The depressed oil price, industrial market weakness and sluggish economic growth in emerging markets combined to send adjusted operating profit at Bodycote (BOY) down 8 per cent to £102m in 2015. Fortunately, a third consecutive year of special dividend payouts helped to mask what was otherwise a fairly uninspiring set of results, triggering a 3 per cent rise in the heat treatment specialist's share price.
Constant-currency revenues in the energy division tumbled 28 per cent in the reported period as oil companies reacted to squeezed prices by buying less of the group's heat treatment and surface technology products. Given the close correlation between oil and capital good markets, this backdrop also weighed on the spending power of core industrial customers.
Management responded to these challenges by splashing out £20m on exiting operations in Brazil and India, reducing costs in the North American oil business and closing facilities in Europe. These measures, coupled with the growing popularity of specialist technologies, enabled the group to sustain operating margins despite market difficulties.
Further encouragement can be taken from the automotive segment. Sales there rose 6 per cent as Bodycote capitalised on a raft of new vehicle launches. Broker Investec expects adjusted pre-tax profit of £91.7m for the year ahead, giving EPS of 34.8p (from 39.5p in 2015).
| BODYCOTE (BOY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 583p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 583-585p | 12-MONTH HIGH: | 777p | LOW: 490p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 287p* | NET CASH: | £12.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 571 | 76 | 30.0 | 10.9 |
| 2012 | 588 | 90 | 35.9 | 12.3 |
| 2013† | 620 | 98 | 38.5 | 13.5 |
| 2014† | 609 | 104 | 41.7 | 14.4 |
| 2015† | 567 | 75 | 29.6 | 15.1 |
| % change | -7 | -28 | -29 | +5 |
Ex-div: 21 Apr Payment: 3 Jun *Includes intangible assets of £175m, or 91p a share †Excludes special dividends of 10p in 2013, 20p in 2014 and 10p in 2015 | ||||
