Bodycote PLC on Friday said its automotive and industrial end-markets remain mixed, as it delivered a cautious outlook alongside reporting a drop in sales and profit in 2024.
The supplier of heat treatments and specialist thermal processing services said conditions for its Automotive and Industrial divisions are ‘challenging’, while there continues to be a temporary impact from industry-wide supply chain disruption in Aerospace & Defence.
‘Reflecting this backdrop, current run-rate profit performance is at a broadly similar level to [the second half of 2024],’ Bodycote said.
RBC Capital Markets analyst Mark Fielding said the guidance implies up to mid-single-digit percentage consensus downside ‘if there is no improvement in end markets’.
Analysts at Jefferies agreed, also predicting mid-single-digit cuts, ‘and probably a healthy range within consensus, given the likely variance in macro views’.
In response, shares in Bodycote fell 10% to 571.00 pence each in London on Friday morning. The stock was the worst performer in the FTSE 250 index, itself up 0.5%. At the open, Bodycote shares set a new 52-week low of 520.00p.
Pretax profit fell by three-quarters to £28.4 million in 2024 from £111.7 million in 2023, including exceptional items of £78.3 million. These included a £28.4 million write-down of its enterprise resource planning system, a £31.9 million hit from optimisation actions, and a £18.0 million goodwill impairment at its North American automotive and industrial focused operations.
Adjusted pretax profit declined 0.5% to £119.5 million from £120.1 million. The adjusted measure excludes the exceptional charges.
Adjusted operating margin improved to 17.9% in 2024 from 16.7% in 2023, making progress towards Bodycote’s target of more than 20% by 2028.
Revenue fell 5.7% in 2024 to £757.1 million from £802.5 million in 2023.
Bodycote said it was a ‘stable organic revenue performance, excluding surcharges, in a challenging market environment.’ Organic revenue grew 1.0%, Bodycote said.
Chief Executive Officer Jim Fairbairn said: ‘We delivered a resilient performance in 2024, with our core business growing organically pre-surcharges and good margin improvement despite challenging conditions in many of our end markets. This was driven by Specialist Technologies where we saw good growth and strong margin improvement, as well as decisive cost control actions taken in our Automotive and Industrial Precision Heat Treatment businesses.’
Bodycote upped its final dividend by 0.6% to 16.1 pence per share from 16.0p. Its total dividend increased 1.3% to 23.0p from 22.7p.
Bodycote said its ’optimisation’ programme will deliver additional profit benefits in the second half of 2025 while a ‘continued focus on cost control’ and ‘progressing our strategic actions’ is ‘ensuring we are well positioned to capitalise when markets recover’.
A £12 million to £14 million profit benefit at full run-rate is seen by end-2026.
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