Bodycote Plc · LSE:BOY
Bodycote — Investor Presentation (December 2004)
28 slides from Bodycote's investor presentation, December 2004
Slide 1: Positioned for Future Growth
Positioned for Future Growth December 2004
Slide 2: Strategic Business Units
Strategic Business Units Bodycote International plc Hot Heat Materials Metallurgical Materials Isostatic Treatment Testing Coatings Testing Pressing Bodycote is currently operating 232 plants in 22 countries with 7500 employees slide number 2
Slide 3: What is Heat Treatment?
What is Heat Treatment ? Heat Treatment increases the mechanical properties of critical components so they can last longer, operate with less mass and withstand extreme conditions. slide number 3
Slide 4: What is Materials Testing?
What is Materials Testing? Materials Testing provide independent, accredited materials testing services to almost every business sector. The results of testing facilitate product development, production release, forensic analysis and certification. slide number 4
Slide 5: What is HIPping?
What is HIPping? HIPping uses high temperature and pressure to achieve structural changes in metals and other materials. HIP technology enables critical castings to be densified, powder metallurgy products to be improved and novel materials to be made. HIPping is a vital step in manufacturing aero e
Slide 6: What are Metallurgical Coatings?
What are Metallurgical Coatings? Metallurgical Coatings utilises a variety of technologies e.g. • anodising and sherardizing for protection against corrosion • specialist ceramic and metallic slurry coatings for wear resistance • plasma coatings for thermal barrier protection slide number 6
Slide 7: Strategy Implementation
Strategy Implementation Bodycote positioned as subcontractor of choice Focused on core business Competitive advantages being exploited Roll-out proprietary value added processes Infill existing markets Follow customer expansion into low cost areas Development of people slide number 7
Slide 8: Furnace Utilisation
Furnace Utilisation (75% of Heat Treatment is still captive in Europe) In-House 5.5 days Bodycote 7 days Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Best Utilisation 85% Best Utilisation 65% New Average Driver for cost From 3rd Parties down Current Average slide number 8 From own busines
Slide 9: Bodycote Business Models
Bodycote Business Models ‘Strategic Partnership’ Agreements ‘Factory Gates’ option – permits third party in-load Reciprocal business development Long Term Agreements Price stability and volume linked rebates Capacity and service guarantees Conventional Subcontract Support Concentrate on core busines
Slide 10: Ford & GM Outsource Successes at Livonia
Ford & GM Outsource Successes at Livonia New LPC furnace installation Latest technology for case hardening transmission parts Market leading services slide number 10
Slide 11: Outsourcing for Rotary Drill Bits Vasteras
Outsourcing for Rotary Drill Bits Vasteras Deep case hardening Iron ore mining – Canada Bodycote processing extends productive life 6x vs. captive process slide number 11
Slide 12: Geographic Expansion
Geographic Expansion Heat Treatment Eastern Europe – bolt on acquisition and partnership with western customers: Poland Hungary Romania Turkey China – partnership with western customers slide number 12
Slide 13: Trading Update
Trading Update Trading YTD in line with management expectations Sales ahead 7.7% (excluding electroplating, at constant exchange rates) Energy impact 2004: negligible 2005: significant share passed onto customers Electroplating exit on schedule Cash generation continues to be ahead of last year slid
Slide 14: Trading Update*
Trading Update* Heat treatment Turnover ahead (+5%) in all geographies bar France Operating profit up 16% Materials Testing Sales up 10% with margins slightly ahead HIP Turnover more than 20% higher US up more than 30% - best ever sales Metallurgical Coatings Sales up 6%, profits up 50% * All values
Slide 15: Positioned for Future Growth
Positioned for Future Growth Disposal of Electroplating Merger of PVD Activities Ongoing bolt-on acquisitions programme slide number 15
Slide 16: Electroplating
Electroplating 17 facilities in 4 countries 15 separate deals for 17 plants 2004 anticipated cash realisations £14.0m Deferred consideration £3.5m 6 Anodising/Organics/Sherardizing plants retained slide number 16
Slide 17: Impact of Disposed Businesses Electroplating
Impact of Disposed Businesses Electroplating H1 £m 2003 2004 Sales 26.0 13.0 EBIT (6.9) (2.7) EBITDA (3.3) (1.3) Improves Group ROS by 2% and ROCE by 1.5% compared to 2003 slide number 17
Slide 18: Retained Anodising/Organics/Sherardizing Businesses
Retained Anodising/Organics/Sherardizing Businesses H1 £m 2003 2004 Sales 14.9 8.2 EBIT 1.3 1.4 EBITDA 2.4 2.0 slide number 18
Slide 19: Retained Slurry/Plasma Spray Businesses
Retained Slurry/Plasma Spray Businesses H1 £m 2003 2004 Sales 3.5 1.8 EBIT 0.9 0.5 EBITDA 1.0 0.6 slide number 19
Slide 20: Definitive #2 global PVD service provider
Definitive #2 global PVD service provider Cutting tool coatings Diamond like carbon tribological coatings Decorative coatings 25 facilities in 12 countries slide number 20
Slide 21: Strategy
Strategy Consolidation of PVD market Release cash from under performing assets, increase ROCE Increases Bodycote PVD offering to customers Option to buy back in slide number 21
Slide 22: Deal Summary
Deal Summary £m Sale Proceeds 26.1 Cash 19.0 Deferred 1.9 Reinvested 15% of equity 5.2 Loss disposal 2.2 Transaction costs 0.8 slide number 22
Slide 23: Deal Summary continued
Deal Summary continued Number 2 global supplier: Pro forma 2004 sales £53m Joint marketing and branding agreement Mutually exclusive 5 year supply agreement for heat treatment and PVD Board representation Right of first refusal slide number 23
Slide 24: Financial Impact Bodycote PVD Business
Financial Impact Bodycote PVD Business 12 Months H1 2003 2004 £m £m Sales 15.6 9.1 EBIT 1.6 0.9 EBITDA 3.5 2.1 CAPEX (4.1) (2.1) Cash Outflow (0.6) - slide number 24
Slide 25: PVD Business – Bodycote Share Equity Accounted
PVD Business – Bodycote Share Equity Accounted Pro forma 15% Pro forma 20% 2004 2004 £m £m Sales 8.0 10.6 ROS Low teens Low Teens slide number 25
Slide 26: Acquisitions Programme 2004-2005
2004-2005 Acquisitions Programme Materials Testing Eastern Europe Complementary Technologies Objective – 15% ROCE in medium term slide number 26
Slide 27: Summary
Summary Focused on core competences Strengthened balance sheet Positioned for outsourcing growth Focused on rebuilding ROCE Expanding into emerging markets slide number 27
Slide 28: BODYCOTE INTERNATIONAL plc
BODYCOTE INTERNATIONAL plc Heat Treatments Hot Isostatic Pressing MaterialsTesting Metallurgical Coatings Bodycote outsourcing for industry