Bodycote is providing the following trading update ahead of its interim results announcement on 29 July 2009.
As has been widely reported, industrial output has continued to decline globally. In European economies, such as Germany and Sweden, where automotive, capital goods and general industrial activities predominate, the impact for Bodycote has been significantly greater than in countries which also have substantial aerospace and power generation activity, notably the UK and USA. As announced in the IMS on 27 April 2009, the automotive sector has seen some recovery but from very low levels. Capital goods and general industrial demand appears to have stabilised but aerospace and oil & gas demand has continued to soften.
Consequently, revenue for the continuing business (post the sale of the Testing division) for the six months to 30 June 2009 is 20% below the same period last year. On a constant currency basis, revenues for the continuing business are down 31%. As a result, the Board expects to announce a marginal operating loss before exceptional items for the half year.
The actions agreed and provided for in 2008 continue to be executed in line with our expectations. Additional restructuring actions in South America and Europe have now been put in place, together with further cost cutting measures over and above those anticipated at the time of the IMS. Details of the cash cost of all these additional actions, the associated asset write downs, and the incremental cash savings will be given at the time of the interim results.
Bodycote has a strong balance sheet and continues to focus on reducing capital expenditure and effective working capital management. Reflecting this, there was a positive operating cash flow in the first half. As at June 30 net borrowings stood at £89m, having paid £23m, as expected, in settlement of tax liabilities related to the sale of the Testing business and having paid the final dividend for 2008 (£10m) in May instead of July as was the previous practice.
There has to date been some modest improvement in auto demand from the very depressed levels seen in the early part of the year but customer summer shutdowns are expected to be longer than those of last year. Aerospace and oil & gas demand continues to soften. The wide-ranging restructuring plans that are being actioned are already delivering material cost savings and these will increase as the year progresses. As a consequence of our short order book and continuing uncertainty in market conditions visibility is very limited, but if demand remains at its current depressed levels the Board would anticipate the outcome for 2009 being materially below recent market EBIT consensus (£24m).
For further information, please contact:
Bodycote plc Tel No: +44 (0)1625 505300
Stephen Harris, Chief Executive
David Landless, Group Finance Director
Financial Dynamics Tel No: +44 (0) 20 7831 3113
Jon Simmons
Bodycote is providing the following trading update ahead of its interim results announcement on 29 July 2009.
As has been widely reported, industrial output has continued to decline globally. In European economies, such as Germany and Sweden, where automotive, capital goods and general industrial activities predominate, the impact for Bodycote has been significantly greater than in countries which also have substantial aerospace and power generation activity, notably the UK and USA. As announced in the IMS on 27 April 2009, the automotive sector has seen some recovery but from very low levels. Capital goods and general industrial demand appears to have stabilised but aerospace and oil & gas demand has continued to soften.
Consequently, revenue for the continuing business (post the sale of the Testing division) for the six months to 30 June 2009 is 20% below the same period last year. On a constant currency basis, revenues for the continuing business are down 31%. As a result, the Board expects to announce a marginal operating loss before exceptional items for the half year.
The actions agreed and provided for in 2008 continue to be executed in line with our expectations. Additional restructuring actions in South America and Europe have now been put in place, together with further cost cutting measures over and above those anticipated at the time of the IMS. Details of the cash cost of all these additional actions, the associated asset write downs, and the incremental cash savings will be given at the time of the interim results.
Bodycote has a strong balance sheet and continues to focus on reducing capital expenditure and effective working capital management. Reflecting this, there was a positive operating cash flow in the first half. As at June 30 net borrowings stood at £89m, having paid £23m, as expected, in settlement of tax liabilities related to the sale of the Testing business and having paid the final dividend for 2008 (£10m) in May instead of July as was the previous practice.
There has to date been some modest improvement in auto demand from the very depressed levels seen in the early part of the year but customer summer shutdowns are expected to be longer than those of last year. Aerospace and oil & gas demand continues to soften. The wide-ranging restructuring plans that are being actioned are already delivering material cost savings and these will increase as the year progresses. As a consequence of our short order book and continuing uncertainty in market conditions visibility is very limited, but if demand remains at its current depressed levels the Board would anticipate the outcome for 2009 being materially below recent market EBIT consensus (£24m).
For further information, please contact:
Bodycote plc Tel No: +44 (0)1625 505300
Stephen Harris, Chief Executive
David Landless, Group Finance Director
Financial Dynamics Tel No: +44 (0) 20 7831 3113
Jon Simmons
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