A generationThis is a perfect 180-degree strategic turnaround.Just in April, Robert McLeod, CEO of the FTSE 100 Index Johnson Matthey, Stimulated the excitement of the group’s work in electric vehicle battery materials-this is a very zero net risk, designed to replace the imminent decline in the company’s core business of internal combustion engine catalytic converters.
In addition to the factory built in Poland, a new factory will be built in Finland and a long-term agreement to ensure the supply of raw materials-nickel, cobalt and lithium hydroxide has been signed. MacLeod announced that Johnson Matthey has passed “an important milestone in our development of a sustainable battery material ecosystem“.
For the UK, the news sounds great. Johnson Matthey is a low-key member of Footsie, but is called the national champion in this new professional field-not the battery itself, but the key chemistry and raw materials. The factories will be overseas, but 400 high-skilled R&D jobs are concentrated in Oxfordshire and Durham. Will bring the benefits of overflowing batteries to the country.
now? The adventure was abandoned. McLeod said these numbers do not add up, which completely reversed his enthusiasm in April. “We concluded that we will not get a return to justify further investment,” he admitted, blaming intensified competition and commoditization.
However, the notion that the risk of competition has only become apparent in recent months is untenable. Many Manchester City analysts have held the same view for the physical advantages of Chinese, South Korean and Japanese players for many years.exist Europe, Belgian rival Umicore is believed to get off the car faster.
It is impossible to know how the debate within the board of directors is conducted, but some people suspect that this is a bad case because so much money has been invested. Bad judgment: Analysts predict that even if one or more buyers can be found, the unit’s £340 million net asset value will be significantly written down.
McLeod thinks it’s a good time for him to retire (shareholders may agree to see the 19% drop in stock prices that day), but the real question is where Johnson Matthey will go next. This is an excellent British company with a history of 200 years. It is a science-based company that, in theory, should be able to make good use of the energy transition. On the contrary, the big bet on the battery has failed. The hydrogen battery and chemical decarbonization, two companies that are called future technologies to replace the revenue of catalytic converters, are in the early stage of development.
The danger is that private equity predators or similar institutions believe that the company is more valuable when it is dead than it is alive, and then it becomes popular. It’s easy to imagine a frustrating alternative strategy: squeeze cash flow from the catalytic converter, city analysts say it may still reach 4 billion pounds in the next ten years, and then sell the rest of the business.
The new CEO, Liam Condon, is about to resign from the German chemical group Bayer, but he won’t be in office until March next year. Some people think that a strategic review will be conducted at that time, but at the same time, Johnson Matthey’s board of directors needs to be controlled. When you abandon your big project six months after the hype, you look confused and vulnerable.
ING supports the “not huge” impact of Brexit
“Nothing is closer to Christmas than we are Brexit Negotiation,” ING’s economic team said half-jokingly.
this European Union If the UK unilaterally modifies the Northern Ireland Agreement, the UK is preparing possible options for retaliation, including a suspension of trade agreements. So yes, it’s time for urban thinkers to collate their “no-deal” Brexit analysis and examine which parts may apply.
Perhaps surprisingly, ING has fewer answers than you might think. Britain’s withdrawal from the single market and customs union at the end of 2020 is a “significant change in trade terms”, and many of the costs of Brexit have already been incurred in form filling and customs procedures. The additional economic shock “may not be great.”
This is a theory that will only be tested when the trade and cooperation agreement ends. But please note that analysts are mainly looking at the impact on the pound, and they are looking at the problem from the overall perspective. As they admit, this will “severely hit some key industries”, and these industries may be severely hit by tariffs. Well, quite. Financial markets may feel relaxed about current political rhetoric; this is not the case in the UK’s automotive and agricultural industries.
