Bodycote Plc · LSE:BOY
Bodycote — Investor Day (April 2019)
20 slides from Bodycote's investor day presentation, Apr 30, 2019
Slide 1: Bodycote through a different lens
Bodycote through a different lens Stephen Harris
Slide 2: Agenda
Agenda Bodycote Group market sectors and geographies Classical Heat Treatment vs Specialist Technology Classical Heat Treatment strategy Specialist Technology strategy Summary 2
Slide 3: Bodycote Group: Market Sectors and Geographies
Bodycote Group Market Sectors and Geographies Market Sectors Geographies 9% 23% 8% Aero & Def 35% North America 38% Energy Western Europe ex UK 9% Auto UK Gen Ind Emerging Markets 48% 30% 3
Slide 4: Classical Heat Treatment vs Specialist Technology
Classical Heat Treatment vs Specialist Technology Group Revenues Group Profits 24% 36% Specialist Specialist Technology Technology Classical HT Classical HT 64% 76% 4
Slide 5: Geographies
Geographies Classical Heat Treatment Specialist Technology 9% 7% 7% 12% 35% 34% North America North America Western Europe ex UK Western Europe ex UK UK UK Emerging Markets Emerging Markets 49% 47% 5
Slide 6: Market Sectors
Market Sectors Classical Heat Treatment Specialist Technology 22% 26% 30% Aerospace & defence Aerospace & defence 42% Energy Energy 6% Automobile Automobile General Industry General Industry 16% 30% 28% Relatively low weighting in Energy markets Relatively evenly balanced across Aerospace, Automotiv
Slide 7: Classical Heat Treatment
Classical Heat Treatment Classical Heat Treatment Classical Heat Treatment is an indispensable set of is the controlled heating processes within the manufacturing chain of most of the and cooling process of products used in life. A seat belt buckle for example, hardens after heat treatment so that i
Slide 8: Classical Heat Treatment: Bodycote is by far the largest service provider
Classical Heat Treatment Bodycote is by far the largest service provider Global total market estimated at greater than £23B Some £18B is done in-house, but much of this is not Addressable Bodycote addressable by 3rd party service providers as it is an Market Target inherent part of the production pr
Slide 9: Customers
Customers Classical Heat Treatment While we do some work directly for the big OEMs, such as Boeing, Rolls-Royce, General Motors or Caterpillar – the majority of the work is for their supply chains We serve over 40,000 customers in the Classical Heat Treatment business The top 20 customers acco
Slide 10: Strategy
Strategy Classical Heat Treatment The quality of our CHT business is prioritised above the quantity – quality as measured by financial returns – Margins – ROCE – ROI Continual focus on the target market of high value add applications, avoiding the temptation to take on the abundant low value wor
Slide 11: Growth initiatives
Growth initiatives Classical Heat Treatment Capacity expansions in existing facilities to service growing customer demands where respectable returns are achievable. Particularly targeted at aerospace given the long term secular growth drivers. Geography – Emerging markets Growing ‘indirect’ sa
Slide 12: Classical Heat Treatment: Scoping the future
Classical Heat Treatment Scoping the future Key to Bodycote’s strategy is to keep transitioning classical heat treatment away from low margins associated with commoditised and fragile businesses Margin enhancement will be aided/impeded by a benign/hostile economy A 1% margin enhancement adds 7
Slide 13: Specialist Technologies
Specialist Technologies A selection of highly differentiated, early stage processes with high margins, large market opportunity and good growth prospects. Bodycote is either the clear market leader or one of the top players among few competitors. Low Pressure Carburising (LPC) CiD Provides a hardene
Slide 14: CHT substitution
CHT substitution The heat treat specialist technologies Two of the technologies are much higher value adding substitutes for classical heat treatment alternatives Low Pressure Carburising (LPC)* CiD* Provides a hardened surface and Improves corrosion resistance & wear tough core in a “clean” process
Slide 15: Adjacent technologies
Adjacent technologies The heat treat specialist technologies The other four technologies are adjacencies to classical heat treatment Low Pressure Carburising (LPC) CiD Provides a hardened surface and Improves corrosion resistance & wear tough core in a “clean” process properties without use of chrom
Slide 16: What makes a technology 'Specialist'?
What makes a technology ‘Specialist’? Capable of margins over 30% Has a very large market potential Capable of sustaining double digit growth for many years By definition this means there are high barriers for a new entrant and Bodycote is, or can be, the number one (or in the top tier) with v
Slide 17: Strategy: Specialist Technology
Strategy Specialist Technology The priority for Specialist Technology is growth – Margins and returns are excellent already Expand capacity at a rate to keep ahead of demand Expand and improve human capital (sales, technical support, operational support etc.) through investment in operating ex
Slide 18: Specialist Technology: Scoping the future
Specialist Technology Scoping the future The specialist technologies have few competitors, though undoubtedly competitors will become established at some point in the future given the attractiveness of the business The Specialist Technology business growth rates and margin resilience is well est
Slide 19: The Bodycote strategic journey
The Bodycote strategic journey Key aspects of the Group strategy are: Margin enhancement Growth Reduced volatility Recognising our 2 distinct lines of business – and prioritising accordingly Different business goals: – Classical: Prioritise business quality improvement over growth – Specia
Slide 20: 2019
2019 |