Johnson investor Matthey rejects the chemical group’s response to calls for an overhaul of its board
- Standard has an 11% stake in catalyst manufacturer Johnson Matthey
Johnson Matthey’s largest shareholder has labeled the chemical specialist’s response to calls to replace the board as ‘completely inadequate’.
Industrial investor Standard Investments, which has an 11 percent stake in Johnson Matthey, has pushed the company to appoint new directors.
It claimed this would put an end to the “significant value destruction” that has taken place under current management.
On Christmas Eve, Johnson responded to Matthey, saying the board had a “strong mix of skills and expertise” that could support management while providing “the right rigor and challenge.”
It says three of its seven non-executive directors have arrived in the past three years, with a new chief financial officer joining ‘in the coming months’.
The catalyst manufacturer also announced the establishment of an investment committee that would “periodically assess whether alternative options to the status quo are available to maximize value.”
Leadership: Johnson Matthey’s largest shareholder, Standard Investments, has denounced the chemical specialist’s response to calls to replace its board as ‘wholly inadequate’
However, Standard said on Tuesday that this idea was “wholly inadequate” and did not adequately address the “many serious issues” raised in the December 16 letter.
“In fact, it only underlines the current board’s continued lack of urgency and inability to do what is necessary to turn Johnson Matthey around and help the company realize its potential,” the company added.
‘We have engaged legal, proxy and other advisors as we intend to actively engage with fellow shareholders. We are also waiting for a substantive response to our most recent letter.’
Standard’s December letter noted that only one new independent director had joined Johnson Matthey’s board since November 2021, when the company announced its intention to sell its battery materials business.
It also recommended Johnson Matthey de-risk or sell its hydrogen technology unit, saying the company “faced a similar fate” to its battery materials segment.
Johnson Matthey sold the latter division for just £50 million in 2022 due to intense competition and low investment returns.
Standard also wants the company to conduct a strategic review that could include a full or partial sale of the entire company.
In its latest half-year results, Johnson Matthey revealed that sales fell by around £900m to £5.6bn, while underlying pre-tax profits shrank 4.3 per cent to £133m.
The London-based manufacturer said a “challenging macroeconomic backdrop” had hurt trading, with a decline in global car production impacting the clean air segment.
Meanwhile, a weaker car scrap recycling market affected the platinum group company’s metals division.
Still, Johnson Matthey maintained its full-year outlook and said it expects a stronger result in the second half as the benefits of its “transformation program” filter through.
Johnson Matthey shares were 0.4 per cent lower at £13.46 early on Tuesday afternoon, meaning they have lost around 18 per cent over the past twelve months.
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