Bodycote revenues, profits fall as it repositions business

The FTSE 250 coatings and surfaces company said headline operating profit for the year was down 44% at £75.2m, while its EBITDA margin remained “resilient” at 26.4%, down from 29.2% in 2019.

Free cash flow conversion was described as “excellent”, at 141% for the year, compared to 91% in the prior year, while closing net debt came in at £23m, after paying £96m of the consideration for Ellison.

Bodycote recorded £36m of cash restructuring costs in its full-year results, which it said would generate £30m of annual savings by 2022.

Its board proposed a final dividend of 13.4p per share, taking the total distribution for the year to 19.4p, up marginally from the 19.3p total in 2019.

That, the board noted, added to its more-than-30-year uninterrupted record of either growing or maintaining its dividend.

“As part of our strategy, we have focused in recent years on repositioning the group to take advantage of a number of ‘megatrends’ in our end markets,” said group chief executive officer Stephen Harris.

“Our expansion in eastern Europe is targeted at supporting the electric vehicle supply chains that are establishing themselves in this region.

“The change in focus of our civil aerospace business addresses the structural shift within the industry towards point-to-point air travel and narrowbody aircraft.”

Harris said that in addition, the repurposing of some of its North American facilities aligned the business with the diminishing importance of fossil fuels.

“The restructuring programme we have been executing in 2020 represents an acceleration of our strategy and is exactly aligned with these secular trends.”

Looking ahead, Harris said that markets were recovering, though the uncertain timeline for recovery in the civil aerospace market clouded the short-term outlook for that part of the business.

“Nonetheless, our restructuring programme is now largely complete, resulting in a higher quality business aligned to the growth opportunities we are seeing.

“The board is confident that Bodycote is well placed to drive growth and take advantage of the upturn in activity across all of its markets as they strengthen.”