Drop in US demand hits Johnson Matthey

JOHN WILLCOCK

Financial Correspondent

Shares in Johnson Matthey, the high-technology precious metals group, fell 7 per cent to 533p after it reported lower than expected first half results due to falling demand for its catalytic converters in the US.

The company suffered from the loss of a contract with General Motors to supply convertors, which help clean exhaust fumes. Other US car makers also cut production.

The company's first-half pre-tax profit rose 4 per cent to pounds 47m from pounds 45m. Analysts had expected nearly pounds 50m.

The dividend also disappointed, rising from 4.2p to 4.4pm against forecasts of around 4.6p. The market was forced to cut its full-year forecasts from around pounds 113m to pounds 103m.

The shares fell from 571p to 528p following the announcement, then recovered to close at 533p.

David Davies, chairman, said three of Johnson Matthey's divisions were performing well, but the drop in the catalytic systems division's profits would continue to restrain progress in the second half. That division suffered a 31 per cent fall in operating profit, he said, while three others did better: precious metals was up by 18 per cent, electronic materials by 27 per cent and Cookson Matthey Ceramics by 66 per cent.