Bodycote announces another restructuring, shares slide

Bodycote shares slid on Thursday after the heat treatment and thermal processing company announced another restructuring and sounded a downbeat note on the outlook for the civil aerospace market.

The company, which already cut the workforce in its automotive and general industrial segment (AGI) earlier this year by around 1,000, said there will be a further restructuring similar to that in its aerospace, defence and energy business (ADE).

"Our expectation is that the civil aerospace market will remain near the current low levels for at least the next 18 months," the company said. "This provides us with the opportunity to consolidate our ADE footprint into fewer, larger facilities. The exercise to do this requires significant study, since we expect the civil aerospace market to recover strongly in due course and we want to be in the best position possible to take full advantage as this happens.

"There will, therefore, be a further restructuring programme, similar to the programme already announced in the first half, but which will be more focused on our ADE business. We will provide further details with our full year results in March."

In an update for the period from 1 July to the end of October, Bodycote said revenue fell 20% from last year to £193.6m, which was an improvement on the 28% decline seen in the second quarter when the Covid-19 related downturn was at its peak. Bodycote said profitability "has held up relatively well" given the significant drop in revenue and the impact from the coronavirus.

Revenues in the ADE division fell 33% over the period, while AGI revenues were down 15%.

The ADE business remains under pressure, given the scale of the impact on revenues, Bodycote said, adding that it was taking necessary actions to improve the business in the short term, while protecting its ability to take advantage of the upturn when it comes.

The AGI business, meanwhile, has recovered strongly from the steep revenue declines of the second quarter, it said.

At 0920 GMT, the shares were down 6.1% at 720.50p.