Emerging markets boost Bodycote profit growth
Bodycote notched up double digit profit growth across all its operations last year as it revealed operating profits of £112.2m for 2022, on growing revenues of £743.6m.
The Macclesfield-headquartered heat treatment specialist also saw net debt decline to £33.4m (2021: £51.9m).
Bodycote has more than 165 facilities around the world which are organised into two customer-focused businesses: aerospace, defence, and energy customers; and automotive and general industrial customers. Customers include multinational companies that tend to operate on a regionally-focused basis and numerous medium-sized and smaller businesses.
Looking ahead, Bodycote sees potential for further growth supplying manufacturers of electric vehicles.
Chief executive Stephen Harris said growth in 2022 was underpinned by investment in the higher growth markets of Specialist Technologies, Emerging Markets, Civil Aerospace and electric vehicles, which now represent more than half of the Group’s revenue and 62% of headline operating profit.
“While there are near term macroeconomic uncertainties, we expect underlying volume to continue to grow ahead of the background markets, and margins are expected to expand as surcharges moderate.
“Beyond 2023, we expect robust growth, leading to further margin expansion. Civil Aerospace will benefit from higher OEM build rates and increasing airline flying hours, and our investments in Emerging Markets and Specialist Technologies will drive higher growth in these areas.”
The emerging markets side of the business has been a particularly strong part of the profit growth story. Revenues (comprising Eastern Europe, China and Mexico) grew 24% to £93m (13% of Group revenues).
But there was virtually no growth in Bodycote’s Chinese business as a result of pandemic-related lockdowns.
On the electric vehicle side, the company has signed some significant long-term contracts and expects the business to grow well as production ramps up.
The company is investing in new capacity in Eastern Europe to support electric vehicle production, as well as a new greenfield facility in China.