Johnson Matthey has lost around 11% of its stock market value since last week when VW admitted to falsifying the tests of its diesel cars in the US — a market which Johnson Matthey has been working hard to break into.
Diesel catalysts, which provide more than half of Matthey’s annual sales, are about five times more profitable than equivalent petrol and hybrid filters. Investors had therefore hoped diesel would gain popularity in the US, where the fuel has a market share among engine makers of between 5 and 8 per cent compared with nearly 50 per cent in Europe, said Deutsche Bank.
“The negative reputation of diesels in the US has taken a further knock and is now unlikely to gain significant market share,” Deutsche said. “Furthermore, the negative reputation could migrate over the Atlantic into Europe.”
Legislation in favour of petrol and hybrids means tougher emissions regulation will become a risk for the catalyst makers rather than an opportunity, said Exane BNP Paribas. Matthey’s sales growth could halve as a result, from 8 per cent to 4 per cent, as the global market value goes into decline from 2019, it forecast.
This is the company’s lowest share price since March 2013. The shares also reflected a six-year low for platinum, which analysts suggest could increase pressure on Matthey’s supply and refining businesses.
Zacks upgraded the company (OTCMKTS:JMPLY) from a sell rating to a hold rating in a research note issued to investors on Tuesday morning according to reports.The share price opened slightly higher today, after yesterday dipping to a 2.5-year low. On Thursday, 24 September, Johnson Matthey PLC share price was 2,405.50p.