Bodycote announces another special dividend, but profit drops

Specialty chemicals firm Bodycote said it will pay another special dividend for 2015 despite posting a drop in full year profit.

For the year ended 31 December, pre-tax profit slid to £75m from £103.7m in 2014 as revenue dropped 6.9% to £567.2m.

At the same time, operating profit declined 8.1% to £102.1m.

The slump in profit and revenue came as revenue in the company’s civil aerospace business rose 1%, while takings in power generation fell 9% on the year. The biggest decline was seen in oil and gas, however, where revenue slid 28% on weakening crude oil prices.

Chief executive Stephen Harris said: "The group delivered a resilient performance in 2015. Automotive and aerospace revenues moved ahead. However, the decline in oil price combined with downward pressures on our general industrial business led to group revenues falling by 4% at constant exchange rates.

“The speed and effectiveness of management's actions, in addition to the continued focus on improved mix, enabled headline operating margins to be sustained. Recognising the group's net cash position, the board is recommending a further special dividend."

Bodycote lifted its dividend to 15.1p from 14.4p and said it would pay another special dividend for 2015 of 10p per share, following on from the 20p per share in 2014. Net cash for 2015 stood at £12.3m.

The group also said on Thursday that finance director David Landless has informed the board of his intention to retire.

Landless has agreed to remain with the group to ensure a smooth handover to his successor and will oversee the publication of the 2016 full year results if the handover has not been completed by then.

RBC Capital Markets, which rates the stock at ‘sector perform’, said: “We expect that this will be seen as a good performance in light of what appeared to have been a deterioration in industrial demand through H2.”

At 0945 GMT, Bodycote shares were up 2.7% to 583.00p.