- Metals and chemicals processor has seen shares halve in value over five years
Standard Industries has called for a shake-up of Johnson Matthey’s board and the launch of a strategic review after a prolonged share price slump.
The industrials giant, which says it has an ‘economic interest’ in around 11 per cent of Johnson Matthey’s shares via its Standard Investments arm, warned ‘decisive action must be taken’ as it also called for the sale of the firm’s Hydrogen Technologies unit.
Co-chief executives David Millstone and David Winter slammed a track record of unprofitable takeovers, and ‘volatile and meagre’ group free cash flow.
They also highlighted the ‘tremendous’ underperformance of Johnson Matthey’s PGM Services business, and ‘unambitious’ performance targets for its industry-leading Clean Air unit.
Johnson Matthey shares have fallen by around 15 per cent over the last 12 months and have lost more than half their value over the last five years.
The chemicals and metals processor has seen profits suffer amid tough market conditions and FX headwinds
The chemical and precious metal processor, which has blamed a fall in profits on tough market conditions and FX headwinds, is in the process of a transformation plan.
It plans to divest underperforming units and improve cost savings overall.
Millstone and Winter said in an open letter published on Monday that Standard Investments has ‘directly engaged’ with Johnson Matthey on the ‘many challenges’ it faces ‘and the opportunities which should be seized’.
They added: ‘Despite our patient and constructive approach, the Board and management remain complacent and incapable of correcting a misguided strategy that has delivered sustained underperformance.
‘This has created a massive credibility gap with investors and the broader market.’
Standard Investments wants Johnson Matthey to ‘refresh’ its board, which currently lacks ‘the sense of urgency and strategic capabilities required, with ‘highly qualified independent directors’.
It also thinks the group should ‘de-risk or sell’ Hydrogen Technologies, and launch a formal and public strategic review process.
Millstone and Winter added: ‘As long-term owners and operators of both industrial and investment businesses, we believe pursuing the actions we outline will position JM to unlock the unrealised promise of “New Johnson Matthey” and emerge as a stronger, more resilient business, enabling significant value creation for the company and its shareholder.’
Johnson Matthey has been contacted for comment.
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.