Johnson Matthey reaps benefits of a weak pound

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It’s the gift that keeps on giving. For some.

The weakened pound was behind another flattering performance for a UK company with substantial overseas revenues, with Johnson Matthey reporting an almost one-fifth jump in sales during the third quarter.

The FTSE 100 specialty chemicals group said that sales excluding precious metals – a measure that strips out fluctuating commodity prices which are passed on directly to customers – increased 19 per cent to £876m in the three months ended 31 December, against the same period a year earlier.

Many large UK-based companies with global operations have seen earnings surge once translated back into sterling, following the currency’s slump in the wake of the EU referendum in June. Some domestic manufacturers that export are also benefitting from increased demand as their products appear more competitive on international markets.

Stripping out the currency effect, Johnson Matthey’s sales rose by a more modest 2 per cent in the period at constant exchange rates, with underlying improvements in its divisions that make emissions controls catalysts, refine precious metals and another thatsupplies catalysts to oil refineries and licenses processes for chemical plants.

It also said that underlying profit before tax was ahead of last year at constant exchange rates.

But revenues shrank at its arm that makes active pharmaceutical ingredients and another that houses new businesses.

Johnson Matthey is the world’s largest manufacturer of catalytic converters and has been trying to expand into battery technology in expectation of a long-term shift in the motor industry towards electric power systems.

The company said it would benefit from favourable exchange rates in the full year, reiterating guidance from November that underlying profit would be boosted by around £65m.

“Our guidance for the full year remains unchanged for our continuing businesses on a constant currency basis and therefore we expect the group’s performance to be slightly ahead of last year,” it added.

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