Johnson Matthey reports 11% profit

All parts of the specialist chemicals group see sales growth

Full-year profits for specialist chemicals company, Johnson Matthey came in ahead of market expectations and all parts of the business reported sales growth.

The company’s profit before tax to 31 March 2011 rose 14% to £260.6m on revenue of £9.98bn (+21%).

The fine chemicals division reported sales up by 11% to £245m. The division’s Active Pharmaceutical Ingredient (API) manufacturing businesses, which comprise Macfarlan Smith and Pharmaceutical Materials and Services and represents 71% of fine chemicals’ sales, saw sales rise by 14% to £173m.

Johnson Matthey said Macfarlan Smith achieved growth in all key areas of its business, benefiting from strong demand for its specialist opiate products, such as buprenorphine and naloxone, in both Europe and North America. Generic demand for methylphenidate, used to treat attention deficit hyperactivity disorder (ADHD), and fentanyl based, used in the management of acute pain, was also strong. Overall, Macfarlan Smith’s sales were 4% ahead of last year at £83m.

In December 2010, Macfarlan Smith’s joint venture, Hebei Aoxing API Pharmaceutical Company, formed with the Chinese pharmaceutical manufacturing company Hebei Aoxing Pharmaceutical Group Co, was granted a business licence by the Chinese authorities. The joint venture company will manufacture and supply narcotic APIs to the rapidly growing market in China.

The division’s Pharmaceutical Materials and Services business had a good year with sales up 26% at £90m. Its contract research business recovered from an operating loss in 2009/10 to deliver a profit this year.

In November 2010 the business acquired pharmaceutical manufacturing assets in Conshohocken, Pennsylvania, US together with certain ongoing business from Lonza. This site, which is close to the group’s existing facilities in West Deptford, New Jersey, will provide the business, and Fine Chemicals Division as a whole, with enhanced manufacturing capacity. It will enable continued growth of Johnson Matthey’s controlled substance API business in the US and provide additional capacity to support customers of its contract research business.

Sales in the Research Chemicals business were 17% ahead of the previous year at £72m. All regions saw growth with North America and Asia performing well.

Catalysts and Chemicals’ sales rose by 20% to £159m. The company said growth was especially good in Asia with China continuing to contribute strongly.

Following the commissioning of its new sponge nickel catalyst manufacturing facility in Shanghai last year, the Catalysts and Chemicals business has now started a major project to build a new plant there to manufacture pgm catalysts for the growing pharmaceutical industry in China.

Neil Carson, chief executive of Johnson Matthey said the results marked a return to strong growth for the group and further good progress is expected in 2011/12.

‘We are increasing our investment in research and development in order to target new areas of future growth for our business,’ he said.

‘We are confident that the combination of our existing strengths and the investments that we are making now will position the group well for longer-term growth.’

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