REG-Bodycote Plc: November Trading Update

BodycoteAnnouncement

Today 07:02

Bodycote plc - November Trading Update

Improved momentum in mixed markets

 

Bodycote, the world's leading provider of specialist thermal processing
services, issues a trading update covering the four-month period from 1 July
to 31 October 2025 ("the period").

 

Key points
*            Core           1           : organic revenue growth of 2.2%
year-on-year in the period, with improved momentum in almost all end markets;
year-to-date (YTD) now 1.4% lower than prior year (H1: -3.6%)          
*            Group: organic revenue growth of 0.3% year-on-year in the period,
after headwinds from Non-Core plant closures; YTD organic revenue now 2.7%
lower than prior year (H1: -4.6%)          
*            Further good progress on plant closures and revenue transfers as
part of the Optimise programme; sale of 10 French Automotive and Industrial
sites on track and nearing completion          
*            Strong growth in Aerospace & Defence in the period with improving
momentum; Automotive and Industrial remained challenging with improved
year-on-year trends due to easier comparators          
*            Continue to expect increased profit in H2 vs H1, driven by
improved Specialist Technologies trading and Optimise benefits; H2 operating
profit expected to be broadly in line with H2 2024           2
 

Trading Summary

Core revenue was 2.2% higher organically during the four months, resulting in
a reduced year-to-date decline of 1.4%. Including the impact of Non-Core plant
closures as we continue to progress our Optimise programme, Group organic
revenue was broadly stable in the period (+0.3%) and is 2.7% lower
year-to-date at £613m.

End markets remain mixed, with strong growth achieved in Aerospace & Defence
which accelerated sequentially in the period. In Automotive we delivered low
single-digit growth year-on-year in the period, reflecting stronger light
vehicle production trends in Q3, although these are expected to soften again
in Q4. Industrial Markets remain challenging, particularly in Europe, albeit
comparators have become easier resulting in a more modest year-on-year decline
in the period compared with H1. In Oil & Gas, low levels of upstream
investment and drilling in the Middle East has resulted in customer-driven
delays to the ramp-up of some of our recent contract wins.

Specialist Technologies

Momentum improved through the period, with stronger year-on-year growth
notably in September and October. Organic revenue in the period was 1.8% below
prior year and is now 5.4% lower year-to-date. Growth in Aerospace & Defence
accelerated materially, led by a significant ramp-up in LEAP engine related
work in Surface Technology. Oil & Gas remained a significant headwind, driven
by delays in the ramp-up of some of our recent contract wins in the Middle
East. Industrial Markets also remained weak, particularly in Europe. In HIP
Product Fabrication (HIP PF), we continue to execute on H1 order wins in
Defence, with a higher-than-normal level of deliveries anticipated in Q4. We
expect an improvement in growth in Specialist Technologies for the remainder
of the year, supported by a further acceleration in Aerospace growth alongside
higher deliveries in HIP PF, with a degree of dependence on the timing of
these deliveries around year-end.

Precision Heat Treatment

Organic revenue in the period grew 4.1% and is now marginally positive
year-to-date at 0.6%. This reflected a slight improvement in sequential
performance combined with easing comparators versus a weak prior year period.
By end market, year-on-year growth was led by Industrial Gas Turbines and
Aerospace & Defence, alongside modest growth in Automotive helped by stronger
performance in North America and continued growth in China. For the full year,
we expect Aerospace & Defence and Industrial Gas Turbines growth to continue,
while Industrial and Automotive markets are likely to remain challenging.

Optimise, Perform & Grow

We continue to make good progress across our Optimise, Perform and Grow
initiatives. Activity on the Optimise programme accelerated in the period,
including an increased pace of revenue transfer to our Core Precision Heat
Treatment sites, benefitting utilisation levels at these plants. The planned
disposal of 10 Automotive and Industrial sites in France (announced with our
2025 Half Year Results) is on track and nearing completion. We also expect to
have fully exited more than one third of the 20 remaining Non-Core sites by
year end. We remain on track to deliver a £4-5m full year Optimise benefit to
Core operating profit and are confident of reaching at least £15m run-rate
benefits by mid-2027. Non-Core revenue and profit will continue to decline as
we execute on further closures.

We are advancing with the deployment of the HEAT framework to improve
operational performance. Significant progress has been made on the roll out of
important lean productivity tools, with around 90% of Core sites having these
in place by year-end. As we move into 2026 and beyond, we expect to see
gradually increasing benefits from improved operational execution.

As part of our focus on driving enhanced future growth, we are making a number
of organic investments in our target areas. We are progressing with the major
upgrade and expansion of two US Precision Heat Treatment sites focused on
Aerospace and IGT. In HIP, we are investing in additional capacity in both
Europe and North America to support continued growth in Aerospace activity.
Initial work is also progressing on the new greenfield site for S          3  
       P in Asia, which we announced in our May 2025 trading update. The
majority of these initiatives are expected to go live in late 2026 and early
2027. We also continue to build our M&A pipeline and remain confident in the
potential to accelerate growth through attractive bolt-on acquisitions.

Outlook

We continue to expect to deliver stronger profit performance in H2 versus H1,
driven by further growth in Aerospace & Defence, improved Specialist
Technologies trading and increasing benefits from the Optimise programme. As a
result, operating profit in H2 is expected to be ahead of H1 and broadly
similar to the level seen in H2 2024.          2           Our focus remains
on execution as well as delivering on our Optimise, Perform and Grow
initiatives which will create a higher quality, more resilient and faster
growing Bodycote.

1                    Core business excludes Non-Core plants to be exited as
part of the Optimise programme

2                    H2 2024 adjusted operating profit: £62.2m

 

 

 

For further information, please contact:

 

Bodycote plc

Jim Fairbairn, Chief Executive Officer

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

 

Disclosures:

This announcement contains forward-looking statements based on current
expectations and assumptions. Various known and unknown risks, uncertainties
and other factors may cause actual results to differ from future results or
developments expressed or implied from the forward-looking statements. Each
forward-looking statement speaks only as of the date of this document.
Bodycote plc accepts no obligation to revise or update these forward-looking
statements publicly or adjust them to future events or developments, whether
as a result of new information, future events or otherwise, except to the
extent legally required.

 



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