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Johnson Matthey to take £50m charge as it settles lawsuit
Johnson Matthey said on Wednesday that it will recognise a charge of £50m after settling a lawsuit, as it announced that changes to the US tax system would have a positive impact on the group.
The specialty chemicals company said that Johnson Matthey Inc (JMI) had settled a dispute with an automotive original equipment manufacturer supplier in the US on "mutually acceptable terms with no admission of fault". The £50m charge will be excluded from underlying operating profit for the year to the end of March 2018.
The group also said the lowering of the US tax rate should result in a £30m one-off non-cash benefit in the income tax expense line in the income statement for the year ending 31 March 2018. This will be excluded from the tax on underlying profit.
For the current year to the end of March, it does not expect any change to the effective tax rate on underlying profit and continues to expect it to be around 18%. For the financial year ending 31 March 2019 and beyond, the changes are seen cutting the effective tax rate on underlying profit by around two percentage points.
The group added that its outlook for the full year remains unchanged.