12th Dec 2024 10:16
(Alliance News) - Bodycote PLC on Thursday laid out new financial ambitions that will "deliver sustainably stronger growth with improved profitability".
At a capital markets event in London, the Cheshire, England-based supplier of heat treatments and specialist thermal processing services said it plans a new divisional reporting based on two platforms, Specialist Technologies and Precision Heat Treatment.
Chief Executive Officer Jim Fairbairn and Chief Financial Officer Ben Fidler pledged to improve operating performance, service quality and profitability and to deliver accelerated, profitable growth.
As a result of these actions, Bodycote aims to achieve mid-single digit percentage total revenue growth per annum through the economic cycle.
Specialist Technologies is to increase its contribution to 35% to 40% of total revenue by 2028, rising from 28% in financial 2023.
Headline operating margins of more than 20% are projected by 2028. In 2023, Bodycote delivered headline operating margin of 15.9%.
Through-cycle operating cash conversion is seen of 80% to 90%. A through-cycle return on capital employed of 15% to 20% is expected. In 2023, the return on capital employed was 14.8%.
In addition, Bodycote plans to extend its current GBP60 million share buyback programme by a further GBP30 million.
Bodycote said it sees a range of "appealing organic investment opportunities" and continues "to evaluate acquisition opportunities as they become available".
But its primary focus in the near term is "on the execution and delivery of our plan".
CEO Fairbairn said: "Today we are presenting a clear vision to create an optimised, efficient and high-performance Bodycote, which will deliver sustainably stronger growth with improved profitability and resilience through the cycle."
Fairburn said the targets were "compelling and achievable".
"We are confident in our ability to achieve these ambitions and have a clear plan to deliver on our targets," he added.
Bodycote said actions to optimise the business would deliver an ongoing annual operating profit benefit of GBP12 million to GBP14 million, once the programme is complete by the end of 2026.
These moves, which include plant closures and overhead cost cuts, come at an exceptional net cash cost of around GBP25 million to GBP30 million.
Bodycote expects an exceptional profit and loss charge of around GBP60 million, with an additional around GBP12 million to GBP15 million goodwill write-down related to its North America Automotive and Industrial focused operations.
The majority of the exceptional P&L charge and cash costs will be incurred across 2024 and 2025.
Bodycote said current trading remains in line and full year expectations remain unchanged.
Shares in Bodycote were unchanged at 664.00 pence each in London on Thursday morning.
By Jeremy Cutler, Alliance News reporter
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