- Standard has an 11% stake in catalytic converter maker Johnson Matthey
Johnson Matthey’s biggest shareholder has denounced the chemicals specialist’s response to calls to replace its board as ‘wholly insufficient’.
Industrials investor Standard Investments, which has an 11 per cent stake in Johnson Matthey, has been agitating the company to nominate new directors.
It claimed this would stop the ‘significant value destruction’ that has occurred under the current management.
On Christmas Eve, Johnson Matthey replied, saying its board possessed a ‘strong mix of skills and expertise’ that could support management whilst providing ‘appropriate rigour and challenge’.
It said three of its seven non-executive directors had arrived in the past three years, while a new chief financial officer is joining in ‘the coming months’.
The catalytic converter producer also announced the setting up of an investment committee that would ‘periodically assess whether alternative options to the status quo are available to maximise value’.
Leadership: Johnson Matthey’s biggest shareholder, Standard Investments, has denounced the chemicals specialist’s response to calls to replace its board as ‘wholly insufficient’
However, Standard said on Tuesday that this idea was ‘wholly insufficient’ and failed to sufficiently deal with ‘the many serious issues’ raised in its 16 December letter.
‘In fact, it only underscores the continued lack of urgency and incapacity of the current board to do what is necessary to turn Johnson Matthey around and help it to realise its potential,’ the firm added.
‘We have engaged legal, proxy and other advisors as we plan to actively engage with fellow shareholders. We also await a more substantive response to our most recent letter.’
Standard’s December letter noted that only one new independent director had joined Johnson Matthey’s board since November 2021, when it announced intentions to sell its battery materials business.
It also recommended Johnson Matthey de-risk or sell its hydrogen technologies arm, claiming it was ‘facing a similar fate’ to its battery materials segment.
Johnson Matthey sold the latter division in 2022 for just £50million due to stiff competition and low investment returns.
Standard additionally wants the firm to undertake a strategic review that could involve a complete or partial sale of the entire business.
In its latest half-year results, Johnson Matthey revealed turnover slumped by around £900million to £5.6billion, while its underlying pre-tax profits shrank by 4.3 per cent to £133million.
The London-based manufacturer said a ‘challenging macroeconomic backdrop’ had hurt trading, with a drop in global vehicle production impacting its clean air segment.
Meanwhile, a weaker vehicle scrap recycling market impacted the firm’s platinum group metals arm.
Yet Johnson Matthey upheld its annual outlook and said it expects a stronger result in the second half as the benefits of its ‘transformation programme’ seep through.
Johnson Matthey shares were 0.4 per cent lower at £13.46 on early Tuesday afternoon, meaning they have lost around 18 per cent over the past 12 months.
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