Johnson Matthey to review executive pay, cut spend in hydrogen technologies

LONDON: British autocatalyst maker Johnson Matthey said today it would review its executive pay and cut its capital expenditure in its hydrogen technologies business to boost its cash following pressure from its top investor.

The company, which manufactures catalytic converters and pollution filters for cars, missed analysts' expectations for first-half revenue and underlying profit late last year, amid a decline in global vehicle production and a subdued Platinum Group Metals trading business.

Standard Investments, the largest shareholder in Johnson Matthey with an 11% stake, in December urged the group to initiate a strategic review and overhaul its board.

Johnson Matthey said although the transformation strategy it set out in March 2022 when Liam Condon took over as group CEO was "delivering clear results", the board acknowledged that "further progress is required at pace".

The centuries-old company said it is reviewing the group's executive remuneration schemes to increase the weighting on cash generation targets, and formed a new investment committee to review cash generation.

The "board fully recognises the need to improve the absolute share price and to deliver increased returns for shareholders," it said in a statement.

Johnson Matthey shares, which have lost about 27% since Condon took over as CEO, gained 1% in early trade.

New York-based Standard Investments did not comment outside its business hours.

The company expects cash conversion levels to increase from about 20%-30% in the 2025 financial year to at least 50% in 2026 and above 80% in subsequent years.

Johnson Matthey said it will not allocate further growth capital expenditure to the hydrogen technologies division, spending will be reduced to maintenance levels of no more than £5 million (RM27.3mil) each year from 2026.

Companies around the world have increased investments in green hydrogen, a zero-carbon fuel made by using renewable power from wind and solar to split water into hydrogen and oxygen, in their quest for energy which does not add to global warming.

The fuel has been identified as a potentially important way of decarbonising transport, by powering vehicles with only water as a by-product.

Standard Investments had urged Johnson Matthey to limit further investment in hydrogen technologies, including a potential exit, citing that the division has burnt cash and continued to generate operating losses.