Macclesfield-based heat treatment and thermal processing giant Bodycote said on Thursday it will cut 700 jobs — about 13% of workforce — and that its revenue for the first four months of 2020 was 12% lower at £216 million amid the coronavirus crisis.
Bodycote shares rose 9%.
In a trading update for the four months to April 30, Bodycote said: “From the third week of March, the business outside of China has been severely impacted by COVID-related lockdowns across a wide variety of geographies.
“In terms of our market sectors, since the COVID-19 related crisis has taken hold, we have seen the biggest immediate impact in our automotive and civil aerospace businesses, as many OEMs have had extended production halts …”
Bodycote added: “The pre-COVID-19 restructuring plan announced in March focused on our Classical Heat Treatment activities in Western Europe.
“With the onset of the COVID-19 pandemic, this restructuring plan has been extended in both scale and geography.
“Manning levels have been permanently reduced at facilities where the level of business is not expected to return to previous levels in the medium to longer term.
“Some facilities are being eliminated, with equipment redeployed to other sites.
“Overall, the production capacity in the group will be largely unaffected but will be situated where there is greater long term demand and where it can be more efficiently utilised.
“The restructuring activities underway will reduce full-time employees by more than 700 – some 13% of total headcount.
“Together with savings in infrastructure from closed plants, c.£45m of annualised costs will be permanently eliminated from the business.
“Savings from the restructuring program will be realised progressively through 2020, with most being completed by year-end and the full annualised savings in place from Q2 2021.
“The cash cost of the expanded restructuring program is now expected to be c.£25m, versus the c.£15m announced at the full year results.
“The restructuring activity is designed to right-size our business, so that we will emerge from the current downturn in a strong position, with good, sustainable profitability and cash flow generation, as well as healthy margins and returns.
“Bodycote has also looked to contain costs by a further temporary reduction in full-time employees and careful management of ongoing expenditure on utilities, consumables and other overheads.
“The current level of cost containment measures represents savings of c.£7m per month, which is over and above that achieved so far through the restructuring program …”