Engineering group’s sales hit by global problems

ENGINEERING group Bodycote is continuing to suffer from the rapid decline in oil prices and commodities, slow growth in China, and the embargo on global trade with Russia.

The listed company in its final results for the year ended December 31 reported a 7% decline in revenue to £567.2m (2014: £609.1m), although headline operating profit only reduced by 8% to £102.1m (2014: £111.1m), including negative foreign currency translation of £2.3m. 

Group chief executive Stephen Harris said that while automotive and aerospace revenues moved ahead, the decline in oil price combined with downward pressures on Bodycote’s general industrial business led to group revenues falling by 4% at constant exchange rates.

He said: “The group benefits from serving a broad spread of industrial sectors and geographies. In 2015 the macro-economics were favourable for our aerospace and automotive sectors, but the rapid decline in oil prices weighed heavily on our customers in the energy sector.
 
“The weakness in the energy sector bled over into the general industrial markets and was further compounded by the slowing growth in China, weakening global demand for many commodities and the embargo on global trade with Russia.”

A restructuring programme was announced at the half year, with an associated charge of £20m (of which £9m related to non-cash impairments) and which focused on its facilities serving the oil services and general industrial sectors.
 
By year end Bodycote, which has operations in Birmingham, Coventry and Wolverhampton, had successfully exited the businesses in Brazil and India.

Elsewhere, it closed five facilities and consolidated poorly performing activities within a further six facilities. Closure of an additional five facilities will be completed in the first half of 2016. Equipment is being relocated within the group, and in many cases business is being transferred to neighbouring facilities.

Meanwhile, Bodycote  also announced the intention of group finance director  David Landless to retire after 18 years with the company after he has overseen the publication of the group’s 2016 full year results.
 
Raj Rajagopal will also retire as non-executive director at the conclusion of the annual meeting on May 27.

Harris said: “David has been with Bodycote for 18 years, during which time he has made an outstanding contribution to the group.
  
“He has been a loyal and inspirational colleague to many and he will leave with our gratitude for the considerable effort he has expended over this period.  In the meantime I look forward to continuing to work with him and ensuring a smooth handover to his successor.

“I would also like to thank Raj for his continued support over the years.”