(Reuters) -Standard Investments, the largest shareholder in UK’s Johnson Matthey, on Monday urged the British autocatalyst maker to initiate a strategic review and overhaul its board.
Standard Investments, which holds an 11% stake in the London-listed company, said in a letter addressed to Johnson Matthey Chairman Patrick Thomas that the board and management had remained “complacent and incapable of correcting a misguided strategy” leading to “sustained underperformance”.
“JM requires new voices on its board ready to take swift action and put a stop to the significant value destruction that the current board and management have presided over,” it said in the letter.
Standard Investments also called for steps to minimise the group’s further investment in hydrogen technologies, including potential exit from that business.
Responding to the letter, Johnson Matthey said its board welcomes “constructive input from all shareholders”, and has had a dialogue with Standard Investments since it became a
shareholder.
“JM is making progress in a challenging market environment through delivery of a comprehensive transformation strategy and
will continue to adapt this strategy to the evolving market situation,” the company said in a statement.
The FTSE 250 firm’s shares, which have fallen more than 20% this year, jumped as much as 6.6% on Monday by 1318 GMT.
Jefferies analysts wrote in a note that the “greatest issue” for Johnson Matthey was its inability to successfully translate promised free cash flow into actual cash.
In November, the centuries-old British company, which has its roots in testing precious metals for purity, missed analysts’ expectations for first-half revenue and underlying profit, amid a decline in global vehicle production and a subdued Platinum Group Metals trading business.
However, the company, which manufactures catalytic converters and pollution filters for cars, had maintained its outlook for the year ending March 31, partly aided by the progress in its cost-cutting efforts.
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Anil D’Silva)
