JOHNSON MATTHEY (JMAT) – Materials
| Price: £19.92 -4.6% | P/E: 14.5x |
| Market Cap: £3.35bn | Yield: 3.8% |
Sadly, Johnson Matthey’s results for the half-year to the end of September are a bit of a mess, as it tries to account for the ever-changing shape of the group, which has obscured good underlying progress.
Reported operating profit is down 78%, due to profits on disposals a year ago, but underlying profit is up 38%, while the loss per share comes to 9.5p on a reported basis (against a profit of 247p last year) but earnings are up 40% on an underlying basis.
Importantly, the firm has seen a significant improvement in free cash flow in H1 and expects to see ‘a material step-up’ in H2, in addition to which the £1.8 billion sale of Catalyst Technologies is on track to complete in the first calendar half of 2026.
Following the sale, shareholders can look forward to £1.4 billion of capital returns, £1.15 billion via a special dividend and £250 million via buybacks.
Our View
We would have expected the news investors were in line for a payout of £1.4 billion, or just over 40% of the company’s market cap, would have got a better reception, but clearly there was nothing new in today’s report.
Add to that the fact the shares have already gained more than 50% year-to-date and the sell-off starts to make sense.
Still, chief executive Liam Condon, who arrived in 2022, has made good on his promise to transform the group into a more focused, lean, cash-generative machine, and for that investors should be grateful.
Read the press release here: https://matthey.com/investors
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