Bodycote Plc · LSE:BOY
Bodycote — H1 2022 Earnings Presentation
32 slides from Bodycote's earnings presentation, Jul 29, 2022
Slide 1: Slide 1
Slide 2: Introduction
Introduction Stephen Harris Group Chief Executive
Slide 3: Agenda
Agenda § Overview § Financial Review § Business Review § Summary § Outlook 3
Slide 4: Key achievements
Key achievements § Excellent pricing and surcharge execution – cost inflation being fully recovered by the end of H1 § Modest impact on plant operating efficiency from daily demand volatility, now stabilising § Submitted emission reduction targets to the Science Based Targets initiative committing t
Slide 5: Financial highlights
Financial highlights Results § Revenue up 14.6% to £358.5m (14.1% at constant currency) § Pricing recovering cost inflation, drove nearly 10% revenue growth § Headline operating profit up 6%1 to £50.5m § Net debt (excl. lease liabilities) of £57m § Strong balance sheet provides optionality Dividends
Slide 6: Financial Review
Financial Review Dominique Yates Chief Financial Officer
Slide 7: H1 2022 results summary
H1 2022 results summary £m H1 H1 Growth Growth 2022 2021 constant currency Revenue 358.5 312.9 14.1% 14.6% Headline operating profit 50.5 48.7 6% 4% Headline operating margin 14.1% 15.6% Headline profit before tax 47.1 45.8 6% 3% Headline tax rate 22.2% 22.5% Free cash flow 31.8 60.2 -47% Headline E
Slide 8: Revenue bridge
Revenue bridge £m 380 § Pricing recovering cost 360 8 5 356 2 358 inflation, drove nearly 340 30 10% revenue growth 320 § This impact varies from 313 market to market, 300 reflecting the variability in 280 cost inflation experienced 260 in different markets 240 § Q2 price effect higher than Q1 220 2
Slide 9: Headline operating profit bridge
Headline operating profit bridge £m 55 § Pricing lagged cost 5.0 increases until the end of 51.4 (2.0) 50.5 the half 50 (0.9) 48.7 4.2 - § Pricing now covering cost inflation 45 (4.5) § Incremental restructuring benefit delivered as 40 expected (£30m annualised cost savings in 35 total since 2019) §
Slide 10: AGI summary
AGI summary £m H1 H1 Growth Growth § Revenue growth entirely driven 2022 2021 Organic constant currency by price increases Revenue 209.6 192.5 10.3% 8.9% § Strong General Industrial Headline operating volume growth 35.0 38.9 -6% -10% profit § Automotive volume declined, Headline operating and was hi
Slide 11: ADE summary
ADE summary £m H1 H1 Growth Growth § Strong volume growth 2022 2021 Organic constant currency § Margin diluted by price increase Revenue 148.9 120.4 16.1% 23.6% to cover cost inflation Headline operating 23.3 17.6 28% 32% profit Headline operating 15.6% 14.6% margin The ADE business comprises more t
Slide 12: Cash flow
Cash flow £m 100 H1 2022 H1 2021 Headline EBITDA = £87m Headline EBITDA = £84m Working capital § Working capital outflow reflects 80 Maintenance capex higher receivables from Maintenance capex Depreciation Tax & interest revenue growth Depreciation & other & other 60 Restructuring § Maintenance cape
Slide 13: Balance sheet and taxation
Balance sheet and taxation Balance sheet § Net debt1 £57m after paying £26m of dividends § Facility headroom of £164m at 30 June 2022 § £251m credit facility extended 1 year, now matures in May 2027 Taxation § Headline tax rate of 22.2% Currency § Based on latest exchange rates, forex tailwind in H2
Slide 14: Business Review
Business Review Stephen Harris Group Chief Executive
Slide 15: ESG strategy as a catalyst for growth
ESG strategy as a catalyst for growth Committed to Supporting customers to combat climate change reduction of § Carbon reduction targets submitted in line with the 28% in emissions Science Based Targets initiative (SBTi) committing to an by 2030 absolute reduction of 28% in emissions by 2030 Senior
Slide 16: Energy security
Energy security § Bodycote’s strategy for many years has been to move away from natural gas processes § Electrically powered processes generate three- quarters of Bodycote’s profits in Europe § If natural gas is rationed, customers will likely weight production to their supply chains in less impacte
Slide 17: Automotive
Automotive Revenue: £89m (25% of total revenue) YoY Growth1 : - 4% £m Revenue1 120 100 80 60 40 20 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Price/surcharge § Automotive sector production continued to be hampered by supply chain issues § Shutdowns in China due to COVID-19 further intensified the s
Slide 18: General Industrial
General Industrial Revenue: £181m (50% of total revenue) YoY Growth1 : 19% £m Revenue1 Revenue by segment 180 160 Industrial 140 Machinery Other 20% 120 23% 100 80 60 40 Construction 20 Medical 7% 5% 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Agriculture Electronics Price/surcharge 5% 5% § General
Slide 19: Aerospace & Defence
Aerospace & Defence Revenue: £89m (25% of total revenue) YoY Growth1 : 20% £m Revenue1 120 100 80 60 40 20 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Price/surcharge § Strong new aircraft production – Airbus sold 640 A320s in 2019 and expect to sell 700 in 2022. Ramping production to 900 units in 2
Slide 20: Emerging Markets
Emerging Markets Revenue: £43m (12% of total revenue) YoY Growth1 : 22% £m Revenue1 50 40 30 20 10 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Price/surcharge § China COVID-19 shutdowns impacted growth § Automotive volume declined (supply chain issues) § Good growth in General Industrial volumes Eme
Slide 21: Specialist Technologies
Specialist Technologies Revenue: £109m (30% of total revenue) YoY Growth1 : 10% £m Revenue1 100 90 80 70 60 50 40 30 20 10 0 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 Price/surcharge § Energy surcharge impact smaller, as these are generally lower energy technologies § Long term agreement indexed pri
Slide 22: Summary
Summary § Headline operating profit up 6%1 § Inflation impact being successfully managed across the business § Automotive market was impacted by supply chain issues reducing revenues by 4% – improvement expected in H2, particularly in North America § Other market areas experienced strong growth1 wit
Slide 23: Outlook
Outlook The significant daily demand volatility that we saw in April and May is now stabilising and we have managed to contain the impact on operating efficiency to modest proportions. The price increases implemented across the business, along with the decisive management actions we have taken over
Slide 24: 24
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Slide 25: Specialist Technologies
Specialist Hot Isostatic Pressing (HIP) Services Improves component integrity and strength by Technologies application of extreme pressure and heat HIP PF inc. Powdermet® Additive manufacturing of often complex components A selection of highly in conjunction with HIP differentiated, early- Specialty
Slide 26: Classical Heat Treatment
Classical Heat It provides wear resistance, strength or toughness depending on the application. Surface hardness can Treatment be controlled by diffusing elements such as carbon and nitrogen into the metal during the heating stages of the process. Classical Heat Treatment is an indispensable set of
Slide 27: H1 2022 Statutory income statement
H1 2022 Statutory income statement £m H1 2022 H1 2021 Revenue 358.5 312.9 Headline operating profit 50.5 48.7 Amortisation of acquired intangible assets (4.8) (5.1) Acquisition costs (0.7) (0.2) Exceptional items - - Operating profit 45.0 43.4 Net finance charge (3.4) (2.9) Profit before taxation 41
Slide 28: H1 2022 Cash flow
H1 2022 Cash flow 1 £m H1 2022 H1 2021 Headline operating profit 50.5 48.7 Depreciation and amortisation 36.6 37.7 Income from associates - (0.2) Profit on disposal of property, plant and equipment (0.5) (2.3) Headline EBITDA 86.6 83.9 Net maintenance capital expenditure (24.5) (14.3) Net working ca
Slide 29: Net finance charge/facilities
Net finance charge/facilities £m H1 2022 H1 2021 Interest received on bank deposits and loans 0.1 0.1 Interest on loans and bank overdrafts (0.8) (0.6) Lease & other interest charges (1.5) (1.1) Finance and bank charges (1.2) (1.3) Total finance charge (3.5) (3.0) (3.4) (2.9) Net finance charge § Co
Slide 30: H1 2022 Sales and operating profit by currency
H1 2022 Sales and operating profit1 by currency GBP1 3% § Operating profit translation decrease of £0.9m Other 17% GBP 7% GBP 10% § Average exchange rates: £1: €1.19 and £1: $1.30 Other 22% Other 22% § Every cent change in the Euro is worth c.£0.4m of annual operating profit EUR 39% EUR 37% EUR 35%
Slide 31: Financial information
Financial information H1 H1 Shares in issue 2022 2021 Weighted average 190.7M 190.7m Exchange rates H1 2022 H1 2021 Analysis by EUR Average (P&L) 1.19 1.15 currency, H1 2022 Closing (B/S) 1.16 1.17 Operating USD Average (P&L) 1.30 1.39 Sales profit Closing (B/S) 1.22 1.38 EUR 35% 43% SEK Average (P&
Slide 32: Definitions
Definitions Term Definition Headline operating profit Operating profit before acquisition costs, exceptional items and amortisation of acquired intangibles Headline profit before tax Profit before tax, acquisition costs, exceptional items and amortisation of acquired intangibles Earnings before inte