Bodycote (BOY) H1 2024 earnings summary

Executive summary

• Achieved 7% headline operating profit growth and 1.5% organic revenue growth (excluding surcharges) in H1 2024, with margin improvement to 16.7%, led by Specialist Technologies and strong Aerospace & Defence, despite softness in Automotive and Industrial markets.

• CEO transition completed, with new leadership focused on operational improvement and strategy refinement.

• Completed Lake City acquisition and first £30m tranche of £60m share buyback.

• Statutory operating profit fell to £30.8m after a £28.3m exceptional ERP impairment charge.

Financial highlights

• Revenue: £399m, up 1.5% organic (excl. surcharges), down 5% total year-over-year due to lower surcharges and FX headwinds.

• Headline operating profit: £66.8m, up 7% organic; margin 16.7% (+170bps).

• Basic headline EPS: 25.0p, up 5%; interim dividend: 6.9p, up 3% year-over-year.

• Free cash flow: £26.0m, down from £42.9m due to higher tax payments.

• Net debt (excl. leases): £68.0m; leverage at 0.7x net debt/EBITDA.

Outlook and guidance

• Full-year expectations unchanged: organic revenue growth (excluding surcharges) and further margin progress anticipated.

• FX headwinds expected to impact revenue by £25m and profit by £5m if current rates persist.

• Cash tax for the full year now expected at £30m, £10m higher than previously guided.

• £60m share buyback to be completed by end of 2024.

• Path to margins in excess of 20% over the medium term remains intact.