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LONDON, July 25 (Reuters) - Johnson Matthey, the world’s largest supplier of catalytic converters, posted a virtually flat first quarter, as the impact of lower platinum and palladium prices offset the benefit of increased car and truck sales in North America.
The British speciality chemicals company said on Wednesday underlying profit before tax came in at 99.9 million pounds ($155.1 million) in the three months to end-June, against 98.2 million a year ago, on the back of a 6 percent rise in sales.
“Good growth” in profit at its key environmental technologies and fine chemicals divisions was offset by the effect of weaker platinum and palladium - with prices down 16 percent and 17 percent against the same period last year - on the services business of its precious metal products arm, as refining demand dropped.
It expects that business, which saw sales down 8 percent in the quarter, to remain weak throughout the year, offsetting growth elsewhere, as North American and Asian growth help counter softer European markets, the group said.
“If market conditions and precious metal prices remain as they are today, the outlook for the group in the second quarter of 2012/13 is expected to be broadly similar to that of the first quarter,” Chairman Tim Stevenson will tell shareholders at the group’s annual meeting later on Wednesday.
“For the year as a whole, we expect that growth in Environmental Technologies and Fine Chemicals divisions will be offset by continued weakness in the Precious Metal Products division.”
The group’s core environmental technologies arm, which makes catalysts for cars and heavy industry and accounts for almost half group profit, saw sales in the quarter rise 12 percent and operating profit was “well ahead of last year”, as the sale of diesel catalysts for trucks grew strongly in North America.
The division was hit in the same period last year by headwinds associated with higher rare earth prices and the Japanese earthquake and tsunami.
It said the order book for the next few months was “strong”.
Johnson Matthey - which makes catalysts to convert toxic engines emissions, sells pharmaceutical ingredients and refines platinum - last month proposed its first ever special dividend after posting larger than expected full year profits. (Reporting by Clara Ferreira-Marques; editing by James Davey)