Last year’s acquisitions and favourable currency movements meant Bodycote’s (BOY) first half numbers came in just ahead of market forecasts. Without that contribution sales actually fell 4.5 per cent following a slump in demand from tooling and mining equipment customers. Still, that’s a respectable outcome given the fragile global economy, and further cost cutting and new higher-margin US businesses improved profits, too. Management reckons the second half should be much the same.
Bodycote’s higher than average operational gearing generated double-digit growth at both the group's divisions and an 11 per cent increase in underlying operating profit to £52.4m. As the major beneficiary of acquisitions and margin improvement, the aerospace, defence and energy unit made £34.5m. However, a temporary slowdown in US subcontracting crimped aerospace growth. It should pick up again, but not to previous levels. And organic sales to the oil & gas industry fell 12 per cent as Bodycote’s growing subsea business failed to offset the impact of destocking among North American fracking firms. A recovery here will be rapid, but when is unclear. Exposure to heavy trucks was enough to wipe 6 per cent off organic revenue at the automotive & general industrial division. Cost cutting, however, limited the hit and a profit of £25.1m was better than analysts expected.
Credit Suisse expects full-year pre-tax profit of £102.9m, giving EPS of 41.1p (from £89.8m and 35.8p in 2012).
BODYCOTE (BOY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 583p | MARKET VALUE: | £1.12bn | |
| TOUCH: | 579-583p | 12-MONTH HIGH: | 608p | LOW: 320p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 284p* | NET DEBT: | 5% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 301 | 43.9 | 17.3 | 4.00 |
| 2013 | 317 | 48.5 | 18.9 | 4.40 |
| % change | +5 | +10 | +9 | +10 |
Ex-div: 2 Oct Payment: 7 Nov *Includes intangible assets of £172.2m, or 90p per share | ||||
