Interactive Investor

ii view: Johnson Matthey as a hydrogen fuel cell play

18th September 2020 11:48

Keith Bowman from interactive investor


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Its products reduce carbon emissions, but this UK company is also looking to the future. 

Hydrogen seminar

Chief executive Robert MacLeod said:

"Johnson Matthey has been a leader in hydrogen activities for many years. We have an established and profitable business across hydrogen production and fuel cells, with leading technology, strong segment shares and a long-standing customer base. 

“In Fuel Cells, we are very excited about the major growth opportunities where we can apply our catalyst and platinum group metals expertise to decarbonise transportation. 

“I am confident that Johnson Matthey is strongly positioned to deliver significant future growth across hydrogen as the global transition to net zero accelerates."

ii round-up:

Maker of products to reduce air pollution Johnson Matthey (LSE:JMAT), including many of the world's catalytic converters, today held an analyst seminar regarding its hydrogen business and how it believes it will contribute towards positive climate change. 

Increasing commitments by both governments and companies over the last year seek to achieve net zero emissions by 2050 as established at the Paris climate change summit in 2015. Oil majors including BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) have been pushing environmental initiatives higher up their strategic agendas. 

An increasing use of hydrogen in replacing carbon base fuels is expected to contribute heavily to achieving net zero emissions by 2050. Johnson Matthey is, management believes, strongly positioned to benefit in the use of hydrogen.  

Today, Johnson Matthey already achieves sales of around £100 million annually across fuel cells and hydrogen production technologies. Fuel cells are expected to play a key role in the decarbonisation of transportation. It has over 20 year's experience in fuels cells and is an area in which it already makes a profit. 

The company is currently positioned across the fuel cell components value chain, which includes the manufacture of catalyst coated membranes (CCM) and membrane electrode assemblies. The addressable market for CCM supply into fuel cell truck and automotive applications is estimated by management consultants to be worth £1 billion per annum to Johnson Matthey in 2030 and more than £10 billion per annum come 2040. 

Much of its current profit comes from emissions catalysts to reduce fossil fuel air pollution. Its products cater for both the car and truck sectors along with heavy industries such as chemicals and oil and gas. Full-year profits to the end of March fell 38% as the coronavirus pandemic hit sales and disrupted production for its automotive customers. 
ii view:

Employing over 15,000 people, Johnson Matthey has built itself into a key global player in the clean air arena. One in every three new cars carries one of its catalytic converters. Increasing legislation to improve the environment appears to play into its hands. A foothold in the hydrogen fuel cell arena offers long term growth potential as the world moves with increasing urgency to tackle carbon associated climate change.

For investors, the near-term impact of Covid-19 on its automotive and industrial customers and continued overshadowing of the outlook head the agenda. Its shares are down by nearly 15% year-to-date and August European new car sales fell by 17.6%. Management caution also saw it halve the 2019 final dividend. But exposure to required environmental change continues to support the long-term reasoning for investors to hold Johnson shares, a case arguably further strengthened by its exposure to hydrogen and fuel cell technologies. 


  • Strong position in the clean air market
  • A cost saving and efficiency programme in progress 


  • Uncertain outlook due to Covid-19
  • Dividend payment cut

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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