Bodycote (BOY) Trading Update summary

Trading performance and revenue trends

• Organic revenue growth for the first ten months was 1.0%, with 0.2% growth in the last four months, excluding surcharges.

• Revenue for the first ten months reached £643.4m, with energy input costs and surcharges down by GBP 28 million, a 50% reduction.

• Specialist Technologies delivered 7.1% organic revenue growth year to date, driven by S3P, HIP, and Surface Technology, with new capacity added in the U.S.

• Classical heat treatment revenues declined by 3.3% in the recent four-month period due to lower industrial activity.

• Aerospace and defense grew 6.3% in the second half, energy up 11.9%, automotive up 0.5%, while industrial markets fell 6.3%.

Market and segment insights

• Specialist Technologies is positioned for premium margins and further growth, with ongoing expansion in addressable markets and applications.

• Aerospace growth was mainly in civil, with temporary supply chain headwinds; engine aftermarket sales remain strong.

• Energy growth driven by wins in the Middle East and industrial gas turbines in North America, though oil and gas remains volatile.

• Automotive outperformed the market in China, Eastern Europe, and Mexico, but overall sector remains weak.

• Medical market softness persists due to destocking, but long-term growth drivers remain intact.

Cost management and capital allocation

• Cost base remains agile, with variability tied to top-line performance; no structural cost increases expected unless business volume rises.

• Cost management has stabilized performance in challenging markets, especially in industrial and auto segments.

• Share buyback program is over 75% complete, with 6.74m shares acquired for GBP 45.8 million of GBP 60 million executed.

• Net debt (excluding leases) stood at GBP 65.8 million at period end, stable versus half-year, with interim dividend of GBP 12.6 million paid.

• Capital allocation remains balanced across organic investment, M&A, dividends, and potential further buybacks, depending on market conditions.