Downturn in business for Bodycote

Macclesfield-based Bodycote’s figures plunged to a half year loss.

The world’s largest provider of heat treatments and specialist thermal processing services saw a pre-tax profit of £62.2m in the six months to June 30 last year transform into a £3.8m pre-tax loss in 2020.

Interim revenues also fell, from £366.5m in 2019 to £306.7m this year.

The group, which announced plans to axe 700 jobs in May, said the results were significantly impacted by the pandemic-related downturn.

Immediate cost saving initiatives have been implemented and restructuring activities stepped up, yielding permanent future annualised cost savings of £58m.

Bodycote said it has excellent free cash flow of £69.7m, and net debt of £23.6m.

The 2019 deferred dividend of 13.3p will be paid in September, while a decision on the 2020 interim dividend will be made in due course.

Group chief executive Stephen Harris said: “In terms of business performance, Bodycote reacted swiftly to the sharp revenue declines arising from the pandemic-related downturn.

“Most cost elements have been reduced in line with sales which has yielded a resilient operating margin of 12.3%.

“Moreover, the excellent free cash flow performance is testament to the cash generative nature of our business.

“The organisational restructuring programme announced in March has been expanded and accelerated and will permanently reduce operating expenses by around 10%.

“This allows good profits to be achieved at lower volumes and should enable margin expansion beyond historical levels when revenues ultimately return to normal.”

He added: “The immediate outlook varies by sector and is difficult to predict for obvious reasons.

“Bodycote benefits from its geographic and sector diversification, and its strong business model.

“We remain focused on strong cash and cost discipline and we expect to continue to generate sustainably attractive returns for our shareholders.”