24th Oct 2007 07:01
Bodycote International PLC24 October 2007 BODYCOTE INTERNATIONAL PLC TRADING UPDATE - 24 OCTOBER 2007 Bodycote International plc, the specialist thermal processing and testingservices company, is today hosting an investor day and strategy update. TheGroup is pleased to report good performance through the third quarter of 2007. HIGHLIGHTS • Revenues (at constant exchange rates) increased by 19%• Organic revenue growth (in local currency) in Testing Strategic Business Unit (SBU) of 10%• Organic revenue growth (in local currency) in Thermal Processing SBU of 6.5% GROUP At the time of the interim results announcement, we reported that sales in thefirst half of 2007, for continuing operations were 14% higher than 2006 at£317.6m (19% at constant exchange rates) and headline operating profit 1 was£48.2m compared to £40.6m in 2006, an increase of 19%. Sales growth for the nine months to the end of September (at constant exchangerates) was 18.7%, of which 7.3% was organic and 11.4% was from acquisitions. As a result of the impact of exchange rates (primarily the weakness of the USdollar) on currency translation YTD, sales in sterling terms have to date beenreduced by 3.6% compared with the same period last year. If exchange ratesremain at the current level, the impact will moderate as the year progresses,with the annual impact on sales and operating profit expected to be c. 3%. 1 excluding impairment of goodwill and equity investments, amortisation ofacquired intangibles, major facility closure costs and interest and tax onassociates. STRATEGIC BUSINESS UNIT (SBU) OVERVIEW Heat Treatment sales in local currency are cumulatively running 15.2% ahead ofthe same period last year, of which 5.5% is organic. Aerospace, powergeneration and oil & gas demand remains robust in all territories, andautomotive sales have strengthened in Continental Europe although North Americais soft. Turnover has increased in all geographies except North America, wheregrowth has been temporarily affected by the previously announced closure of twofacilities and soft economic conditions in the mid west region. Hot Isostatic Pressing is maintaining its excellent performance, with organicsales growth of 16% (in local currency) compared to 2006 as a result ofcontinued strong demand for aerospace, industrial gas turbine and oil & gascomponents. Sales in the Testing SBU are 29% higher than for the same period last year inlocal currency with organic sales growth of 10%. Oil & Gas, Aerospace, Defenceand Construction markets continue to be strong with our Materials & EngineeringTechnology businesses benefiting. There was some slow down in North Americanmarkets, particularly in the automotive sector, which has been exacerbated bythe weakness of the US dollar reducing the competitiveness of our largerCanadian business. As a result we have decided to rationalise the number oflaboratories focused on this sector. In Health Science and Environmental division, margins were under pressure andthe Canadian business had some seasonal issues. Whilst the Canadian businesshas not caught up the lower quarter two sales, operational efficiencies are nowdriving improvement in food testing margins. The development of the Testing SBU continues to gain momentum with elevengreenfield start ups in the process of commissioning which will drive organicgrowth coupled with several acquisitions nearing completion. OUTLOOK The Board expects all markets in which the Group operates to remain buoyant,except for automotive where, whilst Europe is improving, North America continuesto be muted. Acquisitions completed in 2007 to date are expected to contributeapproximately £9m of sales in 2008. A further 9 acquisitions are at variousstages of evaluation and negotiation, and, as set out in our preliminaryresults, we expect 2007 acquisition spend to be in the range of £50 - 60m with asignificant ongoing pipeline. INVESTOR DAY Bodycote is hosting an investor day in North West England today and thepresentations will be available on the company website from noon pm today. A pre year end update will be announced week commencing 17 December 2007. For further information, please contact: Bodycote International plc Tel No: +44 (0)1625 505300John D. Hubbard, Chief ExecutiveDavid Landless, Group Finance Director Financial Dynamics Tel No: +44 (0) 20 7831 3113Jon SimmonsJames Ottignon This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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