Car parts specialist Johnson Matthey has said it is shedding 2,500 jobs after taking a hit from coronavirus in the latest blow to the UK manufacturing sector.
The FTSE 100 firm also revealed plans to halve its dividend to shareholders as it announced the redundancies, which will remove more than a sixth of its workforce over the next three years.
The London-based firm specialises in producing catalytic converters to be used in cars.
Car production has dropped dramatically in the face of the outbreak, with UK car manufacturing plummeting by 99 per cent in April compared to the same month last year, according to the Society of Motor Manufacturers and Traders.
Robert MacLeod, chief executive of the business, said the company made “good progress” before the Covid-19 outbreak but now needs to be “even more efficient” amid challenging market conditions.
Mr MacLeod added: “Covid-19 has brought unprecedented challenges to the world and Johnson Matthey. During this pandemic, we have tried to balance the needs of all of our stakeholders but our first priority remains the health and safety of our people, customers, suppliers and communities where we operate.
“I would like to say a heartfelt thank you to all of our employees for their dedication and efforts over the past few months.”
The company said it was unable to provide guidance for the current year as a result of “ongoing uncertainty”.
Johnson Matthey said it aims to secure £80m in annual savings from its cost reduction plans by 2023.
It came as the firm reported a 27 per cent slump in operating profits to £388m in the year to March, after taking a £60m hit from the impact of coronavirus.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “In recent years the group has benefited from ever tougher environmental legislation increasing the complexity of catalysts and thus increasing the price of catalysts.
“However, that relies on the car industry continuing to tick over, and consumers slammed the brakes on car sales as coronavirus struck. There are early signs of recovery in Asia, but whether that will be sustained remains to be seen.”
