Johnson Matthey expects to spend as much as 600 million kilos ($847 million) this monetary yr because it boosts funding in battery supplies and hydrogen expertise to serve Europe’s rising electrical car market, the corporate stated.

The British chemical substances firm has made inroads into the battery supplies sector lately, agreeing to construct a plant producing cathode supplies in Finland with state investor Finnish Minerals Group and securing long-term provides of nickel and cobalt to beat an anticipated deficit in these metals.

The capital expenditure focused for the yr ending March 2022 tops the 486 million kilos imply of 16 analysts’ estimates in a company-compiled ballot.

“Our funding in sustainable applied sciences builds on our present experience and can allow the transformations in transport, power, decarbonization of trade and a round financial system that the world wants to achieve internet zero,” CEO Robert MacLeod stated.

Third Bridge analyst Ben Nuttall stated the corporate’s key problem is managing the transition from inner combustion engines to battery- and hydrogen-powered autos as diesel catalytic converters, a spotlight for the group, are prone to be the primary to say no.

Whereas Johnson Matthey has hedged that danger with high-nickel battery materials, Nuttall stated it might discover it laborious to realize market share given Belgian supplies expertise and recycling group Umicore’s lead within the sector.

Johnson Matthey forecast progress in earnings this new monetary yr after preliminary lockdowns final yr hit automotive demand and despatched underlying annual working revenue 6 p.c decrease to 504 million kilos.

The outcome nonetheless beat common market expectations due to a powerful restoration within the auto sector and better treasured steel costs.

Johnson Matthey, which refines platinum group metals (PGM) used mainly by automakers, nevertheless added that greater PGM costs might hit its free money circulate within the brief time period.