Profile: Saving graces of a well-bred hard man: David Davies: Johnson Matthey's chairman is solid blue-chip but along with his rescue act comes a reputation for ruthlessness. He talks to Helen Kay

DAVID DAVIES is known for rescuing companies rather than running them. As chairman of Johnson Matthey since January 1990, he has spent the past few years slashing costs and completing a salvage operation at the precious metals-to-pigments group.

Last week the fruits were apparent, with a 14 per cent rise in operating profits to pounds 81.7m. Time, surely, to be off.

Yet a few months ago, Davies surprised the City by signalling his intention of staying put. In April, he added chief executive to his many other roles - a move approved by institutional investors although it runs counter to the Cadbury Committee's guidelines on corporate governance. It was a measure of how highly Davies is regarded.

As financiers go, they do not come more blue-chip. Both breeding and training place Davies firmly in the Establishment. His grandfather was Sir John Davies, erstwhile head of Richard Thomas and Baldwin; his uncle was once managing director of the Steel Company of Wales. 'My father went off as a second son and set up his own business making steel wire rope,' he explains. 'I was born (in 1940) in Bridgend and spent the whole of the war years in my father's country house.' The factory, in Cardiff, made parachutes and rubber dinghies as part of the war effort.

His mother, however, a straightforward and determined Northerner, was not very happy in Wales, and in 1947 she persuaded her husband to buy a farm in County Wicklow, Ireland, which Davies has inherited.

Nine years before the move, his father, Stanley, had started Cambrian Airways, primarily because he had a second factory in Bridgwater, Somerset, and wanted to hop the Bristol Channel.

From the tender age of seven, Davies commuted on Cambrian's Dakotas between school in England and holidays in County Wicklow. After prep school in Malvern, he went to Winchester College and New College, Oxford, where he read modern languages, emerging in 1962 with a gentleman's third.

The jet-set existence hotted up when he joined Chase Manhattan in 1963. 'The one thing I knew was that I wanted to go to America,' he says. He was also determined not to work for his father. But as so often in Davies's life, family connections played a pivotal role. A family friend introduced him to David Rockefeller, who hired him.

A year later he was off to New York, where he stayed with Chase Manhattan till 1967 and then with Hill Samuel. He married Debbie Loeb, the daughter of a Wall Street investment banker. But by 1972 the marriage was over, and by coincidence Hill Samuel was thinking of sending him back to England. 'I felt I wanted to come back and see what was going on here,' he says. He returned to Hill Samuel's corporate finance department in London and that same year became a director, at the tender age of 32.

But the following year he was approached by Kennedy Kisch, then deputy chairman of the property group MEPC and a long- standing neighbour of his father in Wicklow. The group was looking for a finance director.

Tempted by the job - and jolted by Hill Samuel's near-merger with Slater Walker in 1973 - Davies took it. 'Unfortunately it coincided with the downturn in 1974,' he recalls. Working closely with Sir Christopher Benson, he pulled MEPC through the crisis and discovered a taste for salvage operations.

In 1977, he became deputy chairman of MEPC and stayed there till 1983. He was then approached by Henry and Simon Keswick, and asked to become managing director of Hongkong Land. 'I was very excited by the opportunity. I wanted to break out of pure property - Hongkong Land also has hotels and dairy farm businesses,' he says.

'When I arrived in Hong Kong I was pretty stunned by how serious the problems were, both in political terms for the colony and in terms of the financial state of the company itself.'

Yet the three years Davies spent in the colony were, he says, 'immensely rewarding'. He met his second wife, Linda Wong Lin-Tye, the daughter of a wealthy Chinese businessman. 'We met in Kuala Lumpur, when her father was establishing a joint venture with Mandarin Hotels (part of the Hongkong Land hotel portfolio).'

Davies still maintains a home and private interests in the colony, and is a non-executive director of The Wharf, Hong Kong's third-largest business. He and his family return regularly: 'My children (aged 5 and 2) are half-Chinese and I want them to have every part of that heritage.'

By 1986, however, he had finished his job at Hongkong Land and was getting restless. He decided to re-establish business connections in London and New York, and joined Hill Samuel as a non-executive director.

The merchant bank was looking for a tie-up with another partner and was being wooed by UBS. When the deal fell through, Davies was asked to take over as chief executive. His answer - a triumph for Hill Samuel and himself - was to sell the bank to TSB for two and a half times its book value.

Since then Hill Samuel has become a byword for black holes, but that, says Davies very firmly, is 'the PR'. 'When we sold it to the TSB it had a loan book of pounds 800m and a bad-debt ratio which had never risen above about one quarter of one quarter of a per cent during the 22 years of its corporate life,' he added. 'TSB has not been a good parent.'

As midwife to the deal, Davies stayed on until April 1988, but he was then approached by Sir Michael Edwardes to become deputy chairman of Charter Consolidated. At the time, Edwardes was also chief executive of Minorco and in the middle of the battle with Consolidated Gold Fields. Charter's business was primarily its then 38.3 per cent stake in Johnson Matthey, the management of which Davies effectively assumed in 1990. Two years later he was responsible for unravelling this structure, when Charter sold out.

Having administered the medicine, he is now keen to see the revived Johnson Matthey expand globally through a series of joint ventures. 'I believe British companies will only survive against international competition if they think in terms of worldwide market share,' he explains.

The company has set up a joint venture with Hicom in Malaysia to build the region's first auto-catalyst factory; with Mitsubishi Chemicals to produce the world's biggest manufacturer of sputtering targets, used to deposit metal on semi-conductor chips; and most recently it has set up a venture with Cookson to amalgamate their ceramics businesses. The move will give a market share of around 16 per cent - critical mass, as the world leader has 22 per cent, says Davies.

He prides himself on being logical in business, but concedes he is 'a hard taskmaster'. Others put it less kindly. Although they point to his glittering CV with genuine respect, they say he is utterly ruthless. 'He is one of the most proficient networkers in the City, but the private face can be very aggressive indeed,' says one man who has worked with him.

Johnson Matthey's chief executive is, it seems, a platinum hand in a velvet glove. And the glove, on occasion, comes off.

(Photograph omitted)