Platinum-plated future in the new catalyst laws for Johnson Matthey

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The Independent Online

The platinum specialist Johnson Matthey is expecting a bumper year as a million trucks and buses across the globe will need to be fitted with diesel catalysts under new environmental standards.

The precious metals and chemicals group yesterday reported an 8 per cent rise in underlying profits before tax to £219.8m in the year to March. The company has benefited from soaring platinum prices and the rising demand for cleaner cars which has driven growth in catalysts, the group's largest division. Catalyst sales climbed by 28 per cent to £1.48bn and overall revenues were up 3 per cent at £4.76bn. Prices of platinum, which is mainly used in auto catalysts and jewellery, have rocketed over the past two years and hit a record high of $1,336 an ounce in May.

Neil Carson, the chief executive, said: "We've had a good year, but next year [to March 2007] we're predicting to have an even better year, especially in the second half." Legislation designed to reduce exhaust emissions is coming into effect in Europe in October and will require all new trucks and buses to be fitted with diesel catalysts. The United States follows suit in January next year and Japan is also putting similar legislation in place. That prompted the company to describe the outlook for the next few years as "very encouraging." In Europe, 400,000 diesel vehicles will need to be fitted with catalysts every year, with 400,000 more in the US and 200,000 in Japan.

Johnson Matthey is supplying a third of the world's demand for car catalysts and intends to grab a similar share of the truck and bus market, which it expects to be worth $700m a year by the end of 2008, higher than its previous estimate.

The company is predicting that platinum prices, now trading at about $,1250 an ounce, will remain within the $1,025 to $1,250 range for months. Mr Carson brushed aside fears of a crash, saying platinum prices have not been as volatile as other commodities because they are underpinned by continuing strong demand for the metal for industrial use. Demand for platinum jewellery has fallen as prices went up, but China, which has shown a huge appetite for it is now discovering palladium jewellery, Mr Carson said.

The company has earmarked £200m for acquisitions to strengthen its core catalyst business, or share buybacks in the next couple of years. The group admitted its ceramics unit was "not a long-term hold" but added it was not actively trying to sell the business either. Question marks have also been raised over the future of the pharmaceuticals division where profits were down.

Johnson Matthey's main competitor, the US catalyst producer Engelhard, is in the process of being swallowed by the German chemical maker BASF for more than $5bn after a five-month standoff.

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