Chemicals maker Johnson Matthey (JMAT.L) halved its dividend on Thursday and said it would cut nearly a fifth of its workforce as the coronavirus pandemic hits demand for its car pollution filters.
The company, one of Europe’s leading producers of autocatalysts, said the 2,500 layoffs, or 17% of its staff, were part of a new plan to target annualised savings of at least 80 million pounds ($101 million) over the next three years.
The company’s shares listed in London were down 3.2% by 0822 GMT. They have lost nearly 30% of their value this year, underperforming the wider FTSE 350 Chemicals index .FTNMX1350 that is down 18%.
“The decision taken to reduce costs has been difficult and the impact on jobs is regrettable,” Chief Financial Officer Anna Manz told Reuters.
“But they are the correct ones to ensure that Johnson Matthey continues to be well placed to deliver long term.”
Johnson Matthey said costs cuts would come from consolidating plants in its Clean Air division, which accounts for about 60% of sales, and by using better technology to simplify the organisation.
It said, however, that it would accelerate its growth strategy by investing 400 million pounds in 2021 with a focus on climate change and sustainable technology.
“Following automotive OEM (original equipment manufacturers)shutdowns earlier in the year, we are now seeing our customers gradually reopen their plants,” the company said. “However, visibility on the path of recovery remains low.”
Johnson Matthey did not provide a forecast for 2021. Its operating profit for the year ended March 31 tumbled 27% to 388 million pounds as it booked a restructuring charge of 140 million pounds and took a COVID-19 hit of 60 million pounds.
With liquidity of about 1.3 billion pounds and net debt of 1.1 billion pounds at the end its financial year in March, Johnson Matthey said it would propose a final dividend of 31.125 pence, or half the level for the previous year.
Manz said the company could raise dividends once market conditions recover.
JP Morgan analysts said Johnson Matthey’s second-half performance beat its estimates.