Bodycote enjoys good start to the year

Bodycote, the Macclesfield-based heat treatment and thermal processing giant, published an AGM trading update covering the four-month period to April 30, 2024, saying it enjoyed a good start to the year and its expectations for the full year remain unchanged.

“Trading year-to-date reflects the strength of Specialist Technologies and the benefits of our diversified end-markets,” said the firm.

“The performance supports our expectation of further progress in 2024, including another step towards our medium-term operating margin target of more than 20%.”

Bodycote said group revenue was £268 million 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.”

The firm reported “organic constant currency growth” of 2.7% (excluding surcharges) whihc 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,” said the firm.

“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.”

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

Jim Fairbairn, who assumed the position of Group CEO following the AGM, said: “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.”