Bodycote says Ukraine war has created volatile market for customers

Bodycote said the war in Ukraine had created a more volatile market for its customers, widening the range of annual expectations.

The company, which provides heat treatment and specialist thermal processing services, said revenue for the four months to April 30 rose 12% to £230m, driven by price increases and energy surcharges as it mitigated the impact of inflation around the world.

“Trading in the first three months of the year has been in line with expectations. However, April saw material shortages at customers driven by supply difficulties out of China. While we have no direct exposure to Russia or Ukraine, the war in Ukraine has also begun to impact our customers, exacerbating the volatility in demand for our services,” Bodycote said in a trading statement on Wednesday.

“While our performance in the first three months of the year has been in line with expectations, over recent weeks we have seen unprecedented volatility emerging in our workflows driven by material shortages at customers. This has resulted in a widening of the range of possible outcomes for this year.”

Price increases and energy were covering current cost inflation, the company added.

However, it warned that high short-term volatility had eroded operational efficiency at its facilities, which together with volatility in demand driven by material shortages at customers, and the temporary shuttering of its plants in China, had more than offset the positive impact of the incremental restructuring benefits.

“Beyond the short term, the outlook for the business remains positive as we anticipate a stronger automotive market in due course, continued good performance in our general industrial business, and further growth in civil aerospace revenues,” Bodycote said.

The company’s own compiled range of analyst forecasts guides for operating profit of £103.8m - £117.0m