Investors in chemicals and precious metals group Johnson Matthey yesterday heard how the company’s Dundee-based battery technology business continued to “make progress” ahead of a new $26 million Chinese acquisition.
The division which includes a research and development hub at Dundee’s Wester Gourdie Industrial Estate and a major plant in the Polish city of Gliwice expects to complete a deal for new assets in the Far East in the coming weeks.
The agreement will see Johnson Matthey buy a Chinese cathode material manufacturing plant from Massachusetts-based rival A123 Systems, with 80 employees transferring to the new owner.
It is expected the deal, which includes a long-term reverse supply arrangement for lithium iron phosphate, will complement Johnson Matthey Battery Systems’ research programmes and expertise as the group seeks to develop the next generation of long-range vehicle battery systems.
Chairman Tim Stevenson told shareholders gathered for the group’s annual general meeting at the Ironmongers Hall in London that sales in Johnson Matthey’s ‘new businesses’ division were “steady” during the first quarter at £18m.
While much of the research and development focus of the Battery Systems business is on automotive applications, sales revenues are primarily driven by demand from power tools and e-bike manufacturers.
The arm broke even during the last financial year on total revenues of £69m, following Johnson Matthey’s acquisition of the business, formerly known as Axeon, for just over £40m in October 2012.
Mr Stevenson said the group’s prospects were “robust”.
Revenue excluding precious metals was flat at £749m for the first quarter to the end of June, but underlying pre-tax profit fell 10% to £95m.
Overall group sales had risen by 9% before a £50m hit from foreign exchange movements and a £10m loss in income on platinum contracts, the chairman added.
Johnson Matthey’s emission control division which specialises in catalytic converters saw sales jump 10% thanks to the growing number of new car sales and new pollution rules in Europe and China.
Shares closed the day down 1.2% at 3,022p. All resolutions at the group’s annual general meeting were passed.