Johnson Matthey will review executive compensation and cut spending in hydrogen technologies

Johnson Matthey, a British autocatalyst manufacturer, announced on Monday that it would reduce its capital expenditures in its Hydrogen Technologies business and review the executive pay to increase its cash flow. This was in response to pressure from its largest investor.

In late 2018, the company, which produces catalytic convertors and pollution filters, failed to meet analysts' expectations in terms of first-half revenue. It also missed on underlying profit due to a drop in global vehicle production, and a low trading volume for Platinum Group Metals.

Standard Investments, Johnson Matthey's largest shareholder with an 11% share, urged the company to conduct a strategic review in December and to restructure its board.

Johnson Matthey stated that although its transformation strategy, which it had set in March 2022 after Liam Condon became group CEO, was "delivering clearly results", the board recognized that "further progression is required at a pace."

The company, which is centuries old, said that it was reviewing its executive remuneration plans to give more weight to cash generation targets. It also formed a new committee to examine cash generation.

In a press release, the "Board" acknowledged the need to increase the share price in absolute terms and deliver higher returns to shareholders.

Early trading saw a 1% gain in Johnson Matthey's shares. The stock has lost 27% since Condon became CEO.

Standard Investments, based in New York, did not respond to requests for comment after business hours.

The company anticipates that cash conversion rates will increase from approximately 20%-30% during the 2025 fiscal year to at minimum 50% in 2026, and to above 80% for subsequent years.

Johnson Matthey has announced that it will no longer allocate growth capital expenditures to its Hydrogen Technologies division. Instead, the company will reduce spending to maintenance levels at no more than 6 million pounds (5 million pounds) per year starting in 2026.

In their search for energy that does not contribute to global warming, companies around the globe have increased their investments in green hydrogen, a fuel produced by splitting water using renewable electricity from solar and wind.

Fuels that produce only water can be used to power vehicles, which is a way of reducing carbon emissions.

Standard Investments had asked Johnson Matthey not to invest in hydrogen technologies further, and even to consider a possible exit. They cited that the division was burning cash and continuing to produce operating losses.

(source: Reuters)