Bodycote Plc · LSE:BOY
Bodycote — H1 2009 Earnings Presentation
41 slides from Bodycote's earnings presentation, 2009
Slide 1: 2009 Interim Results
2009 INTERIM RESULTS
Slide 2: Introduction
Introduction • Stephen Harris – CEO - Low Pressure Carburising - Improved fatigue performance and cleanliness 1 2009 Interim results
Slide 3: Overview
Overview • Revenue down 19.4% to £227.9m (2008: £282.8m) and 31.0% at constant exchange rates • Headline operating loss of £1.7m (2008: profit £41.0m) • Positive operating cash flow of £14.5m (2008: £29.0m) • Restructuring programme extended and progressing as planned • Unchanged interim dividend of
Slide 4: Financial results
Financial results • David Landless – Group FD - Hot Isostatic Pressing - Casting densification and complex near net shapes 3 2009 Interim results
Slide 5: Interim Statutory Results (Continuing Operations)
Interim Statutory Results (Continuing Operations) H1-2009 H1-2008 Change £m £m % Revenue 227.9 282.8 -19.4 Exceptional Items (49.1) (0.6) +4810 Operating (Loss) / Profit (50.8) 40.3 -226.1 (Loss) / Profit Before Tax (53.1) 38.2 -239.0 Basic (Loss) / Earnings Per Share (23.9) p 8.9 p -368.5 4 2009 In
Slide 6: Interim Headline Results
Interim Headline Results H1-2009 H1-2008 Change Continuing Operations £m £m % Revenue 227.9 282.8 -19.4 EBITDA 1 24.5 66.0 -84.2 Operating (Loss) / Profit 2 (1.7) 41.0 -104.0 (Loss) / Profit Before Tax 3 (4.0) 38.8 -110.3 Basic (Loss) / Earnings Per Share 4 (0.2) p 9.1 p -102.2 1 Earnings before exc
Slide 7: Profit Reconciliation
Profit Reconciliation H1- 2009 H1- 2008 Continuing Operations £m £m Headline (Loss) / Profit Before Tax 1 (4.0) 38.8 Amortisation of acquired intangible fixed assets (0.7) (0.6) Impairment charge (28.6) -…. Major facility closure costs (19.8) -…. (Loss) / Profit Before Tax (53.1) 38.2 6 2009 Interim
Slide 8: Profit Bridge
Profit Bridge (Continuing Operations £m) 60.0 90.0 9.3 -50.6 85.0 80.0 50.0 75.0 41.0 2.2 70.0 65.0 40.0 60.0 55.0 30.0 50.0 45.0 40.0 20.0 35.0 30.0 25.0 10.0 20.0 -4.1 15.0 0.1 0.4 -1.7 10.00.0 5.0 0.0 -10.0 Headline OP 2008 Price increase Restructuring Sales Volume Input Prices Acquisition Foreig
Slide 9: Operational Gearing – Current (with falling revenue)
Operational Gearing – Current (with falling revenue) UK/US US EUROPE % Aero/Energy focus Auto/General focus Auto/General focus HIP 1 week 90 90 90 90 1 - 3 months 50 40 80 80 6 - 12 months 40 40 50 70 With site closures etc 30 30 30 N/A 8 2009 Interim results
Slide 10: Restructuring
Restructuring Asset Write Downs Cash Costs Total Exceptional charges £m £m £m 2008 42.7 34.9 77.6 H1 - 2009 8.4 11.4 19.8 Total 51.1 46.3 97.4 Expenditure £m 2008 2.1 H1 - 2009 10.2 H2 - 2009 19.9 Later 14.1 Total 46.3 Americas/Asia Europe Total Savings by Geography £m £m £m H1 - 2009 3.2 6.1 9.3 H2
Slide 11: Revenue and Operating Profit - By Region
Revenue and Operating Profit - By Region Western North Emerging H1- 2008 H1- 2009 Europe America Markets £m Sales £m £m £m £m 256.6 Heat Treatment 204.3 127.4 58.2 18.7 26.2 Hot Isostatic Pressing 23.6 11.9 11.7 -.0 282.8 Thermal Processing 227.9 139.3 69.9 18.7 Headline Operating (Loss) / Profit1 3
Slide 12: Summary Cash Flow
Summary Cash Flow H1-2009 H1-2008 £m £m Headline EBITDA 1 - continuing operations 24.5 66.0 Headline EBITDA 1 - discontinued operations -. 16.9 Headline EBITDA 1 24.5 82.9 Cash exceptional items (11.4) - EBITDA 2 13.1 82.9 Working capital movement - Exceptional 1.2 - Working capital movement - Other
Slide 13: Cash and Debt
Cash and Debt June 2009 December 2008 £m £m Cash (63.6) (258.4) Debt 152.3 323.1 Net Debt 88.7 64.7 Impact Reference rates Vs GBP EUR 1.18 1.03 USD 1.65 1.44 12 2009 Interim results
Slide 14: Treasury
Treasury • Gross Debt reduced by £170.8m in H1 • £225m RCF matures in August 2010 but plan to refinance in H2 • Significant margin increase and fees expected for any refinancing • €125m RCF matures July 2013 13 2009 Interim results
Slide 15: Financial Ratios
Financial Ratios H1-2009 H1-2008 Net debt/EBITDA1 1.8x 1.6x Gearing 21% 46% Debtor Days 58--- 66--- 1 Earnings before interest, tax, depreciation, amortisation, impairment and share-based payments. EBITDA Rolling 12 months. 14 2009 Interim results
Slide 16: Business Review
Business Review • Stephen Harris – CEO - Thermal Spray - High performance coatings for corrosion and wear resistance 15 2009 Interim results
Slide 17: What's happening in our markets and in Bodycote
- What’s happening in our markets - What’s happening in Bodycote - Some insights into the period ahead Some of the material involves management judgements. 16 2009 Interim results
Slide 18: H1 Bodycote sales
H1 Bodycote sales 2008 H1 £283m 2009 H1 £228m Aerospace Aerospace & Defence & Defence General General 24% Industry Industry 18% 40% 42% Automotive 20% Automotive Energy 28% 16% Energy 12% • Overall sales down 19% - Automotive is the most affected by far • At constant exchange overall reduction is 31
Slide 19: Average Daily Sales at Constant Exchange Rates
Average Daily Sales at Constant Exchange Rates 1,000 900 800 Western Europe A&GI North America A&GI 700 Emerging Markets A&GI 600 Western Europe ADE North America ADE 500 400 300 200 100 - P9 2008 P10 P11 P12 P1 2009 P2 P3 P4 P5 P6 • Quarter 2 weaker than Quarter 1 • Run rate has stabilised 18 2009
Slide 20: General Industry
General Industry 140.0 End Market -25% 120.0 £119m Supply chain 100.0 destocking -6% Closed Exchange sites -2% £92m 80.0 60.0 Constant currency decline: Western Europe -35% 40.0 North America -29% Emerging Markets -33% Overall -33% 20.0 H1- 2008 H1- 2009 0.0 H1-2008 End Market Supply chain de- Close
Slide 21: Automotive & Trucks
Automotive & Trucks 90.0 End Market 80.0 -25% £77m 70.0 Supply chain destocking 60.0 -14% In-sourcing 50.0 -6% Closed sites -4% Exchange £44m 40.0 30.0 20.0 Constant currency decline: Western Europe -51% North America -42% 10.0 H1- 2008 Emerging Market -46% H1- 2009 Overall -49% 0.0 First Half Ahead
Slide 22: Aerospace & Defence
Aerospace & Defence 60.0 End Market -5% Supply chain Exchange destocking -8% Closed £54m 50.0 £52m sites -2% 40.0 30.0 Constant currency decline: Western Europe -13% North America -16% 20.0 Emerging Markets -15% Overall -15% 10.0 H1- 2008 H1- 2009 0.0 H1-2008 End Market Supply chain de- Closed sites
Slide 23: Energy
Energy Exchange End Market -7% £38m £35m Constant currency decline: Western Europe -2% North America -19% Emerging Markets +54% Overall - 7% H1- 2008 H1- 2009 H1-2008 End Market Exchange Finish First Half • Mixed picture: Ahead? - Power gen – up 5% • Long term growth - Oil production – flat • Pick u
Slide 24: Process Lines and Site Closure
Process Lines and Site Closure • Sites closed Through H1 – 2009 H2 – 2009 & Later 17 16 • Process lines decommissioned: Through H1 – 2009 H2 – 2009 & Later Mothball 96 26 Taking out of service 93 29 End 2009 • Total sites left: 171 • Total Process lines operational: 1,709 23 2009 Interim results
Slide 25: Matching costs to volume
Matching costs to volume Headcount 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun 08 Dec 08 Jun 09 Dec 09 • June headcount is 23% down year on year • Actions in hand achieve further 7% reduction 24 2009 Interim results
Slide 26: Restructuring Cash Spend (£m)
Restructuring Cash Spend (£m) 25 20 Other personnel savings 15 10 Restructuring 5 0 Q4 2008 H1 2009 H2 2009 2010 Later 25 2009 Interim results
Slide 27: Restructuring Annualised Savings (£m)
Restructuring Annualised Savings (£m) 80 70 60 Other personnel 50 Other cost savings savings 40 30 20 Restructuring Restructuring 10 0 Jun 08 Jun 09 Jun 10 Oct 08 Dec 08 Mar 09 Oct 09 Dec 09 Mar 10 • June - £30m restructuring savings run rate – plus £25m other personnel savings 26 2009 Interim resul
Slide 28: Good things happening...
Good things happening... • Delayered management • Selected new hires • Increased focus on key markets and customers • Market share 27 2009 Interim results
Slide 29: Outlook
Outlook • Demand visibility limited • Summer shutdowns expected to be longer than usual • Aerospace and oil & gas demand continues to soften • Restructuring extended, savings being delivered • Final dividend to be assessed in the light of outlook in early 2010 • Poised to benefit from the upturn whe
Slide 30: 2009 Interim Results
2009 INTERIM RESULTS
Slide 31: Financial Information
Financial Information • Average shares in issue, H1 - 2009 185.9m H1 - 2008 318.6m • FX rates H1 2009 average vs H1 2008 average H1 - 2009 H1 - 2008 USD 1.48 1.98 EUR 1.11 1.29 • The 2009 anticipated tax rate on normal trading profit continues to be circa 25%. 29 2009 Interim results
Slide 32: Impact Of Exchange Rates
Impact Of Exchange Rates ` Headline Sales Operating Loss1 Continuing Operations £m £m H1-2009 As Reported 227.9 (1.7) H1-2009 Using H1-2008 Rates 195.2 (2.1) Impact 32.7 0.4 30 2009 Interim results 1 Pre exceptional items and share of associates’ interest and tax.
Slide 33: Analysis Of Organic/Acquisition Growth
Analysis Of Organic/Acquisition Growth Head HT HIP Office Total Revenue £m £m £m £m H1 2008 256.6 26.2 - 282.8 Organic 1 (83.0) (6.4) - (89.4) Sales of acq.Subsidiaries 1.8 - - 1.8 Currency 28.9 3.8 - 32.7 H1 2009 204.3 23.6 - 227.9 Headline Operating(Loss) / Profit 2 H1 2008 37.7 8.1 (4.8) 41.0 Org
Slide 34: YoY Change in Revenue
YoY Change in Revenue Western North Emerging TOTAL Organic Europe Organic America Organic Markets Organic Revenue % % % % % % % % Heat Treatment (20.4) (32.3) (25.8) (34.8) 2.3 (23.4) (33.5) (35.8) Hot Isostatic Pressing (9.9) (24.4) (16.8) (22.4) (1.7) (26.9) - - Thermal Processing (19.4) (31.6) (2
Slide 35: Headline Operating Margins
Headline Operating Margins TOTAL % Western Europe % North America % Emerging Markets % Headline Operating margins 1 H1-2009 H1-2008 H1-2009 H1-2008 H1-2009 H1-2008 H1-2009 H1-2008 Heat Treatment (1.3) 14.7 (3.5) 17.0 7.9 11.6 (15.0) 7.1 Hot Isostatic Pressing 15.7 30.9 13.4 27.3 18.0 35.3 - - Therma
Slide 36: Revenue By Market – By Region in %
Revenue By Market – By Region in % Western Europe North America Emerging Markets Total H1- 09 H1- 08 H1- 09 H1- 08 H1- 09 H1- 08 H1- 09 H1- 08 Sector* % % % % % % % % Aerospace/Defence 16 13 44 40 3 2 24 18 Automotive/Trucks 20 28 10 14 43 50 20 28 Capital Goods/General Industry 45 47 27 29 50
Slide 37: Acquisitions, Capital Expenditure & Depreciation H1
Acquisitions, Capital Expenditure & Depreciation H1 Acquisitions 51 Net Capital Expenditure 44 Depreciation 41 37 34 32 32 31 25 25 26 23 £m 20 7 2005 2006 2007 2008 2009 1 Capex/Dep 1.1x 1.1x 1.3x 1.2x 0.8x 35 2009 Interim results 1. Net capital expenditure divided by depreciation.
Slide 38: Finance Charge
Finance Charge H1-2009 H1-2008 £m £m Continuing Operations Net interest payable 1.2 1.4 Pension finance charge 0.6 0.4 Bank charges etc. 0.5 0.3 2.3 2.1 Discontinued Operations - 4.0 Total 2.3 6.1 36 2009 Interim results
Slide 39: Taxation
Taxation H1-2009 Tax H1-2008 Tax £m % £m % Continuing Operations Headline (Loss) / Profit before tax 1 (4.0) 73.3% 38.8 22.9% Exceptional items (49.1) 10.1% (0.6) -… (Loss) / Profit before taxation (53.1) 14.9% 38.2 23.2% Discontinued Operations Headline profit before tax 1 - -… 7.5 28.4% Exceptiona
Slide 40: Pension Deficits
Pension Deficits H1-2009 H1-2008 Dec-08 £m £m £m UK Funded 3.0 21.0 0.7 Europe Funded 1.9 1.8 2.2 Europe Unfunded 9.5 9.8 11.0 11.4 11.6 13.2 Americas Funded 0.8 0.0. 1.0 Total 15.2 32.6 14.9 38 2009 Interim results
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