Bodycote (BOY) will resolve a compliance issue with its 2018 special dividend at its next shareholder meeting, after the heat treatment specialist failed to lodge half-year accounts with Companies House to show that the dividend was supported by sufficient reserves. The company will reconfirm shareholder approval for the payout, eliminating a hypothetical need for shareholders to repay the dividend.
Bodycote had a mixed first half, as challenging automotive and industrial markets weighed upon earnings, although civil aviation revenues grew an impressive 21 per cent. The group’s low pressure carburising outfit was hit by the cancellation of an automotive programme in Western Europe that had been heading for the Chinese market. Its stainless steel division, meanwhile, lost a significant piece of business owing to a customer’s product change.
The group’s free cash flow (FCF) fell 12.5 per cent to £44.6m, as Bodycote invested £38m that included £23m on two June acquisitions. But Bodycote has elected to cease deducting ‘expansionary capital expenditure’ from FCF. Chief financial officer Dominic Yates described this figure as “discretionary by nature”, unlike ‘maintenance capital expenditure’, which is required for the daily running of the business. Add the number back into current and prior year figures, and FCF comes down to £29m, a fall of 17.4 per cent.
Credit Suisse forecasts adjusted full-year EPS of 54.22p, rising to 57.27p in 2020.
| BODYCOTE (BOY) | ||||
| ORD PRICE: | 749p | MARKET VALUE: | £ 1.43bn | |
| TOUCH: | 749-750p | 12-MONTH HIGH: | 1,023p | LOW: 658p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 364p* | NET DEBT: | 4% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 368 | 67.0 | 26.5 | 10.9 |
| 2019 | 367 | 62.2 | 24.7 | 11.4 |
| % change | -0.4 | -7 | -7 | +5 |
| Ex-div: | 10 Oct | |||
| Payment: | 08 Nov | |||
| *Includes intangible assets of £221m, or 115p a share | ||||
