13th Dec 2005 07:00
PRE-CLOSE TRADING UPDATE 13 December 2005 Bodycote International plc, the leading materials services company, is issuingthis regular trading update prior to entering the close period ahead of itsfull year results for the year ending 31 December 2005.HIGHLIGHTSThe Board expects to announce full-year sales and operating profit in line withthe consensus of analysts' forecasts for the Group.Sales growth for the year to date (at constant exchange rates) has been 9%, ofwhich 4% is from acquisitions and 5% is organic. Acquisitions completed duringthe year are expected to contribute approximately ‚£18m in sales in 2005 and ‚£32m in a full year.Energy costs have continued to increase and are being largely passed on tocustomers, although the recovery lag is typically several months.The execution of the Group's strategy of expanding the Testing business and towiden the geographic coverage of Heat Treatment and HIP remains firmly ontrack.GROUPAt the time of the interim results announcement we reported that first halfsales, for the continuing business at constant exchange rates, were 8% higherthan in the same period last year at ‚£229.3m and operating profit (excludingimpairment of goodwill and restructuring costs) was ¢â€š¤29.2m compared to ¢â€š¤22.3min the first half of 2004, an increase of 31%. Organic growth in the secondhalf has been almost 5% compared to approximately 6% in the first half, withthe reduction primarily due to softer than expected demand from continentalEuropean automotive customers. Demand from the aerospace, power generation, oil& gas and health science sectors are buoyant but prospects for the automotivesector remain uncertain.The most notable increases in energy costs have been in North America, in theimmediate aftermath of the two Gulf Coast hurricanes, where prices are still60% above pre hurricane levels, and in the UK, where wholesale gas prices haveincreased significantly. These cost increases continue to be largely passed onto customers although recovery often lags by several months.We continue to progress the geographic expansion of the Group's network offacilities. Three bolt-on acquisitions have been completed since the interimresults announcement. Two are Testing laboratories namely Food ProductsLaboratory Inc, in Portland, Oregon USA, which complements our UK and Canadianfood testing businesses, and Arthur Gordon Environmental Evaluators Limitedbased in Montreal, Canada, who carry out continuous monitoring of emissions forcustomers in the paper, metallurgy and petrochemical industries and supportsBodycote's existing stack sampling business in Quebec City. The Group has alsoacquired the heat treatment operations of UTTIS Industries SA, which have beencombined with our existing business in Romania. A number of other potentialacquisitions are at various stages of evaluation and negotiation and several ofthese are expected to complete early in the New Year.The impact of exchange rates on currency translation of the Group's sales andprofits has been immaterial.Cash generation remains strong as a result of continued tight control ofcapital expenditure, and the ongoing focus on working capital management.STRATEGIC BUSINESS UNIT (SBU) OVERVIEWHeat Treatment sales in local currency are cumulatively running more than 6%ahead of last year, of which three quarters is organic and operating profit isup 14%. Turnover has increased in all geographies, although slower automotivedemand has held back Germany and France. Product mix in North America andFrance together with energy cost increases in most countries remain the biggestchallenges in improving profitability.Metallurgical Coatings is performing satisfactorily.Testing continues to be the best performing SBU with sales, at constantexchange rates, 28% up on last year of which 9% is organic and 19% fromacquisitions, but operating margins, as anticipated, are slightly lower and inline with the first half. The division has recorded strong organic growth inall regions, but with the benefit of acquisitions, total sales increase hasbeen largest in the UK and continental Europe.Hot Isostatic Pressing is maintaining its improved performance, with sales morethan 8% (in local currency) higher year to date than 2004, as a result ofstrong demand for aerospace and industrial gas turbine components together withour Densal‚® programme for high performance automotive castings.The Preliminary Results will be announced on 28 February 2006.An investor and analyst conference call is taking place today, 13 December, at10:00 hours (GMT).The dial-in number is +44 (0) 845 146 2010 password is BodycoteFor further information, please contact:Bodycote International plc Tel No: +44 (0)1625 505300John D. Hubbard, Chief ExecutiveDavid Landless, Group Finance DirectorFinancial Dynamics Tel No: +44 (0) 20 7831 3113Jon SimmonsSally LewisENDBODYCOTE INTERNATIONAL PLCRelated Shares:
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