30th Jul 2015 07:40
LONDON (Alliance News) - Bodycote PLC posted a sharp drop in first half profit on Thursday as the pullback in activity in the oil and gas industry exacerbated a heavy hit the company is taking from the weak euro.
The FTSE 250-listed specialty chemicals company said its pretax profit for the six months to the end of June fell to GBP30.6 million from GBP52.6 million, pulled lower by a 4% decline in revenue to GBP299.8 million from GBP312.3 million. Revenue fell by 1.1% at constant currencies, but was dragged down by the weakness of the euro against sterling in the first half.
Bodycote said it managed to maintain its operating margin at 18% in the first half, but said it has seen a sharp reduction in oil and gas-related work, which helped drive down its revenue. Its profit was also hit by a GBP19.9 million restructuring charge it booked in the half, primarily related to its exit from Brazil.
The group said, however, that it will pay an interim dividend of 4.8 pence per share, up from 4.6 pence a year earlier.
"The group's performance was resilient in the first half, with business improvements mitigating the sharp cutback in oil & gas activities. No upturn is anticipated in the second half in oil & gas and general industrial demand is expected to remain soft. However, the second half will benefit from the early results of restructuring and further progress in aerospace and automotive together with continued growth from the group's specialist technologies," said Stephen Harris, Bodycote's chief executive.
"The board is confident that management's continued focus on business improvement will generate good returns throughout the cycle," Harris added.
Bodycote shares were down 0.8% to 645.00 pence early Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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