Shares in Johnson Matthey fall as the group delivers its full year results but the consensus has it as a ‘buy’

Otmane El Rhazi from Mindful Money » Shares.

Shares in Johnson Matthey have tumbled following the release of its full year results but the analyst consensus still has the chemicals and platinum specialist down as a ‘buy’.

Despite boasting an 8% jump in sales to more than £3.12m and making £496m in profit before tax in the year to the end of March, the FTSE 100 giant witnessed its shares fall by 4%, or 155p to 3,363p in late morning trading on Thursday.

According to brokers at Hargreaves Lansdown, the overall market sentiment has the stock down as a ‘buy’, although conviction had been stronger some three months ago. Liberum Capital today reiterated its own ‘hold’ recommendation, while on Monday brokers at Numis called the business an ‘add’.

Commenting on the results, Robert MacLeod, chief executive of Johnson Matthey said: “Johnson Matthey remains well placed to benefit from major global sustainability drivers and we continue to invest in R&D, our infrastructure and our people, working closely with customers to provide them with innovative and improved solutions.  Supported by a clear purpose and strategy, Johnson Matthey is well positioned to deliver growth for our shareholders through the creation of value adding sustainable technologies.”

MacLeod added however that given the firm has divested its gold and silver refining business and is in advanced negotiations on the sale of research chemicals, he expects the group’s performance in 2015/16 to be only “slightly ahead of 2014/15”.

Looking at the group’s latest market update Helal Miah, investment research analyst at The Share Centre, said that overall its numbers were in-line with expectations.

Commenting on today’s share price fall he noted, that it is possibly due to the outlook for the current year, with management expecting performance to be only “slightly ahead” of last year.

He said: “Investors should acknowledge that there were good performances from both its Emission Control Division, which saw sales up 12% and operating profit up 21%, and its Process Technologies division which saw sales and operating profit up 7%. However, these good performances are likely to be offset by difficulties at its Precious Metals business which saw sales decline by 9% over the last year, as the platinum prices reach new lows and industrial disputes in South Africa.

“We believe the demand for clean fuel emission technologies, such as catalytic converters, will be offset by low commodity prices and specifically the difficulties faced in the platinum market. As a result, we recommend Johnson Matthey as a ‘hold’ for medium risk investors with a balanced portfolio.”