Johnson Matthey Cuts Hydrogen Investment Amid Shareholder Demands
London, Thursday, 30 January 2025.
Johnson Matthey scales back hydrogen funding, responding to shareholder pressure. Despite spending $385 million, the sector faced losses, prompting strategic changes and potential sale considerations.
Major Strategic Shift
I’m observing a significant pivot in Johnson Matthey’s hydrogen strategy. The company has halted all growth-focused capital expenditures as of 28 January 2025 [1], following pressure from Standard Investments, their largest shareholder holding an 11% stake [1]. This comes after investing approximately $385 million in their hydrogen ventures [1], which resulted in $60 million in losses despite generating $105 million in sales during the last fiscal year [1].
Financial Constraints and New Direction
The company’s new approach is remarkably conservative. They’re limiting future hydrogen investments to just $6 million annually for maintenance [1][4]. I find it particularly telling that this represents a dramatic reduction from their previous spending pattern, where hydrogen investments consumed about a quarter of their total capital expenditure [1]. The company attributes this shift to what they describe as a ‘sharp acceleration and then deceleration of the hydrogen sector’ [1], highlighting the volatile nature of emerging green technologies.
Governance and Performance Measures
Looking at the organizational changes, I see a comprehensive reform taking shape. The company is establishing a new board-level investment committee [1][4] and reviewing executive compensation structures to better align with cash generation goals [1]. As Charles Bentley from Jefferies points out, Standard Investments has been instrumental in pushing for better operational performance [1]. The company aims to achieve operating profit break-even in their hydrogen technologies by the end of FY2025/26 [4].
Future Outlook
I notice that while this represents a significant pullback, it’s not a complete abandonment of hydrogen technology. The company is maintaining minimum operational capabilities [1][4]. What’s particularly interesting is that Standard Investments is pushing for a strategic review that could potentially lead to a sale of the hydrogen business [1]. This situation reflects a broader industry challenge in balancing innovative technology investments with shareholder returns.