UK manufacturer Johnson Matthey to axe 15% of senior management

Johnson Matthey is planning to cut up to 15 per cent of senior management jobs, as the FTSE 250 manufacturer aims to reduce costs because of soaring inflation and energy prices.

Chief executive Liam Condon said he was planning the cuts as part of plans to simplify the organisation and achieve £150mn in annual savings.

“We had an overengineered administrative layer,” he said. “We need to make sure we have enough [staff] to do the work and we are not top heavy on [managers].”

Condon is racing ahead with a restructuring of the group, which was hit this year by a costly exit from its business manufacturing chemicals for electric car batteries.

The move, which came months after Johnson Matthey touted the business as key to future growth, stunned investors and was shortly followed by the departure of former chief executive Robert MacLeod.

In recent months, inflation has added to pressures on profitability. The manufacturer on Wednesday reported a 25 per cent fall in underlying pre-tax profits to £201mn during the six months to September, as the rising cost of energy, raw materials and labour weighed on margins.

Shares in Johnson Matthey fell 3 per cent to £19.76 by mid-morning in London, bringing their decline over the past year to about 10 per cent.

Chief financial officer Stephen Oxley said closing sites and offshoring more work abroad would also help the company achieve its target for cost savings. Johnson Matthey declined to confirm the actual number of jobs that could be lost.

Condon told the Financial Times earlier this year that previous management had committed a “cardinal sin” by entering the car battery business before securing any customers.

Since taking over, he has set out plans to slim down the conglomerate to its core businesses, as well as focus on supplying parts to the booming renewable energy market.

Condon said Johnson Matthey would reduce management headcounts as it divested from more businesses, but it was seeking to employ more engineers and operational staff who would be “crucial” to the company’s development.

“We need a smaller administrative footprint,” he said. “It is about getting the right balance.”