Johnson Matthey (JMAT) share price soars on plans to invest £200m in battery materials business
Chemicals firm Johnson Matthey’s shares soared after the firm said it would invest £200m into expanding its battery material technology business.
The company will plough an initial investment of up to £200m from 2018 to capitalise on growing demand for electric vehicles.
Johnson Matthey said the overall market could be worth more than $30bn (£22bn) in sales once battery electric vehicles make up around 10 per cent of the market.
Shares in the FTSE 100 company were up 11.54 per cent at 3,297p in afternoon trading.
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In its capital markets day statement, the company also confirmed overall guidance for the year. It said its autocatalyst business would deliver strong single-digit sales growth in the next two to three years as emissions legislation tightens. Sales are expected to moderate in the following years due to the move away from diesel engines in Europe and the increasing penetration of electric vehicles.
“Thematic investors are diving into any sub-sector of the stock market that could benefit from electric vehicles (EVs). Johnson Matthey has now positioned itself within the EV space through lithium batteries,” said Jasper Lawler, head of research at LCG.
Analysts at Investec said: “We would hope that today management outlines a clear and compelling strategy and certainly the sizeable investment planned for battery materials is a notable step in the right direction, still some way behind Umicore, but indicative of the company being increasingly confident of securing business in the space.”
Johnson Matthey has trailed behind rival Umicore in growing its battery business.
Robert MacLeod, chief executive of Johnson Matthey, said:
We will enhance our leadership in the high margin, technology driven growth markets we operate in through focused investment and efficiency throughout the group.
This will create value and a cleaner and healthier world.
Read more: Weakened sterling gives Johnson Matthey a £27m profit bump