The company acknowledged that its capital intensity was too high compared with other more established large-scale low-cost producers. Whilst demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers. Consequently, this is rapidly turning into a high volume, commoditised market.
It is to this end that the Board of Johnson Matthey has decided to put all or parts of the battery business up for sale with the ultimate intention to exit the battery business. The company intends to move swiftly to determine the best outcome for all of its stakeholders and will make a further announcement as soon as possible.
In a statement, JM says it is making good progress in its other growth areas, such as hydrogen technologies, circularity and the decarbonisation of the chemicals value chain. It sees these as attractive opportunities, which it will now accelerate with greater focus and investment.
It goes further to say, “In addition, in a world that increasingly needs solutions to address the challenges faced by climate change, we will continue to pursue opportunities across other areas that are closely aligned to our core capabilities.”
Robert MacLeod, Chief Executive, said: “While the testing of our eLNO battery materials with customers is going well, the marketplace is rapidly evolving with increasing commoditisation and lower returns. We have concluded that we will not achieve the returns necessary to justify further investment.
“This decision will allow us to accelerate our investment and focus on more attractive growth areas, especially where we have leadership positions such as in hydrogen technologies, circularity and the decarbonisation of the chemicals value chain.”
Johnson Matthey will announce its first-half results on 24 November, which will be in line with market expectations. The trading outlook for the full year ending 31st March 2022, assuming current precious metal prices and foreign exchange rates, is towards the lower end of market expectations.
This is primarily due to the wider supply chain shortages affecting the automotive industry and the consequential impact on precious metals prices, together with acute labour shortages in the US that are adversely impacting its Health business, which is subject to a strategic review.