Forum Archive Index - June 2000

[malcolmcoleman@hotmail.com]

malcolmcoleman@hotmail.com  has sent you this Article from
http://www.citywire.co.uk/articles/
News to Make Investors Money

For those holders of NZ refining (NZR?), NOG or NCH - this may be of
interest.

Johnson Matthey develops dual fuel processor
6/8/2000 9:01:29 AM

Johnson Matthey, the world leader in catalysts and catalysed components
for fuel cells, has demonstrated a new fuel processor capable of
converting both natural gas and liquefied petroleum gas to hydrogen. It
can be used directly in a fuel cell to provide electricity cleanly and at
high rates of efficiency.

Based on Matthey's (JMAT) catalyst technology, the system is equally
efficient with either fuel and can be changed from one to the other at any
time.

Catalytic fuel processors are cleaner, more robust and easier to operate
than systems based on other technologies.

The initial customers for high value fuel cell systems will be residential
users in areas with unreliable power supplies and hence many of the
group's development partners have requested LPG fuel processors for these
applications.

Ultimately the larger market will probably be for natural gas fueled
systems and the ability of Matthey to supply both markets with the same
processor should reduce the development cost and increase the speed to
market of the technology.

This announcement follows the launch of Matthey's SCRT system - a major
step forward in diesel emission control that should make heavy duty diesel
truck and bus engines much cleaner.

Fuel cells are a further development along the 'cleaner-emissions' road
and are being developed by a handful of major international power
companies and vehicle manufacturers as well as one or two smaller
non-listed companies. Demand is being driven by tightening emission
standards in all the world's major vehicle and power markets, thus
supporting investment.

Fuel cells come in two main forms - polymer electrolyte membrane (PEM)
cells which require platinum as a catalyst for their operation (quite
expensive), and alkaline fuel cells which can use platinum, cobalt and
potentially other metals as a catalyst, and can be used in marine power.

The race for a mass consumer product at a mass consumer price, and
therefore a leading market position, is on. But alliances and joint
ventures are more than likely to be the way forward.

Matthey is already in collaboration with General Motors Corporation on a
significant research and development project on fuel cells for
transportation application, following settlement between the parties of a
long-standing commercial dispute.

Johnson Matthey (JMAT) also announced today its results for the year to 31
March with strong performances from continuing businesses.

Pre-tax profits for the year were up 10% to £143.8 million. Including
exceptional gains profits were up 14% to £157.2 million.

Earnings per share rose 7% to 47.5p and the dividend for the year has been
increased by 7% to 20.3p.

During the period, Matthey sold its electronic materials business for $655
million in cash giving an exceptional profit of £28.5 million after
goodwill write back. The proceeds will be used for further investment and
acquisitions.

A significant investment has been made in the group's catalysts &
chemicals division, on fuel cells, diesel emission control, homogeneous
catalysts and pharmaceutical materials. The division increased its sales
by 26% over the year, to £856 million.

The growth reflects a rise in sales volume and the effect of higher
palladium prices on autocatalysts, unit sales of which were up 11%.

The precious metals division has benefited from significant growth in
demand for platinum group metals (PGM) and the corresponding rise in PGM
prices. Sales were 31% ahead of last year at £2.67 billion. Gold and
silver operations had a satisfactory year with good levels of business for
refining and bullion products being offset by weaker margins in a
competitive market place.

Sales from the colours & coatings division were down 1% to £241.2 million,
but grew 3% on a constant currency basis. Matthey is in the process of
rationalising its colours & coatings division to add £4 million to profits
in the next financial year and £7 million per year thereafter.

The group's net cash flow for the year was strong at £393.3 million, but
free cash flow was slightly negative at £7.6 million due to the sharp
increase in PGM prices towards the end of the year. Matthey ended the year
with net cash of £165.8 million against net borrowings of £221.6 million
at the end of March 1999.

With the group's 'change of focus' largely completed, it is time to drive
the core businesses, which achieved a 17% increase in profits over the
year, forward. Growth and demand in the autocatalyst market is
particularly strong but should be aided by Matthey's new £10 million
autocatalyst facility at Royston in the UK and a new facility in China.

The prospects look very good for Johnson Matthey and the shares (JMAT) -
up 11p at 845p - offer investors an exposure to some revolutionary
technology.
©2000 CityWire.co.uk

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