Top investor in UK industrial giant Johnson Matthey demands overhaul
The US-based investor said the British firm, one of the biggest makers of catalytic converters for car exhausts, needed a board shake-up.
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Your support makes all the difference.The largest shareholder in British industrial giant Johnson Matthey has demanded an overhaul of the company’s board and a new business plan which could include selling the firm.
Standard Industries, a US conglomerate, wrote on Monday via its investment platform Standard Investments that “decisive action must be taken” after a prolonged slump in Johnson Matthey’s share price in recent years.
Bosses David Millstone and David Winter slammed Johnson Matthey’s directors for being “complacent and incapable of correcting a misguided strategy”.
JM’s current board of directors lacks the sense of urgency and strategic capabilities required to improve the company’s performance
Johnson Matthey responded on Monday afternoon to say its board “welcomes constructive input from all shareholders”.
“The board and management team are resolute in their focus on improving JM’s (Johnson Matthey’s) share price performance and recognise the need to restore shareholder returns,” it said in a statement.
The firm added that it was “making progress in a challenging market environment” through its transformation strategy.
London-listed Johnson Matthey is a two-century-old industrials and chemicals firm which makes most of its money from making catalytic converters for cars.
The devices are fitted to car exhausts and are designed to reduce carbon emissions and other harmful pollutants.
About one-in-three cars on the road in the UK are fitted with a Johnson Matthey catalytic converter.
But its share price has slumped 55% in the last five years, with many investors concerned that the converters will become obsolete with the onset of electric cars.
Sales at Johnson Matthey’s so-called clean air business, which makes the converters, were down 9% year-on-year for the six months to September.
It also has several other business units which are seeing even sharper declines, such as a hydrogen technologies business.
Standard Industries demanded that Johnson Matthey sell this business, which delivered £20 million in sales in the first half of the financial year, down 46% on the same period in 2023.
The investor also called for a “refresh” of Johnson Matthey’s board, pointing out that only one new director had been hired since November 2021.
We strongly urge the board to hire advisers and publicly launch a formal strategic review process exploring all potential paths for maximising shareholder value, including, but not limited to, a sale of part or all of the company
Standard Industries’ Mr Millstone and Mr Winter wrote that the current team of top executives “lacks the sense of urgency and strategic capabilities required to improve the company’s performance”.
They added that selling the entire company could even be an option and the Johnson Matthey bosses should hire advisers to explore their options.
They wrote: “We strongly urge the board to hire advisers and publicly launch a formal strategic review process exploring all potential paths for maximising shareholder value, including, but not limited to, a sale of part or all of the company.”
Johnson Matthey employs 11,600 people across more than 30 countries, including a large manufacturing plant in Royston, Hertfordshire.
The market seems to welcome Standard Investments’ intervention and that may hint at the potential for success in its efforts to secure new voices on the board and radically shake up the business
Shares in the company jumped 4.3% on Monday after the publication of the letter.
Russ Mould, an analyst at AJ Bell, said the criticisms were “lent credibility by the poor performance of the share price and weak and inconsistent earnings over several years”.
He added: “The market seems to welcome Standard Investments’ intervention and that may hint at the potential for success in its efforts to secure new voices on the board and radically shake up the business.”