Interactive Investor

FTSE 250 shares round-up: Johnson Matthey, Britvic, Bodycote

UK mid-cap stocks have easily outperformed their FTSE 100 counterparts over the past month and are doing so again today. Here are the winners and losers.

22nd November 2023 12:44

Graeme Evans from interactive investor

A big earnings miss failed to hold back Johnson Matthey (LSE:JMAT) shares today as the clean air technologies firm became an unlikely front runner in the FTSE 250 index.

The former blue-chip stock offset the weaker-than-expected half-year results performance by lifting its guidance for the remainder of the financial year.

Chief executive Liam Condon told investors the outlook for JM’s underlying performance has improved, underpinned by restructuring benefits of about £55 million in the year.

He said: “We are starting to see the benefits of the new strategy and transformation of Johnson Matthey.”

The 200-year-old business suffered relegation in September’s FTSE 100 reshuffle, a fate sealed by the impact of lower prices on the world's largest recycler of platinum group metals.

Without the £55 million hit from lower prices, the company said today’s operating profit figure would have been 10% higher.

Underlying earnings of £180 million were down 19% year-on-year and 11% below the City consensus, although UBS analysts blamed metal prices for the majority of this miss.

Johnson Matthey said that while precious metal prices have stabilised recently, it remains difficult to predict how they may develop. If they stay at their current level, this would be an adverse impact of £80 million on full-year results.

Excluding these price factors, it now expects at least high single digit growth in operating profits compared with mid-single digits forecast previously.

This is driven by hopes for continued margin improvement in its clean air and catalyst technologies divisions, as well as near term sales growth in hydrogen technologies.

Today’s results included an unchanged dividend of 22p a share, which will be paid to shareholders on 6 February. Analysts at Jefferies have a target price of 2,100p, which compares with this morning’s 1,533.5p after a results-day rise of 74.5p.

Other corporate updates in the FTSE 250 failed to trigger such a strong response, with Britvic (LSE:BVIC) down 2p to 837p after its annual results met City hopes.

Chief executive Simon Litherland said Britvic delivered “another excellent performance” in a year when the Fruit Shoot, Robinsons, Tango and J2O business faced significant cost pressures as well as poor summer weather.

Revenues rose 8.1% to £1.75 billion and adjusted earnings by 6% to £218.4 million, although one-off items meant post-tax profits were slightly weaker at £124 million.

The company made no comment on trading in the early part of the 2024 financial year, although analysts at UBS see no reason for material changes to City forecasts following today’s figures.

Britvic increased its full-year dividend by 6.2% to 30.8p a share, which it said reflected confidence in its prospects and strong balance sheet. This will be paid on 7 February.

Among other companies reporting today, Bodycote (LSE:BOY) shares fell 8p to 585.5p despite the heat treatment and thermal processing business sticking by full-year guidance.

Its update for the four months to 31 October showed year-to-date revenues 10% higher at £677 million, with aerospace and defence the driving force. Automotive revenues fell by 2%.

Analysts at Jefferies called the update “very resilient” and said the direction of travel looked to be unchanged. They added: “Management seldom issues long, wordy outlook commentary. And today is no different, and the messaging is clear with regard to 2023.”

The US bank has a “buy” recommendation and target price of 900p.

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