LONDON - First-half pretax profit at Johnson Matthey fell by a fifth and the world's largest supplier of catalytic converters warned on Wednesday that prospects for a recovery in global auto sales were uncertain.
The timing of a return in consumer confidence and the impact of the expiry of car scrappage schemes will be key factors in driving demand in the months ahead, the British platinum refiner said.
Looking forward, visibility of global vehicle sales remains limited, it added.
Shares in the group were down 4.34 percent at 1,522 pence at 1324 GMT, making it the second-biggest faller in the FTSE 100 and valuing the group at about 3.3 billion pounds.
Johnson Matthey said it anticipates its full-year results being in line with market expectations.
Underlying pretax profit for the six months to end September fell to 114.4 million pounds ($189 million) from 144.9 million in the year-earlier period as revenue fell 18 percent.
Although the numbers were in line with expectations and management expects full-year results to be in line, there remains a lack of visibility over the outlook, said Killik & Co.
Market expectations for full-year pretax profit range between 222.5 million and 239.0 million pounds, with the consensus at 231.88 million, according to a Thomson Reuters I/B/E/S poll of four analysts.
The company expects operating profit at its Environmental Technologies Division, which was badly hit by the global slowdown in automotive sales, to be significantly higher in the second half than last year but the outlook was unclear.
Global light duty vehicle production fell 16 percent as a 42-percent output jump in China failed to outweigh the slump in production in North America, Europe and Japan.
Killik said it believes the current valuation of the company is too high because of the lack of visibility over the outlook and the potential for a further decline following the expiry of car scrappage schemes.
Johnson Matthey said results at its Precious Metal Products Division, which were weaker than expected at the interim stage, would improve in the second half at current precious metal prices but would be unlikely to match last year's second half.
Platinum prices could top recent 14-month highs to hit $1,550 an ounce in the next six months if investment demand adds to a recovery in car sales, Johnson Matthey said earlier this month.
(Editing by Paul Hoskins and Andrew Callus; Editing by David Cowell)