12th Mar 2020 09:44
(Alliance News) - Bodycote PLC on Thursday hailed its "robust performance in 2019", but both revenue and profit fell and the coatings services firm decided against offering a special dividend.
It did raise its ordinary payout however by 5.3% to 20.0 pence per share from 19.0p. It made a special payout of 20.0p in 2018.
In an annual results announcement stacked with new initiatives, the company also outlined plans for a restructuring, which would see it reduce its exposure to the internal combustion engine market amid the car industry's shift to electric vehicles.
Pretax profit in 2019 was 6.3% lower at GBP123.9 million from GBP132.2 million. This was on revenue that slipped 1.2% to GBP719.7 million from GBP728.6 million.
"Bodycote delivered a robust performance in 2019, achieving a resilient operating margin despite challenging market conditions," it said.
The firm reported a margin of 18.7%, down from 19.3% in 2018.
"This resilient margin performance was achieved in spite of challenging market conditions and inflationary pressures in labour and utility costs. These pressures were mitigated through good cost control while at the same time maintaining or improving our levels of customer service," Bodycote added.
The FTSE 250 company added that it is embarking on a restructuring programme that will result in a charge to profit of GBP30 million. Half of that cost will be a cash one, which Bodycote said it will recoup in roughly two-and-a-half years.
Bodycote explained: "The macroeconomic uncertainties that held back some of our market sectors in 2019 still persist as we enter 2020. Moreover, while it is clear that we are at a weaker point in the business cycle, it has become evident that there are also some long term structural changes underway in the car & light truck markets.
"As a result, we will be implementing a restructuring plan through 2020. The principal focus of the plan is on our Classical Heat Treatment activities in western Europe, with particular emphasis on reducing exposure to the internal combustion engine. At the same time, we will continue to increase our exposure to the new car and light truck supply chains that are being set up in the emerging markets with a focus on supporting electric vehicle production."
Turning to 2020, Bodycote said the year began with a "number of challenges", most notably the spread of Covid-19.
Bodycote said the impact of the virus, which has now been officially declared a pandemic, is "difficult to assess".
Shares were 13% lower at 555.50p each in London on Thursday morning.
By Eric Cunha; [email protected]
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