Johnson Matthey (JMAT) Status Update summary

Strategic positioning and market outlook

• PGM Services is central to the group’s strategy, enabling clean air, catalyst, and hydrogen technologies for the net zero transition and supporting other business units through supply and recycling of PGMs.

• PGMs are essential for a wide range of industries, including automotive, sustainable fuels, hydrogen, electronics, and medical devices, with demand driven by unique catalytic, durability, efficiency, and recyclability properties.

• The market is shifting from primary mining to increased recycling, with secondary sources expected to fill supply gaps as mining faces margin pressure and offering lower costs and carbon footprint.

• New applications in hydrogen, sustainable aviation fuel, and pharmaceuticals are offsetting declines in autocatalyst demand and driving incremental PGM demand.

• Government policy and the net zero transition are accelerating PGM uptake in new markets.

Operational and financial performance

• PGM Services delivered GBP 462 million in sales and GBP 164 million in operating profit in 2023/24, with a 42% EBITDA margin (excluding metal sales).

• The business operates across refining, precious metal management, and high-value product manufacturing, with refining as the largest segment and a full-service, circular economy model.

• JM operates the world’s largest secondary PGM refinery, with c.2x the capacity of its nearest competitor and a global partnership network.

• A new world-class refinery, commissioning by end of 2025/26, is expected to release over GBP 250 million in working capital, improve efficiency, safety, and emissions, and lower capital intensity.

• CapEx for PGM Services is GBP 350 million over the next three years, with investment reducing to maintenance levels post-2027; maintenance CapEx is projected at GBP 230-250 million for the group post-2028.

Growth drivers and guidance

• At least low single-digit operating profit growth is expected over the medium and long term, driven by recycled PGM demand, product business growth, and operational efficiencies.

• The products business is growing at a double-digit rate, with high-value, often bespoke, long-term contracts.

• HyRefine technology enables recycling of both PGMs and membrane ionomer in hydrogen applications, providing a unique market advantage and reducing carbon, water, and energy use.

• The full-service model combining R&D, supply, fabrication, and recycling is increasingly demanded by customers for simplicity and lower emissions.

• Free cash flow is expected to improve as CapEx and working capital reduce, with normalized 2027 PGMS free cash flow around GBP 175 million.