Bodycote (BOY) CMD 2024 summary

Strategic direction and divisional structure

• Transitioning to two global divisions: Specialist Technologies and Precision Heat Treatment, each with focused growth and optimisation strategies.

• Specialist Technologies targets high-growth, high-margin markets and aims to expand addressable markets with above-market growth.

• Precision Heat Treatment focuses on operational excellence, optimising plant footprint, and selective growth in key regions.

• Three strategic levers: Optimise (portfolio and footprint), Perform (operational excellence via HEAT programme), and Grow (targeted expansion and M&A).

• New divisional reporting to begin with full year 2024 results in March 2025.

Financial targets and guidance

• Targeting mid-single-digit annual revenue growth through the cycle.

• Specialist Technologies to comprise 35–40% of revenue by 2028 (from 28% in 2023, redefined scope).

• Operating margins above 20% and ROCE of 15–20% by 2028.

• Operating cash conversion expected at 80–90% through the cycle.

• Announced a £30m extension to the current £60m share buyback programme, to be executed in 2025.

Portfolio optimisation and operational improvement

• Plant-by-plant review to exit non-core sites (~6% of revenue, ~10% of capacity) by end of 2026.

• Optimisation actions to deliver £12–14m recurring operating profit benefit and >200bps margin improvement, with £25–30m one-off cash costs.

• Associated P&L charge of £60m and £12–15m goodwill write-down for North America Automotive and Industrial operations.

• Focus on nurturing high-performing sites, investing in attractive areas, and fixing underperformers.

• Most exceptional costs to be incurred in 2024 and 2025.