Johnson Matthey, the platinum specialist that makes automotive catalysts to help reduce exhaust emissions, is suffering from the current slump in auto production.
The companys full year profits of £267.9 million up one per cent - beat forecasts but the firm warned that it had experienced a downturn in the second half of the last financial year.
However, Johnson Matthey said that prospects for its business are encouraging beyond the current financial year as a raft of new emissions legislation around the world comes into effect.
This should create a demand for automotive and process catalysts.
An automotive catalytic converter is a device used to reduce the toxicity of emissions from an internal combustion engine. Catalytic converters have only been fitted into new petrol engines in the last 15 years so the business of their recovery is still developing. The device is made up of many materials but the prime material is platinum (see MRW story).
In January 2010, new regulations for heavy duty diesel emissions in North America come into force, which are expected to increase the number of catalysts sold per vehicle. As from January 2011, the European Union will apply rules requiring all new diesel cars to be fitted with filters to reduce diesel particulate emissions.
Johnson Matthey chief executive Neil Carson said: After a strong performance in the first half of 2008/09 the credit crunch and global downturn had a major impact on the groups second half results. For the year as a whole sales and underlying profit before tax were slightly ahead of 2007/08. Underlying earnings per share of 89.6 pence was at the top end of the range given in our third quarter interim management statement.
So far we have seen no real signs of improvement in demand for automotive products in 2009/10 and we expect the groups sales will be down in our first half in comparison to a very strong performance in the same period last year.