3rd Nov 2006 07:01
Bodycote International PLC03 November 2006 PRESS RELEASE EMBARGOED UNTIL 0700 HOURS 3 NOVEMBER 2006 Bodycote Corporate Developments Bodycote International plc, the specialist thermal processing and testingservices company, is pleased to announce further progress in the implementationof its stated corporate strategy. As we are now late in the year, theseacquisitions will not have a significant impact on 2006 sales and profits. TheGroup has acquired six new businesses: - - Brasimet, the market leading metallurgical services company with six plants in Brazil - Consult-us, a County Cork based analytical chemistry and microbiology laboratory - Prova, a Camberley situated pharmaceutical testing laboratory - Foodscan, a food analysis and microbiological testing company based in Glasgow - Norpath, a County Durham food and consumer products testing business - ISTAS (60% equity stake), Turkey's largest heat treatment group These investments advance Bodycote's strategy of expanding its ThermalProcessing strategic business unit (SBU) into emerging economies and increasingthe scale of its Testing SBU. The total cash consideration for the sixacquisitions is £25.0m, with forecast 2006 sales of £31.8m and net assets of£10.9m. As we are in November, these acquisitions will not have a significantimpact on 2006 sales and profits. The multiples paid remain within thepreviously indicated target range. In addition Bodycote has sold its Espoo,Finland coatings plant, which had sales of £1.1m in 2005. In 2007 Bodycote will also invest approximately £12m in heat treatment andtesting greenfield start-ups in India, Singapore and Mexico to increase itsgeographical reach and help realise its strategy for growth in emergingeconomies. This expenditure is in addition to the previously announcedinvestment in Wuxi, China and will be accommodated within previously indicatedlevels for capital spending by Bodycote in 2007. Bodycote expands into emerging markets (Brazil, Turkey, India, Singapore,Mexico, China) Brazil - Brasimet Bodycote has acquired Brasimet Comercio e Industria S.A., the premiermetallurgical services company in Brazil, offering heat treatment, brazing, PVDcoatings and testing services from six facilities. This acquisition will expandBodycote's network into the major industrial centre for South America. Brazilhas a cluster of automotive and aerospace industries, including many ofBodycote's existing global customers. Turkey - ISTAS Bodycote has completed the acquisition of 60% of the equity of ISTAS, Turkey'sleading heat treatment business, which has facilities in Istanbul (2), Izmir,Bursa, Ankara and Adana. ISTAS is ideally placed to service the growing numberof engineering manufacturers moving to Turkey and provides Bodycote with afootprint in an important developing market. India - Pune Bodycote announces the launch of an initial investment in India comprising agreenfield production facility with heat treatment and metallurgical testingcapabilities in Pune, which will be the largest full service commercial heattreatment facility in India. Bodycote's rationale for entering the Indian market is principally driven by theexisting Western customer portfolio and also by the strong growth of Indianeconomy which is currently running at over 9% per annum. Bodycote intends tocontinue its controlled expansion in India by adding five further facilities by2011 to service the main manufacturing regions. Singapore - Thermal Spray Coatings and Testing Bodycote acquired Ceramet Plasma Coatings Limited, a leading supplier of thermalspray coatings, in April 2006. Bodycote is now establishing a facility inSingapore to provide these coatings for critical valves and rotors used in theoil and gas industry. Singapore is the Asian centre for oil rig constructionand refurbishment. In the same facility Bodycote Testing will establish a laboratory to service itsglobal oil and gas client base providing a full scope of metallurgical,forensic, corrosion, fracture mechanics and analytical testing capability. Mexico - Heat Treatment and Testing Bodycote is currently establishing a leading-edge technology centre for lowpressure carburising (LPC) heat treatment in Silao, Mexico initially to supportnext generation GM transmission production in central Mexico. This follows onfrom a successful LPC investment in Livonia, Michigan. In addition Bodycote Testing has been awarded an outsourcing contract and isestablishing a new laboratory to supply FRISA with materials testing servicesfor its aerospace activities in Monterrey, Mexico. China - Heat Treatment and Testing Initial production has commenced in the Wuxi facility and is expected to be atsales of £3m in 2008. An increasing number of Bodycote's global aerospace andautomotive customers have expressed interest in services from this facility.Bodycote plans to continue its controlled growth in China by adding five newfacilities over the next five years. In addition the Testing SBU is evaluating various opportunities to establishservice capability in China. Testing - acquisitions provide further scale Consult-Us Bodycote has acquired Consult-Us, based in County Cork, Ireland. Consult-Us isan analytical chemistry and microbiology laboratory that provides testingservices to a wide range of food and environmental customers throughout Ireland.The acquisition means Bodycote Testing is able to offer its customers localisedservices over a wider geographic area. Prova Bodycote has acquired Prova, a pharmaceutical development laboratory based inCamberley, UK. The acquisition strengthens Bodycote's offer in thepharmaceutical industry with the addition of pre-formulation, formulation andregulatory services in the areas of licence applications, preparation of drugmaster files, technical files and quality summaries. Prova also takes Bodycoteinto the biotechnology market. The addition of regulatory advisory services willprovide additional support to the existing Bodycote pharmaceutical client base. Foodscan Bodycote has acquired Glasgow based Foodscan Laboratories, which carries outchemical food analysis and microbiological testing for food manufacturers andretailers. Norpath Bodycote has acquired Norpath Laboratories, based in County Durham. Norpath isan analytical laboratory that provides research and consultancy services to awide range of food and consumer products clients throughout the UK and Europe. These Testing acquisitions contribute to the strategy of expanding Bodycote'sHealth Sciences division both in the UK and internationally. John Hubbard, Chief Executive of Bodycote International said:- "We are pleased that an additional six companies have been acquired by Bodycoteand we extend a warm welcome to all the staff in these businesses. Along withthe greenfield start-ups we have made a significant advance in our strategy toenter emerging markets with both Thermal Processing and Testing and to build thescale of our Testing business. Finally, we were delighted to be named winners of the 2006 Manchester EveningNews, Business of the Year Award at a ceremony yesterday evening". For further information, please contact: Bodycote International PLC Tel +44 (0) 1625 505300John D. Hubbard, Chief ExecutiveDavid Landless, Finance Director Financial Dynamics Tel: +44 (0) 207 831 3113Jon SimmonsJames Ottignon This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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