Johnson Matthey, the speciality chemicals and materials technology company, admitted this morning to a sharp fall in profits because of the slowdown in the world car industry.

The FTSE-100 firm, which makes a third of all autocatalysts used to control vehicle emissions, said that sales and profits during April, May and June were down 21 per cent on the same quarter last year.

Sir John Banham, the chairman of Johnson Matthey, said that, while sales in other parts of the group were less affected by the recession, demand for automotive products was “well down” on the same period last year.

He said that sales volumes of autocatalysts in April and May were down by more than 30 per cent on those months last year and, while June saw an improvement in both Europe and Asia, they were no better in North America. He said that, by contrast, demand for process catalysts and technologies continued to be encouraging during the three months with good growth in China.

On a brighter note Sir John said that Johnson Matthey’s fine chemicals division, which supplies pharmaceutical ingredients, fine chemicals and other speciality chemical products to the drugs industry, had enjoyed sales “well ahead” of the same period last year.

He added: “Demand for the division’s products has been less affected by the recession than some other parts of the group.”

In Johnson Matthey’s precious metal products division, the world’s biggest refiner and distributor of platinum, Sir John said that results had been strong during the quarter because of volatile conditions in the platinum group metal markets — although he warned that these were unlikely to be repeated this year.

He added: “Overall, we would expect results for the second quarter of this year to be similar to those in the first quarter.”

Shares of Johnson Matthey, which have risen by 39 per cent since the end of January this year, were down 3p at £12.26 in mid-morning trading.

Jeremy Batstone-Carr, of stockbroker Charles Stanley, said: “The share price reaction, in another ‘up’ market, is weaker but not aggressively so given that most analysts had fully factored in an even worse outturn. Furthermore, recent data points to a partial improvement in year-on-year vehicle sales in Europe over June, while emerging market sales remain robust with both Chinese and Brazilian car sales up strongly.

“Car scrappage schemes in Europe have certainly helped drive the European data and may impact positively on the company over the second half of its financial year.”

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