Bodycote Plc · LSE:BOY
Bodycote — Non-Deal Roadshow (May 2006)
16 slides from Bodycote's roadshow presentation, May 10, 2006
Slide 1: Group Overview
GROUP OVERVIEW John Hubbard and David Landless MIDLANDS TOUR 10 MAY 2006 1
Slide 2: Group Organisational Structure
Group Organisational Structure PLC Board CEO Thermal Processing Testing Engineering & Heat HIP Surface Materials Health Technology Environmental Metrology Treat Engineering Testing Sciences Services 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. 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. 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: Strategy
Strategy • Expand Testing • Further develop Heat Treatment and HIP • Extend global availability of Bodycote Services 6
Slide 7: Strategy
Strategy • Target outsourcing with a focus on high added value components for medium/large national/multinational companies • Expand the network in lower cost economies – Eastern Europe, Asia, South America via bolt-on acquisitions and selective greenfield locations • Acquisition of bolt-on speciali
Slide 8: Heat Treatment
Heat Treatment Revenue (₤m) 354.1 349.2 350 320.9 328.7 319.4 280 • Leveraging customer base 210 140 70 • Outsourcing 0 2001 2002 2003 2004 2005 • Technology roll-out Operating Profit (₤m) 70 62.9 60 • Manufacturing growth markets 50 44.8 38.6 38.8 40 33.8 30 20 10 0 2001 2002 2003 2004 2005 8
Slide 9: Hot Isostatic Pressing
Hot Isostatic Pressing Revenue (₤m) 40 35.2 35 32.0 32.1 30 28.5 27.6 25 • Volume growth/operational gearing 20 15 10 • Applications being developed: 5 0 2001 2002 2003 2004 2005 • Additional capacity being added Operating Profit (₤m) 10 9.5 • Approaching ROCE goal 9 8 7.3 7.1 7 6 5 4.5 4 3.6 3 2 1
Slide 10: Testing
Testing Revenue (₤m) 100 • Integrating acquisitions 90 86.5 80 70 65.6 61.2 60 56.6 52.3 • Margins 50 40 30 20 10 • Organic growth 0 2001 2002 2003 2004 2005 Operating Profit (₤m) • Outsourcing wins 18 16.3 16 14 12.4 12 11.4 • Acquisition pipeline 10.9 9.9 10 8 6 4 • Asia 2 0 2001 2002 2003 2004 20
Slide 11: Sales By Market - 2005
Sales By Market - 2005 Group Thermal Testing % Processing % % Sector Automotive - Cars & Light Truck 21 24 7 - Heavy Truck & Bus 6 6 2 Aerospace/Defence 19 19 21 Construction, Agricultural, Railways & Marine 16 17 11 Tooling 9 11 1 Oil & Gas 7 4 18 Power Generation 5 5 5 Consumer Products 3 4 2 Heal
Slide 12: 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
Slide 13: Market Conditions – Medium Term
Market Conditions – Medium Term • Automotive • underlying position stable in NA and Europe • growth coming from outsourcing and lower cost economies • Aerospace/Defence/IGT • good medium term growth prospects • Construction/Agricultural/Marine • will be cyclical – focus on outsourcing • Oil & Gas •
Slide 14: 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 New Average 65% Driver for cost From 3rd Parties down Current Average From own business Strategic Par
Slide 15: Summary
Summary • A focus on ROCE • Expansion of Testing • Increasing presence in lower cost economies • Bolt-on acquisitions • Strategic Partnerships for higher added value components 15
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