Bodycote cost cuts drive after £53.1m loss

ENGINEERING giant Bodycote has extended a massive cost-cutting plan after reporting an interim pre-tax loss of £53.1m.

The Macclesfield-based group warned earlier in the month that the slump in global industrial demand would push it into the red.

Its interim figures for the six months to June reveal a 19% drop in revenue to £227.9m and a pre-tax loss of £53.1m – down from a £38.2m profit last time.

Bodycote, which specialises in heat treatment and hot pressing processes, said the loss included a £20m restructuring cost and a £28.6m impairment charge.

The business, which has seen a 35-50% slump in demand from automotive and general industrial customers, has now stepped up its restructuring programme which is expected to cost £77.6m but deliver annual savings of £41m, up from the original target of £18m.

When the initiative was first unveiled Bodycote said 1,000 jobs would be cut, mainly from its plants in Europe and the Americas. This figure now stands at 1,800, 23% of the group’s staff. It is also closing or consolidating 31 locations, reducing capacity by 12%.

The group said: “The object is to align our cost base with the demand conditions we now face.”

Chief executive Stephen Harris added: “The wide-ranging restructuring plans are already delivering material cost savings and these are expected to increase during the second half of 2009.

“These initiatives, together with Bodycote’s strong market positions and robust balance sheet, mean the group is well placed to benefit from any recovery in demand.”