Johnson Matthey ahead but adds a warning: Computer chip success cancels out falling car sales

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The Independent Online
BUMPER sales of American semi-conductors helped Johnson Matthey, the world's biggest platinum marketing group, to report a 6 per cent rise in pre-tax profits in the six months to September.

But the shares, which have almost tripled over the past three years, closed 3p lower at 496p as David Davies, chairman, warned that trading in markets that account for half of group sales remained weak.

He said: 'Recovery in the UK remains fragile and we are experiencing poor conditions in other European markets. A rise in platinum group metals prices is unlikely without sustained economic recovery.'

In the first half the success of US computer chip makers in wresting back market share from Japanese competitors made up for declining car sales in Europe, where the company is one of the three biggest suppliers of catalytic converters.

A 53 per cent increase in operating profits from the materials technology division - which includes the semi-conductor businesses - contributed to a 17 per cent rise in group operating profits from pounds 32.5m to pounds 37.9m.

The division also announced an exclusive licensing agreement with Sandoz Pharma, the drugs company, for a class of anti-viral compounds to combat HIV, the Aids virus.

Higher interest charges took the shine off the trading result, restricting the pre-tax profits rise from pounds 33.2m to pounds 35.1m. A lower tax charge of pounds 7.7m ( pounds 10.8m) benefited from last year's decision to pay an enhanced scrip dividend.

The pounds 3.7m of advanced corporation tax saved by the scrip pushed earnings per share 21 per cent higher to 14.6p (12.1p). The interim dividend of 3.4p was 6 per cent higher.

The catalytic systems division suffered from declining car sales in Europe, where registrations outside the UK have fallen 20 per cent this year. Buoyant sales in the US and recovery in the UK eased the damage and profits emerged at pounds 13.2m ( pounds 12.9m).

Precious metals profits fell pounds 400,000 to pounds 10.1m, reflecting the collapse in the price of rhodium from pounds 1,400 an ounce a year ago to less than pounds 600 in the first half of the year.

The colour and print division increased profits from pounds 4.2m to pounds 5m, but Mr Davies warned that pension credits had boosted this year's result.

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