UPDATE - Johnson Matthey stock dives on news of battery materials ops sale

British chemicals and precious metals company Johnson Matthey Plc (LON:JMAT) saw its stock close 19% lower on Thursday after it said that it will look at exiting its battery materials operations in light of competition from other producers as well as alternative technologies.

Shares in Johnson Matthey closed at 2,236 pence, resulting in a market capitalisation of GBP 4.33 billion (USD 5.8bn/EUR 5.06bn).

The company has been developing a range of nickel-rich cathode materials (eLNO) for battery electric vehicles (EVs) and has been targeting the start of mass production in 2022.

"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," CEO Robert MacLeod said.

Johnson Matthey added that it had explored potential strategic partnerships in recent months, but concluded that its capital intensity was more demanding compared to large-scale, low-cost competitors.

The UK company will consider making a swift decision on the sale of all or parts of the business, with its intention being to divest it completely. In addition, its health business is also currently subject to review.

The sale of the battery materials operations will enable Johnson Matthey to focus on growth areas such as hydrogen technologies, circularity and the decarbonisation of the chemicals value chain.

The company also said that that its trading outlook for the fiscal year ending on March 31, 2022 is close to the lower end of market expectations, due to supply chain shortages in the automotive industry, the related impact on precious metals prices and serious labour shortages in the US.

(GBP 1 = USD 1.340/EUR 1.169)

Choose your newsletter by Renewables Now. Join for free!