Bodycote Plc · LSE:BOY
Bodycote — H1 2014 Earnings Presentation
28 slides from Bodycote's earnings presentation, Jul 31, 2014
Slide 1: 2014 Interim Results
2014 Interim Results 31 July 2014
Slide 2: Introduction
Introduction Stephen Harris Chief Executive 2
Slide 3: Agenda
Agenda Highlights Financial review Business review Outlook 3
Slide 4: Highlights
Highlights Encouraging sales growth at constant exchange rates New Technologies moved ahead strongly Headline margin and operating profit continued to grow strongly Net cash at 30 June1 Interim dividend of 4.6p, up 5% 1 After total payment of £36.5m for the 2013 final (£17.4m) and special
Slide 5: Financial review
Financial review David Landless Finance Director 5
Slide 6: Financial summary
Financial summary Sales growth: Constant exchange rates +5% Exchange rate changes -6% Overall -1% Headline margin up 140 basis points to 18.0% Headline operating profit up 7% Net cash of £5.5m Bank facilities extended to 2019 6
Slide 7: 2014 Interim results summary
2014 Interim results summary £m H1 2014 H1 2013 change Revenue 312.3 316.5 -1% Headline: Operating profit 56.1 52.4 7% M argin 18.0% 16.6% 140bp Profit before tax 54.5 50.6 8% Amortisation of acquired intangibles (1.9) (2.1) Headline operating cash flow 44.0 46.5 Headline operating cash conversion 7
Slide 8: Headline operating profit bridge
Headline operating profit bridge (£m) 1.5 -3.2 3.1 -0.2 56.1 1.0 1.5 52.4 H1 2013 Price minus Sales mix Sales volume Start-ups Central costs Foreign H1 2014 cost increases exchange translation 8
Slide 9: Divisional summary
Divisional summary YOY Growth: £m H1 2014 H1 2013 Currency Organic % Total % ADE Divisions Revenue 133.5 132.6 (7.3) 8.2 6% 0.9 1% Headline Operating Profit1 36.0 34.2 (2.2) 4.0 12% 1.8 5% M argin 27.0% 25.8% AGI Divisions Revenue 178.8 183.9 (11.4) 6.3 3% (5.1) -3% Headline Operating Profit1 25.3 2
Slide 10: Cash flow
Cash flow £m H1 2014 H1 2013 Headline operating profit 56.1 52.4 Add back: Depreciation and amortisation 26.4 28.2 Capex to depreciation ratio Share-based payments 1.9 3.0 1.2 times (H1 2013: 1.0 times) Headline EBITDA 84.4 83.6 - Greenfield investment and Net capital expenditure (31.5) (28.6) S3P c
Slide 11: Business review
Business review Stephen Harris Chief Executive Ceramic coating Bodycote’s ceramic coatings represent a significant advance in surface engineering technology. Can extend component lifetime by up to 25 times. 11
Slide 12: Year on year sales growth
Year on year sales growth At constant exchange rates 5% 0% -5% H1 2013 H2 2013 H1 2014 12
Slide 13: Organic growth by end market
Organic growth by end market Aerospace & Defence H1 2014 Sales £67m OEM supply chain structural 14% changes 10% 6% Inventory adjustments ahead 2% of platform changeovers -2% -6% Reduced defence spending -10% H1 2013 H2 2013 H1 2014 Energy H1 2014 Sales £44m 14% 2013 impacted by severe 10% de
Slide 14: Organic growth by end market
Organic growth by end market Automotive H1 2014 Sales £77m Car & light truck well up, led 14% 10% by Europe 6% Heavy truck destocking 2% -2% impacted 2013 - demand -6% not yet recovered -10% H1 2013 H2 2013 H1 2014 General Industrial H1 2014 Sales £124m 14% Broad-based recovery in 10% demand,
Slide 15: Bodycote developments
Bodycote developments New Giga HIP in US now fully operational, providing additional capacity for Aerospace and IGT Investment in HIP PF & S3P resulting in strong sales growth: – HIP PF - traction gained in subsea oil & gas – S3P - further penetration into medical and specialist automotive marke
Slide 16: Headline margin bridge
Headline margin bridge 0.1% 18.0% 0.5% 0.6% 0.1% 0.1% 16.6% H1 2013 AGI* Eastern Europe ADE* New Central Costs H1 2014 Technologies & Other * ADE and AGI are shown excluding New Technologies, Eastern Europe and Brazil 16
Slide 17: New Technologies
Elements of profit growth Improving business mix New Technologies Margin % Emerging Markets (excl. Brazil) ADE divisions* NA AGI* WE AGI* % of Group Sales Highest growth in New Technologies Margin improvement in both divisions 17 *Excluding New Technologies and Emerging Markets, Brazil excluded
Slide 18: Five year perspective
Five year perspective At 2014 exchange rates Sales Headline margin £m % H1 H2 H2 18 18 281 291 17 17 266 H1 16 15 15 240 11 291 298 312 9 271 229 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Headline operating profit Average headcount £m H2 53 5,720 5,813 5,863 50 5,603 5,532 H1 40 56 28 46 49
Slide 19: Looking ahead
Looking ahead New Technologies Benefiting overall margin by 50bp Energy Increasing from 2013 lows Aerospace & Defence Inventory adjustments to continue General Industrial Broad-based pick up Automotive Improving sales picture Currency H1 headline operating profit impact £3.2m At current
Slide 20: Outlook
Outlook The Group delivered a strong first half performance. Organic growth and margin improvement were affected by currency headwinds, which at current exchange rates will have a greater impact in the second half. Noting that the Group has limited forward visibility, the Board continues to expect f
Slide 21: Save the date: Capital Markets Day
Save the date Bodycote Capital Markets Day Friday 21s* November 2014 The Royal Academy of Engineering, London SW1Y € This is a morning event, concluding with lunch Invitation to follow... 21
Slide 22: Boaycote
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Slide 23: Definitions
Definitions Term Definition Headline Operating Profit Operating profit before exceptional costs and amortisation of acquired intangibles Headline Profit Before Tax Profit before tax, exceptional costs and amortisation of acquired intangibles Headline Operating Cash Flow Cash generated by operations,
Slide 24: H1 2014 Statutory income statement
H1 2014 Statutory income statement £m H1 2014 H1 2013 Revenue 312.3 316.5 Headline operating profit 56.1 52.4 Amortisation of acquired intangible fixed assets (1.9) (2.1) Operating profit 54.2 50.3 Net finance costs (1.6) (1.8) Profit before tax 52.6 48.5 Headline earnings per share (pence) H1 2014
Slide 25: Net finance charge / facilities
Net finance charge / facilities £m H1 2014 H1 2013 Net interest payable 0.1 0.4 Financing costs 0.8 0.7 Other charges 0.4 0.4 Pension finance charge 0.3 0.3 Net finance charge 1.6 1.8 Interest payable: decrease due to lower average net debt Financing costs: increase due to higher undrawn committ
Slide 26: Pensions
Pensions £m H1 2014 H1 2013 FY 2013 UK Funded 4.6 3.9 4.8 Other Western Europe Funded 1.2 0.6 1.2 Other Western Europe Unfunded 11.9 14.2 12.1 Western Europe Total 17.7 18.7 18.1 North America Funded 0.2 0.9 0.2 Emerging Markets Unfunded 0.1 0.2 0.2 Total retirement benefit obligations 18.0 19.8 18.
Slide 27: Financial information
Financial information Shares in issue H1 2014 H1 2013 Weighted average 190.2 189.3 Exchange rates H1 2014 H1 2013 EUR Average (P&L) 1.22 1.18 Closing (B/S) 1.25 1.17 USD Average (P&L) 1.67 1.54 Closing (B/S) 1.71 1.52 SEK Average (P&L) 10.92 10.05 Closing (B/S) 11.43 10.24 Headline operating Analysi
Slide 28: Bodycote
Bodycote