Bodycote’s main end markets, car parts, aerospace, defence and energy have all been hard hit by the recession that began to bite 18 months ago. Hardest hit was the automotive market especially trucking in northern Europe where demand was down by almost 50 per last year.
However, management took firm action to reshape the business to adjust to lower demand; this took out about 7 per cent of capacity and the group structure has been rationalised into automotive and general industrial (AGI) and aerospace, defence and energy (ADE). The restructuring has so far cost £103m but is now more or less complete and cost savings, £30m last year and £43m expected this year, have started to come through.
Bodycote is taking a cautious line on prospects though. ADI markets have already started to recover, but ADE demand in later cycle sectors such as aerospace and energy is unlikely to strengthen until later this year. But that should provide a good engine for growth when volumes return. Meanwhile the business is targeting developing markets such as China and Brazil and developing new technologies in the pipeline.
Analysts at Arden Partners expects full year adjusted pre-tax profits to recover from £3.7m to £22m, giving EPS of 7.9p (2009: 0.8p), rising to £39.6m and 14.5p, respectively, in 2011.
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BODYCOTE (BOY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 179p | MARKET VALUE: | £337m | |
| TOUCH: | 178-180p | 12-MONTH HIGH: | 198p | LOW: 108p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 223p* | NET DEBT: | 20% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 472 | 52.7 | 12.7 | 6.4 |
| 2006 | 559 | 46.6 | 13.4 | 7.0 |
| 2007 | 465 | 60.6 | 14.5 | 8.0 |
| 2008 | 552 | -55.3 | -12.5 | 8.3 |
| 2009 | 435 | -54.5 | -27.0 | 8.3 |
| % change | -21 | -1 | - | - |
Ex-div: 7 Apr Payment: 7 May *Includes intangible assets of £119m, or 63p per share | ||||
