Bodycote upbeat on outlook

ENGINEERING group Bodycote has said revenues are more than 13% higher than the first nine months on 2009 and that it expects profits to be at the ‘upper end’ of forecasts.

The Macclesfield-based group, which has operations throughout the North West, said it had been boosted by the recovery in the automotive industry.

In a Q3 update, Bodycote said revenues for the nine months to September 30, 2010, at constant exchange rates, were 13.3% higher than the same period in 2009. It said the trends seen in the first half of the year had continued with a notable improvement in revenue during the third quarter compared to the same quarter of 2009.

This was in contrast to the trends last year when revenues were still declining, quarter on quarter. The company said the impact of customer summer holiday shut-downs in Q3 2010 was also less marked than expected.

“In Automotive & General Industrial, the group is still benefitting from much higher sales to car and light truck customers and during Q3, revenues from heavy truck businesses have increased strongly, following a slow start to 2010.

“Sales to general industrial customers have continued to increase, accelerating somewhat during Q3,” said the statement.

In Aerospace, Defence & Energy, sales to the aerospace and defence sectors saw a pick-up towards the end of Q3, as improved maintenance and repair work added to the modest growth that has been evident throughout 2010 from the OEMs.

Industrial gas turbine revenues stabilised but remain at low levels but it said sales to oil and gas customers continued to be solid.

Group margins increased, reflecting both higher sales levels and the cost cutting programme implemented by the company last year.

Cost savings resulting from the restructuring programme remain in line with the guidance given at the time of the interim results, said the firm. These are likely to reach £44.5m for the year.

Bodycote said its financial position remained strong, with net borrowing standing at £72.5m by the end of September, compared to £87.5m at June 30.

In outlook, the company said sales were likely to remain at the same level during Q4. Second half revenues are likely to close to those in H1.

The board said it expected operating profit for the year would be towards the upper end of the range of analysts’ forecasts (£40m to £49m, with an average of £42.5m).