Bodycote (BOY) stayed true to form in 2018, returning a special dividend for the fourth time in five years after ending the year in a net cash position. The surplus capital, as ever, was the result of incremental improvements.
Group chief executive Stephen Harris spoke of the decade that the specialist heat treatment engineer has taken to improve its margins. Labour costs represented Bodycote’s main input cost and amounted to 40 per cent of sales, according to Mr Harris, as labour cost inflation took hold, particularly in eastern Europe.
Nevertheless, good pricing discipline meant that Bodycote’s return on sales rose 1 per cent to 19 per cent for the year, while its return on capital employed grew to 20.5 per cent, from 19.3 per cent in 2017. Management expects revenues to grow around 3 per cent to £750m for 2019, and operating profits to rise to around £143m.
House broker Credit Suisse forecasts 2019 full-year cash profits of £210m and EPS od 54.8p, respectively, against £206m and 56.4p in the prior year.
| BODYCOTE (BOY) | ||||
| ORD PRICE: | 832p | MARKET VALUE: | £1.6bn | |
| TOUCH: | 831-834p | 12-MONTH HIGH: | 1,077p | LOW: 673p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 379p* | NET CASH: | £36.2m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014** | 609 | 104 | 41.7 | 14.4 |
| 2015** | 567 | 75 | 29.6 | 15.1 |
| 2016 | 601 | 92 | 35.2 | 15.8 |
| 2017** | 690 | 117 | 51.0 | 17.4 |
| 2018** | 729 | 132 | 54.2 | 19.0 |
| % change | +6 | +13 | +6 | +9 |
| Ex-div: | 18 Apr | |||
| Payment: | 7 Jun | |||
*Includes intangible assets of £207m, or 108p a share **Excludes special dividends of 20p in 2014, 10p in 2015, 25p in 2017 and 20p in 2018 (same dates apply) | ||||
