Bodycote (BOY) H2 2024 earnings summary

Executive summary

• Delivered resilient financial performance in 2024, achieving organic core revenue growth of 1% and margin improvement despite challenging industrial and automotive markets.

• Completed a full strategic review, set five medium-term financial targets, and established two focused divisions: Specialist Technologies and Precision Heat Treatment.

• Early progress made on all financial and sustainability targets, with a focus on elevating business quality, reducing cyclicality, and driving consistent revenue growth.

• Launched the Optimise, Perform, and Grow strategy, with tangible early results and a focus on operational excellence and sustainability.

Financial highlights

• Core business organic revenue grew 1% to £679.6m; group revenue was £757m, down 4% organically but flat excluding surcharges.

• Core operating margin improved from 15.9% to 17.9%; group margin up 110bps to 17%.

• Adjusted operating profit increased to £129m; adjusted EPS up to 48.6p; full-year dividend up 1.3% to 23p.

• Operating cash conversion reached 90%; free cash flow was £70.6m.

• Over £100m returned to shareholders via dividends and buybacks.

Outlook and guidance

• Current profit run rate similar to H2 2024; optimization program benefits will be second-half weighted in 2025.

• CapEx expected to rise to ~£85m in 2025; free cash flow will be lower due to restructuring spend, but balance sheet remains strong.

• Confident in achieving medium-term targets, including >20% group margin and >30% specialist technologies margin by 2028.

• Market environment remains mixed, with softness in automotive and industrial, but robust demand in aerospace and defense expected to improve as supply chain issues ease.