JPMorgan analyst Lushanthan Mahendrarajah has revised the price target for Bodycote (BYPLF, Financial), reducing it from 630 GBp to 580 GBp. Despite the adjustment, the analyst continues to hold a Neutral stance on the company's shares.
BYPLF Key Business Developments
Release Date: March 14, 2025
- Organic Revenue Growth (Core Business): 1% excluding surcharges.
- Total Revenue: GBP 757 million, down 4% organically, flat after surcharge adjustments.
- Operating Profit: GBP 129 million, up 1.7% organically.
- Core Operating Profit: GBP 127.6 million, 3% organic profit growth.
- Adjusted EPS: Up 0.4% to 48.6p.
- Full Year Dividend: Up 1.3% to 23p.
- Operating Margin (Core Business): Increased by 120 basis points to 17.9%.
- Group Operating Margin: Increased by 110 basis points to 17%.
- Return on Capital Employed (ROCE): 15.7%, up 90 basis points.
- Operating Cash Conversion: 90%.
- Specialist Technologies Revenue Growth: 5% organically.
- Specialist Technologies Margin: Up 300 basis points to 29%.
- Precision Heat Treatment Revenue: Fell by 0.8% organically.
- Precision Heat Treatment Margin: Down 60 basis points to 17%.
- Carbon Emissions Reduction: 6% reduction achieved.
- Shareholder Returns: Over GBP 100 million returned through dividends and share buybacks.
- Net Debt: GBP 68.3 million, leverage at 0.3 times net debt to EBITDA.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bodycote PLC (BYPLF, Financial) achieved a margin improvement from 15.9% to 17%, driven by a better business mix, operational leverage, and productivity improvements.
- The company reported a resilient performance in 2024, with core business organic growth of 1% and a total growth of 2.4% including acquisitions.
- Specialist Technologies division saw a 5% organic revenue growth, demonstrating the underlying quality of the business despite tough market conditions.
- Bodycote PLC (BYPLF) achieved a 6% reduction in carbon emissions, surpassing its previous sustainability targets ahead of schedule.
- The company returned over GBP100 million to shareholders through dividends and share buybacks, reflecting a disciplined approach to capital allocation.
Negative Points
- The non-core segment, which includes cyclical, high-carbon, low-margin processes, was either loss-making or just over breakeven, impacting overall growth.
- The automotive and industrial markets faced challenges, with a 0.8% revenue decline in precision heat treatment due to weak end market conditions.
- FX was a GBP4.9 million headwind to profit year over year, affecting overall financial performance.
- The company incurred significant exceptional costs of GBP78.3 million related to restructuring and goodwill impairment in North American automotive and industrial businesses.
- Free cash flow is expected to be lower in 2025 due to increased capital expenditure and restructuring cash spend, impacting short-term financial flexibility.
