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Johnson Matthey (JMAT) Share Price Fell Briefly, Then Rallied Higher on Upbeat Profits

Simon Mugo trader
Updated 24 Nov 2021

Johnson Matthey PLC (LON: JMAT) share price fell briefly, then rallied higher after revealing that its half-year profits had almost doubled to beat last year’s figures while surpassing the profits generated before the coronavirus pandemic.

It appears investors missed the impressive profit figures as the British chemicals company saw its shares drop briefly before clawing back all the losses to post slight gains by the time of writing.

The chemicals company also announced a lucrative £200 million share buyback program as part of plans to return money to shareholders while also committing to selling its glass technologies division for £178 million ($238 million).

Johnson Mathey announced profits of £293 million ($392 million) in the six months ended September 30, beating analysts estimates of £288.3 million and almost doubling last year’s £151 million profit.

Today’s announcement comes two weeks after the company revealed that it was quitting the battery metals business. This is because the potential returns did not support the extra investment needed to unlock its full potential.

Johnson Matthey also noted that the batteries industry had become commoditised. As a result, other companies could manufacture batteries at lower costs and on a large scale, resulting in lower costs.

Analysts are concerned that JMAT’s incoming CEO, Liam Condon from Bayer, will likely break up the company after selling the batteries division to streamline operations and make the company more profitable.

Today’s profit figures mean that Condon will have to work harder to maintain the current profitability even as he reviews Johnson Matthey’s entire operations and comes up with recommendations for the company’s board.

JMAT disposal of its glass business is expected to result in a £100 million profit for the company, returned to shareholders via a £200 million share buyback program.

Despite warning investors earlier this month that earnings would be at the lower end of its guidance due to supply chain and labour shortages, the company maintained its annual outlook.

Johnson Matthey shares are down 9.98% this year but have fallen over 35.4% in the past seven months from their April high of 3362p. As a result, investors interested in the company may find its current prices quite attractive.

*This is not investment advice. Always do your due diligence before making investment decisions.

Johnson Matthey share price.

IG chart of Johnson Matthey share price 24-11-2021
Source: IG

Johnson Matthey share price fell briefly but later recouped all its losses on upbeat profits.

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading