Insider: directors back FTSE 250 fallers and easyJet’s revival

A lot of companies have run into trouble recently, but bosses have pumped a lot of money into their firms after sharp share price declines. City writer Graeme Evans reveals who’s bought what.

2nd December 2024 07:55

Graeme Evans from interactive investor

The leaders of FTSE 250-listed Johnson Matthey (LSE:JMAT) and Pets at Home Group (LSE:PETS) have countered a fresh bout of City pessimism by spending heavily on their shares at multi-year low prices.

The £134,200 investment by Johnson Matthey chief executive Liam Condon took place with the clean air and catalyst technologies firm trading at a level last seen 15 years ago.

He was joined by departing finance boss Stephen Oxley, who topped up his stake by £99,500, and by company secretary Simon Price after he disclosed dealings worth £67,000.

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The trio made the purchases at prices between 1,335p and 1,342p, having seen shares fall 12% in the aftermath of Wednesday’s half-year results.

The former blue-chip stock is now 60% cheaper than in 2021 - driven by factors including lower prices and a weaker auto scrap recycling market in its world-leading platinum group metals (PGM) services business.

The Clean Air division, which accounted for two-thirds of the group's £1.7 billion of half-year revenues, has also suffered due to declines in global vehicle production.

Underlying operating profits fell 13% to below City expectations at £156 million, although management offset this disappointment by forecasting a stronger second half performance and reiterating full-year guidance.

This reflects hopes for an improved performance and margin in Clear Air, which makes catalysts for emission control in cars and catalyst systems for diesel powered trucks and buses.

It also believes that the recent slowdown in electric vehicle penetration and an ongoing focus on improving efficiency will make Clean Air ‘stronger for longer’, boosting the company’s ambition to deliver at least £4.5 billion of cash from the division in the decade to 2030/31.

Johnson intends to use its established businesses to generate the cash needed to support the growth of its Catalyst Technologies division, which is focused on the decarbonisation of fuels and chemical value chains.

Half-year sales in this division grew by 20% to £336 million, while operating profits rose 43% to £50 million. The company also has operations in hydrogen technologies, which it continues to expect to breakeven by the end of 2025/26 despite a slowdown in market development.

Condon said the company had an important role to play in the global transition to net zero: “We continue to secure important project wins in sustainable technologies, whilst building our capability and transforming at pace.”

The 5.8% yielding company announced an unchanged dividend of 22p a share for payment on 4 February, while a £250 million buyback plan is almost complete. Deutsche Bank reiterated its Buy recommendation following the results, with a slightly lower price target of 2,200p.

Half-year results by Pets at Home got a similar reaction in the City, falling 13% to a four-year low after the company said it has faced an “unusually subdued” pet retail market.

This led to downgraded full-year profit guidance, although chief executive Lyssa McGowan is optimistic that growth will return to historical norms and that the longer-term attractive outlook for the UK pet care market remains the same.

She backed up her confidence the following day by spending £100,000 on shares at a price of 236.4p. The FTSE 250-listed stock had been 518p in early 2021 and 322p earlier this year.

Broker Peel Hunt last week lowered its price target to 325p but said the retail and vets group business is well run and should do well when the consumer re-emerges.

The City firm added: “It is the market leader in a sector that is growing structurally, with a cohort of pets from the Covid-19 pet ownership boom that should become increasingly lucrative over the next few years.”

The shares closed last week at 232.6p, while Johnson Matthey ended Friday’s session at 1,359p.

Strong demand for easyJet (LSE:EZJ) shares on the back of well-received full-year results included a purchase worth £40,000 by one of the airline’s non-executive directors.

David Robbie, the former finance boss of Rexam who has been a member of the easyJet board since November 2020, bought at 550p amid a post-results surge for the shares.

Annual profits rose 34% to £610 million, with a medium-term target of £1 billion still firmly in the company’s sights as it reaps the success of its recent expansion in package holidays.

Shareholders were also handed a big increase in dividend to 12.1p a share, which is due to be paid on 21 March.

Finance director Kenton Jarvis, who is due to replace Johan Lundgren as chief executive in the new year, said travel remained a firm priority with consumers.

He plans to take 25% more package holiday customers in the current financial year and will also target longer leisure routes such as destinations in North Africa and the Canaries.

The shares closed last week at 552.8p, which compares with Peel Hunt’s price target of 850p.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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