Cambridge-based global industrial heavyweight Johnson Matthey is axeing 2,500 jobs – a sixth of its workforce – to “maintain competitiveness” against a challenging global economic backdrop.

The grim news came as the business unveiled rising revenues but falling profits for the year to March 31. The full-year dividend has also been slashed in half as the company pursues further cost savings.

The company serves a broads range of markets from supplying catalysts for the automotive industry to a range of CleanTech, scientific and healthcare solutions based on its chemicals technology innovation.

Chief executive Robert MacLeod said COVID-19 had brought “unprecedented challenges to the world and Johnson Matthey.”

Announcing a 36 per cent revenue spike to just under £14.6 billion but a 38 per cent drop in pre-tax profits to £305 million, MacLeod said JM had tried to 
“balance the needs of all of our stakeholders but our first priority remains the health and safety of our people, customers, suppliers and communities where we operate.”

He said that despite a good year of progress on several fronts – including delivering operating performance slightly ahead of market expectations – COVID-19 hit underlying operating profit by around £60m.

While the company took “immediate and decisive action to protect our business, and to maintain good liquidity and a strong balance sheet,” future trading prospects had to be addressed.

MacLeod said: “Looking forward, we are accelerating our strategy to drive greater efficiency across the business, building upon the investments we have made in new manufacturing facilities and in our systems and processes.

“We have delivered nearly £120 million of our previously announced cost savings. However, we recognise the need to be even more efficient in order to maintain our competitiveness and in addition some of our end markets have been affected by COVID-19. Therefore, we are targeting additional annualised cost savings of at least £80 million by the end of 2022/23. We regret that this will lead to some job losses, which we estimate to be around 2,500 globally over the three-year period.

“Given the ongoing uncertainty, we are unable to provide financial guidance for 2020/21. In Clean Air, our customers are gradually ramping up their plants but visibility on the path of recovery remains low. Efficient Natural Resources is later cycle and we anticipate an impact as lower demand begins to affect the industries it serves. Health is relatively unaffected by the macroeconomic environment and should benefit from new customer contracts.

“In Battery Materials, the commercialisation of eLNO remains on track. Notwithstanding the strong financial position of the group, in light of the current uncertainty and to balance the needs of all stakeholders, the board is proposing a final dividend for the year of 31.125 pence, representing half the level of the 2018/19 final dividend. These developments do not change the global trends that will drive our longer term growth. Addressing climate change remains a priority and commitments to net zero are gathering pace across the world. Our continued investment in strategic growth projects and leading sustainable technologies uniquely positions us to address this and other key global trends, delivering significant value for our shareholders and society.”