Bodycote looks for new CEO amid good start to year

Bodycote, the Macclesfield-based heat treatment and thermal processing giant, announced that CEO Stephen Harris has decided to retire next year, as the firm revealed it made a good start to 2023 with trading in the first four months “modestly ahead of our expectations.”

In a trading update for its AGM, the firm’s guidance for the full year remained unchanged. Group revenue for the first four months of 2023 was £281 million “up 22.1% at actual rates and 16.6% higher at constant currency.”

Harris joined Bodycote in November 2008 and became CEO in January 2009.

Stephen has informed the board that he intends to step down as group chief executive and retire from the board and the company in 2024, following an orderly transition to his successor,” said Bodycote.

“A formal process to recruit Stephen’s successor will now commence, led by the nomination committee of the board, and will consider a range of internal and external candidates.”

Bodycote chair Daniel Dayan said: “Stephen’s leadership of the group over the last 15 years has been exceptional.

“We look forward to continuing to work with him as we move forward with the succession process.”

In its trading update, Bodycote added: “Aerospace & Defence revenues were 16.0% higher (9.4% excluding surcharges) led by good growth in Civil Aerospace (up 11.0% excluding surcharges) driven by OEM build rate increases and higher aftermarket demand. Aerospace supply chain issues are easing but remain an operational challenge for several of our customers.

Automotive revenues rose by 16.3% (8.8% excluding surcharges) against a relatively weak performance in this market in Q1 2022 when our customers had been impacted by supply chain issues and parts shortages. Growth in this market was led by strong progress in Emerging Markets. The outlook for the Automotive sector for the remainder of this year remains sensitive to the macro environment and consumer spending.

General Industrial (including Energy) revenues were up 17.1% (9.9% excluding surcharges). The slower growth we witnessed in certain General Industrial subsegments in Q4 has continued, but was more than offset by very strong growth in Oil & Gas during Q1 driven by specific project related activity, combined with good demand from Medical markets.

“Emerging Markets revenues grew strongly, up 25.3% (18.9% excluding surcharges), driven by strong growth in Eastern Europe, where we continue to make good progress developing and expanding our market penetration. Revenues in China rose more modestly in the first four months reflecting slow automotive growth in the country in the period.”

In its summary and outlook, Bodycote said: “We have delivered good progress in the first four months, which underpins our confidence in delivering on the financial guidance for the full year that we provided with our 2022 results. While there are near term macroeconomic uncertainties, we expect underlying volume to continue to grow ahead of the background markets, and margins are expected to expand as surcharges moderate.

Beyond 2023, we expect robust growth, leading to further margin expansion. Civil Aerospace will benefit from higher OEM build rates and increasing airline flying hours, and our investments in Emerging Markets and Specialist Technologies will drive higher growth in these areas. The board remains confident in the Group’s prospects for continued profitable growth.”