterogeneous catalysts, palladium coupling catalysts and chiral ligands.

At Macfarlan Smith, the Edinburgh-based manufacturer of active pharmaceutical ingredients (APIs), sales of opiate products were well up on last year with good demand for codeine phosphate. Sales of oxycodone, a specialist opiate, were also strong. In the non-opiate sector, sales of galantamine showed good growth as a result of the launch of generic alternatives to Razadyne.

The division's Pharmaceutical Materials and Services business, based in North America, was ahead of last year with good sales of methylphenidate and opiate products. Sales of platinum based anti-cancer APIs were similar to last year with increased sales of oxaliplatin. However, revenue from contract research was adversely affected by the lack of venture capital funding for a number of smaller customers.

On 4 April 2009, Barr Laboratories (now part of Teva Pharmaceutical Industries) launched its generic version of Adderall XR. The Pharmaceutical Materials and Services division has an agreement with Barr, which will provide additional income until October while Barr has market exclusivity for this generic product.

Johnson Matthey closed its facility in Ireland in March 2009, which manufactures prostaglandin APIs for the European market. Manufacturing will be consolidated at the company's facility in Massachusetts, US. The closure has resulted in a restructuring charge of £9.4m.

Revenue in the Precious Metal Products division increased by 7% to £5m boosted by higher prices for pgm in the first half of the year.

The Noble Metals business, located in the US and UK, also had a successful year. Demand for medical products produced at three sites in California remained strong as customers launched products into the cardiovascular sector.

Total Group sales revenue was up 5% to £7.8bn, while pre-tax profit fell by 5% to £249.4m.

Neil Carson, chief executive of Johnson Matthey said: "After a strong performance in the first half of 2008/09 the credit crunch and global downturn had a major impact on the group's second half results.

"Against this background we expect profit in the first half of 2009/10 will be lower than in the same period in 2008/09, when the group achieved strong growth and record profits."

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