Facing slower-than-expected progress in the hydrogen value chain, Johnson Matthey (JM) has revealed plans to cut back on its investment in hydrogen technologies.
This strategic shift comes despite JM’s pivotal role in the hydrogen industry, supplying catalysts for hydrogen production, storage, and fuel cells, and participating in major low-carbon hydrogen projects worldwide.
In the firm’s preliminary 2023/24 results, CEO Liam Condon noted that while JM remains “well positioned” to benefit from the anticipated high-growth hydrogen market, the industry’s development has lagged behind expectations. This slowdown in the hydrogen value chain’s progress has prompted JM to align its investments with the current market pace.
JM announced that its capital expenditure (CAPEX) related to hydrogen technologies will now account for 10% of its three-year group CAPEX guidance, down from the previously expected 30%. This significant reduction reflects the company’s adaptive strategy in response to the market’s slower development.
Despite a 29% increase in hydrogen technologies sales, rising from £55 million ($69.9 million) in 2022/23 to £71 million ($90 million) in 2023/24, JM reported a loss of £50 million ($63.6 million), up from £45 million the previous year. This underlying operating loss underscores the substantial investments JM has made in building capability and product development. Towards the end of the fiscal year, JM took steps to reduce its cost base to better adapt to the market’s softening conditions.
The slowdown in the hydrogen value chain has been particularly noticeable in the US and Europe, where regulatory development, incentives, infrastructure, and supply chains are still evolving. In contrast, the hydrogen market in China remains relatively strong, driven by demand incentives, supportive policies, and significant government investment in infrastructure.
Despite the investment reduction, JM expects modest sales growth and a significantly lower operating loss for the year ending March 31, 2025. A company spokesperson highlighted the long-term attractiveness of hydrogen, emphasizing JM’s disciplined approach to capital allocation and the importance of aligning investments with the changing demand environment.
JM’s sustainable technologies portfolio, which includes low-carbon hydrogen, sustainable fuels, and chemicals, now comprises over 140 projects. The company aims to secure another four strategic partnerships for its Hydrogen Technologies business in the next two years, reinforcing its commitment to the hydrogen sector despite current challenges.
