Standard Industries Pushes for Strategic Overhaul at Johnson Matthey

Highlights:

• Standard Industries Calls for Action: Major shareholder urges a full review of Johnson Matthey's business strategy, advocating for potential sales of assets or the entire company.
• Focus on Underperformance: Johnson Matthey’s hydrogen technologies arm saw a sharp sales decline, fueling criticism of its broader strategic direction.
• Shareholder Returns in Focus: The FTSE 250 group acknowledges the need to restore value as its shares have halved in value over the last five years.

Johnson Matthey PLC (LSE:JMAT), a leader in catalytic converter and advanced materials technology, has come under fire from its largest shareholder, Standard Industries, for what it describes as strategic complacency. The US-based conglomerate is calling for a complete review of the company’s operations, including exploring the potential sale of its assets or even the entire business.

Sharpened Criticism and Strategic Missteps

Standard Industries accused Johnson Matthey’s management of failing to adapt to evolving market demands and of pursuing an ineffective strategy that has not delivered adequate shareholder returns. The company, renowned for its expertise in refining precious metals and manufacturing catalytic converters, has struggled in recent years to replicate its success in newer, greener technologies such as hydrogen.

Interim results from its hydrogen technologies division showed a near 50% drop in sales, intensifying calls for decisive action. Standard Industries emphasized the need for Johnson Matthey to assess all avenues for maximizing shareholder value, including the divestiture of underperforming assets.

“We strongly urge the board to hire advisers and publicly launch a formal strategic review process exploring all potential paths for maximizing shareholder value, including, but not limited to, a sale of part or all of the company,” Standard Industries stated.

Johnson Matthey’s Response

In response, Johnson Matthey said it welcomes constructive feedback from shareholders, emphasizing its commitment to improving performance and restoring shareholder value. “The board and management team are resolute in their focus on improving JM’s share price performance,” the company stated.

While the company has been a pioneer in catalytic converters, crucial for filtering vehicle exhaust fumes, its shift towards hydrogen technologies and other green innovations has yet to deliver significant returns.

Challenges and Strategic Shifts

Johnson Matthey’s challenges reflect the broader industrial pivot from traditional combustion engines to electric vehicles (EVs), which do not require catalytic converters. The group’s investments in green technologies have so far failed to yield comparable success to its historical expertise in platinum-based catalysts, creating uncertainty about its future direction.

Despite this, Johnson Matthey continues to tout its capabilities in handling platinum group metals such as palladium and rhodium, which remain critical in various industrial applications.

Market Reaction

News of Standard Industries’ push for a strategic overhaul provided a temporary boost to Johnson Matthey’s share price, which rose 3.6% to 1,401p on Monday. However, the company’s shares remain down over 50% from their value five years ago, highlighting the scale of the recovery challenge.

Future Outlook

As pressure mounts, Johnson Matthey faces a critical juncture. Standard Industries’ demands reflect growing impatience among investors, who are calling for bold and transparent actions to unlock value. Whether through divestitures, restructuring, or a potential sale, the next steps will be pivotal in determining the company’s future trajectory in an evolving industrial landscape.

All eyes are now on Johnson Matthey’s board as it navigates this shareholder-driven push for transformation.