Johnson Matthey to invest 200m pounds in battery material technology

LONDON, Sept 21 (Reuters) – Johnson Matthey said it will invest an initial 200 million pounds ($270m) in expanding its battery material technology business from 2018, aiming to capitalise on growth in the electric vehicle market.

The specialty chemicals company said the overall market "could be (worth) more than $30 billion (in) sales when battery electric vehicle penetration increases to around 10 percent."

Its Clean Air business, which includes autocatalysts, is expected to show "strong single-digit sales growth" in the next two to three years, driven by share gains in European light duty and upcoming tighter legislation, the company said in a statement, released to mark JM's Capital Markets day.

From then on, growth will slow as a move away from light duty diesel engines in Europe and the expansion of the battery electric light duty vehicle market offset growth in Asia and strength in the heavy duty sector in North America, it said.

Its programme of increased investment in the health sector, which started three years ago, is expected to deliver double-digit sales growth and substantial margin expansion from 2019/20, it added.

The company said in the medium term it targeted a 20 percent compound annual growth rate in its return on invested capital (ROIC), and planned to deliver a progressive dividend policy and mid to high single digit earnings per share growth.

It confirmed overall guidance for the full year.

"Johnson Matthey has delivered a confident riposte to fears over its terminal growth given the diesel debate at the heart of the investment case," Morgan Stanley said in a note.

"Targets are maintained, new cost cutting has been announced and greater granularity … has been provided on its EV strategy." ($1 = 0.7413 pounds)

(Reporting by Jan Harvey; Editing by Susan Fenton)