REG-Bodycote Plc: AGM Trading Update

BodycoteAnnouncement

30/05/2024 07:15

Bodycote plc

Good start to the year; full year outlook maintained

 

Bodycote, the world's leading provider of heat treatment and specialist
thermal processing services, issues a trading update covering the four-month
period from 1 January to 30 April 2024 ("the period"), ahead of the Company's
Annual General Meeting, which will be held at 10.30am today.

 

Trading Summary

We have enjoyed a good start to the year with constant currency revenue growth
of 3.9% excluding surcharges (2.7% excluding Lake City acquired in January
2024). This demonstrates the strength of our Specialist Technologies
businesses and the resilience provided by our diverse customer base, against a
mixed market backdrop and some challenging prior-year comparators. Our
expectations for the full year remain unchanged.

 

 Constant currency organic revenue growth  Jan 1 - Apr 30 2024  
                                                                
 Group (excluding surcharges)              2.7%                 
 Group (including surcharges)              -2.2%                
                                                                
 By process (excl. surcharges):                                 
 Specialist Technologies                   10.5%                
 Classical Heat Treatment                  -1.0%                
                                                                
 By market sector (excl. surcharges):                           
 Aerospace & Defence                       16.2%                
 Automotive                                -1.8%                
 General Industrial (incl. Energy)         -1.8%                
                                                                

 

Group revenue was £268m in the period (2023: £281m), with underlying growth
offset by surcharges which halved to around £14m as energy prices fell, and a
foreign exchange headwind of £10m year-on-year. Organic constant currency
growth of 2.7% (excluding surcharges) was driven by Specialist Technologies
(+10.5%), while Classical Heat Treatment revenue was marginally lower (-1.0%).
Within Specialist Technologies there was notable strength in Surface
Technology and Hot Isostatic Pressing (HIP), which captured growth
opportunities while delivering strong operational performance.

 

By end market, on an organic constant currency basis, strength in Aerospace &
Defence continued (revenue +16.2% excluding surcharges), with both commercial
aerospace and defence sectors growing well. Automotive revenue was slightly
lower (-1.8%) reflecting a subdued market environment and the high growth in
the corresponding prior year period. General Industrial revenue was also
slightly lower (-1.8%), with a varied picture across sub-sectors including
continuing good growth in energy (+14.0%) offset by weakness in industrial
machinery and related markets. While these industrial-focused markets declined
year-on-year, revenue has improved sequentially versus the levels seen at the
end of 2023. Medical-related business benefited from the Lake City acquisition
which has been successfully integrated and is performing well, generating £3m
revenue since its acquisition in late January 2024. As a result of the strong
performance in aerospace, growth was considerably higher in our ADE division
than in the AGI division.

 

Share buyback programme

A £60m share buyback programme was announced in January, with the first £30m
tranche commencing on 15 March 2024. In the period to 30 April 2024, 1.56m
shares in total have been acquired for a total consideration of £10.8m.

 

Financial position

Net debt (excluding lease liabilities) was £45.3m at 30 April 2024, compared
with a net cash position of £12.6m at year-end 2023. This reflected the
acquisition of Lake City for a total gross consideration of £52.2m, the
capital deployed on the share buyback programme to date, and the Group's
typical cash flow seasonality, including bonuses paid in March 2024.

 

Summary and outlook

Trading year-to-date reflects the strength of Specialist Technologies and the
benefits of our diversified end-markets. The performance supports our
expectation of further progress in 2024, including another step towards our
medium-term operating margin target of more than 20%.

 

Update from Jim Fairbairn, who will assume the position of Group CEO following
the AGM:

"Bodycote continues to demonstrate good growth against a mixed picture of end
market dynamics and the Group is well positioned for the remainder of 2024.

 

During my induction since joining the business in March I have travelled
extensively with members of our leadership team to get to know our operations,
engage with employees, and understand the full range of processes we offer. I
am struck by the energy and passion our teams have for our wide range of
capabilities in metallurgy and by the focus and sense of responsibility we
have for our customers.

 

Over the coming weeks I will progress the review of our strategic and
operational priorities, and look forward to sharing my early observations
about the Company at our interim results presentation on July 30th."

 

 

 

 

 

 

Trading Update Conference Call

The Company will be hosting a conference call for analysts and investors at
08.30am today (Thursday 30 May 2024).

 

Participants' dial-in number:

United Kingdom: 0800 279 7040

 

Participants will be asked for names only; no PIN will be required

 

For further information, please contact:

 

Bodycote plc

Jim Fairbairn, Group Chief Executive Designate

Ben Fidler, Chief Financial Officer

Peter Lapthorn, Investor Relations and FP&A

Tel: +44 1625 505 300

 

FTI Consulting

Richard Mountain

Susanne Yule

Tel: +44 203 727 1340

 

 

 

 



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