Bodycote plc · LSE:BOY
Bodycote — FY2010 Earnings Presentation
34 slides from Bodycote's earnings presentation, Feb 24, 2011
Slide 1: 2010 Full Year Results
2010 Full Year Results 24 February 2011 1
Slide 2: Introduction
Introduction Stephen Harris Chief Executive S3P - Kolsterising® A proprietary surface treatment for stainless steels, which provides excellent wear and corrosion resistance, without galling. 2 2010 Full Year Results
Slide 3: Agenda
Agenda Highlights: Stephen Harris Financial Review: David Landless Business Review: Stephen Harris 3 2010 Full Year Results
Slide 4: Highlights
Highlights Demand: - Good recovery in Automotive and General Industrial - Aerospace and Energy yet to recover meaningfully - Defence flat Revenue: 14.8% higher than 2009 (17.8% like for like) Headline Margin: 10.4% (1.8% in 2009) Restructuring: Cost savings £14.1m higher than 2009 Cash: Pr
Slide 5: Financial Review
Financial Review David Landless Finance Director HIP Product Fabrication A method of manufacturing fully dense, often complex metal parts from metal powder. The resulting component is free of porosity and has no points of weakness. 5 2010 Full Year Results
Slide 6: 2010 Results Summary
2010 Results Summary 2010 £m margin 2009 £m margin Revenue 499.8 435.4 Headline EBITDA1 104.4 20.9% 57.4 13.2% Headline operating profit2 52.1 10.4% 8.0 1.8% Headline profit before taxation 2 46.1 3.7 Headline operating cash flow 3 77.3 34.7 Net debt 51.3 85.5 Headline earnings per share (pence) 2 1
Slide 7: Profit Bridge
Profit Bridge £m 38.0 -2.8 -3.2 -4.3 -1.5 -0.5 52.1 14.1 4.3 8.0 7 2010 Full Year Results Headline Operating Profit is stated pre exceptional items
Slide 8: Restructuring
Restructuring Cash spend: 2008 2.1 2009 19.2 2010 9.2 Outstanding 20.2 Total: £50.7m Asset writedowns: £54.3m Reduction in annualised cost base: £45.0m Restructuring programme essentially complete 8 2010 Full Year Results
Slide 9: Cash Flow
Cash Flow £m 2010 2009 Headline Operating Profit 52.1 8.0 Add back non cash items: Depreciation and Amortisation 48.1 49.5 Share Based Payments 4.2 (0.1) 1 Headline EBITDA 104.4 57.4 Capex to depreciation: 2010: 0.8x 2009: 0.6x Net Capital Expenditure (35.8) (32.2) Working Capital 8.7 9.5 Headline O
Slide 10: Net Debt
Net Debt £m 2010 2009 Opening balance (85.5) (64.0) Movement in net debt due to: Free cash flow 57.2 (14.8) Dividends paid (21.0) (20.1) Currency movement 1.7 18.0 Maturing currency swaps (2.9) (12.3) Other (0.8) 7.7 Closing balance (51.3) (85.5) Reduction in net debt of £34.2m Committed facilit
Slide 11: Finance Charge & Debt Facilities
Finance Charge & Debt Facilities £m 2010 2009 Net interest payable 1.9 2.0 Financing costs 2.3 0.4 Other charges 0.9 0.6 Pension finance charge 0.9 1.3 Finance charge 6.0 4.3 Financing costs increased due to fees to refinance £110m and $20m bank facilities Higher undrawn committed facility fees
Slide 12: Business Review
Business Review Stephen Harris Chief Executive CPP – SheraCote® Outstanding corrosion protection 12 2010 Full Year Results
Slide 13: Business Review
Business Review Demand and cost trends Strategy and outlook 13 2010 Full Year Results
Slide 14: Business Review
Business Review Demand and cost trends Strategy and outlook 14 2010 Full Year Results
Slide 15: Daily Sales Trend – Group
Daily Sales Trend – Group Constant Exchange Rates 2010 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 15 2010 Full Year Results
Slide 16: Demand - Aerospace & Defence Sector
Demand - Aerospace & Defence Sector £101m Share £101m End End of Closed Currency market destocking and sites -4% +5% other -3% +2% 2009 2010 Commercial aircraft deliveries reduced slightly; aftermarket weak in early part of year 16 2010 Full Year Results
Slide 17: Demand - Energy Sector
Demand - Energy Sector End £64m market Closed Currency sites £62m Destocking Business -10% Gains +7% 2009 2010 Market mixed – Oil & Gas up, Power Generation down Destocking in Industrial Gas Turbine market continued Business gains in HIP Product Fabrication and Surface Technology 17 2010 Full
Slide 18: Aerospace, Defence & Energy
Aerospace, Defence & Energy £m 2010 2009 Change Constant Daily sales – constant exchange Currency Revenue 202.1 189.5 7% 6% Headline OP 35.1 24.7 42% 42% Mix of business enhanced 2010 Margin increased from 13% to 17% 2009 Geographic Analysis Revenue by market 2010 (£m) Growth Margin Aerospace &
Slide 19: Demand - Automotive & Truck Sector
Demand - Automotive & Truck Sector £134m Closed Currency sites +1% Share -3% £98m End End of and market destocking other +4% plus +25% restocking +10% 2009 2010 Production rebounded, as the destocking in early 2009 was reversed Bodycote sales advanced by a further 27% - driven by share gains and
Slide 20: Demand - General Industrial Sector
Demand - General Industrial Sector Share Closed Currency £202m £172m End of and sites -1% End destocking other -2% market +7% +5% +9% 2009 2010 Recovery in general industrial markets well under way Growth varies by individual industry sector – between 5% and 25% 20 2010 Full Year Results
Slide 21: Automotive & General Industrial
Automotive & General Industrial £m 2010 2009 Change Constant Daily sales – constant exchange Currency Revenue 297.7 245.9 21% 21% Headline OP 27.2 (12.3) - - 2010 Mix of business enhanced 2009 Restructuring benefit Margin recovers from -5% to +9% Geographic Analysis Revenue by market 6% 2010 (
Slide 22: Three Year Perspective – Costs
Three Year Perspective – Costs £m at Constant Exchange Rates 700 600 500 Sales 400 Variable 300 Semi fixed 200 100 Structural 0 08 09 10 22 2010 Full Year Results
Slide 23: Three Year Perspective – Markets Start to Recover
Three Year Perspective – Markets Start to Recover Bodycote sales (£m) expressed at 2010 exchange rates (*) Aerospace 120 80 Aircraft deliveries slightly lower than 2008 40 Aircraft flying hours now increasing 08* 09* 10 0 Energy 80 US new well activity 20% below 2008 40 Industrial Gas Turbin
Slide 24: Three Year Perspective
Three Year Perspective * expressed at 2010 exchange rates Sales (£m) 08* 09* 10 08 09 10 613.2 Margin (%) 12.9 499.8 435.4 10.4 Average Headcount 7503 1.8 6020 5602 Headline Operating Cash Flow (£m) 77.3 63.1 Headline Operating 78.8 Profit (£m) 52.1 34.7 8.0 24 2010 Full Year Results
Slide 25: Business Review
Business Review Demand and cost trends Strategy and outlook 25 2010 Full Year Results
Slide 26: Growth Drivers
Growth Drivers Near term • Progressive recovery Market growth • Some key sectors higher - industrial gas Long term turbine & commercial aerospace Smaller, lighter, • More sophisticated heat treatments • Examples - 8 speed auto gearbox stronger • Examples - Hybrid vehicle components components • Exam
Slide 27: Strategic Progress
Strategic Progress Sustain the low cost base in the • Headcount reduced year on year upturn • Margins improved to 10.4% Selective investment • Capex 0.8 times depreciation • Plant operation Enhance business processes • Pricing Enhance ‘bench strength’ • Management teams strengthened • New capacity i
Slide 28: Outlook
Outlook “The Board is confident that 2011 will be another year of growth for Bodycote, albeit at a less rapid rate than experienced in 2010. The year has started in line with these expectations. Looking further out, the Board sees encouraging opportunities for improved through-cycle returns.” 28 201
Slide 29: 2010 Full Year Results
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Slide 30: 2010 Statutory Income Statement
2010 Statutory Income Statement £m 2010 2009 Revenue 499.8 435.4 Headline operating profit / (loss) 1 52.1 8.0 Amortisation of acquired intangible fixed assets (0.9) (1.3) Impairment charge - (31.5) Major facility closure costs - (25.4) Operating profit / (loss) 51.2 (50.2) Net finance costs (6.0) (
Slide 31: Financial Information
Financial Information Average shares in issue 2010: 185.5m (2009: 185.6m) Exchange rates: Currency Description 2010 2009 Euro Average (P&L) 1.17 1.12 Closing (B/S) 1.16 1.13 US Dollar Average (P&L) 1.55 1.56 Closing (B/S) 1.54 1.61 Net debt and interest related financial ratios: Financial Rati
Slide 32: Pensions – Net Deficit
Pensions – Net Deficit £m 2010 2009 UK Funded 0.6 3.7 Other Western Europe Funded 0.7 0.3 Other Western Europe Unfunded 9.5 10.0 Western Europe Total 10.8 14.0 North America Funded 0.5 0.6 Emerging Markets Unfunded 0.3 0.4 Total retirement benefit obligations 11.6 15.0 32 2010 Full Year Results
Slide 33: Segmental Revenue & Headline Operating Profit
Segmental Revenue & Headline Operating Profit 2008 to 2010 Continuing Operations £m 2008 * 2009 2010 H1 H2 FY H1 H2 FY H1 H2 FY ADE Total Revenue 126.0 120.6 246.6 104.2 85.3 189.5 98.4 103.7 202.1 Operating Profit 25.4 24.5 49.9 11.7 13.0 24.7 15.0 20.1 35.1 AGI Total Revenue 197.3 169.3 366.6 123.
Slide 34: 2010 Preliminary Results
34 2010 Preliminary Results