Bodycote reports on a positive 2011: Sales up 14%, HIP product revenues rise 60%

February 29, 2012

February 29, 2012

Bodycote delivered a strong financial result in 2011, with sales increasing 14% to £570.7m. Headline operating profit was £85.5m, an increase of 64%.

Stephen Harris, Chief Executive stated, “Bodycote’s strategy is aimed at growing the business above and beyond the background growth rate of the global economy while delivering consistently superior value. The pace of execution of this strategy is gaining momentum and we enter 2012 in good shape.”

Significant progress has been reported on the development of the Group’s proprietary products business units.

Hot Isostatic Pressing Product Fabrication

The company’s Hot Isostatic Pressing Product Fabrication (HIP PF) business unit revenues grew by over 60%, with expansion of activity in all territories. “The constraint to expansion of this business has, so far, largely been an issue of recruiting and training sales and operational resources at a sufficient rate. Much progress has been made during the year and the business now has significant strength and depth of expertise.”

“HIP PF specific capital equipment requirements are relatively modest and expansion of this capacity is proceeding well. General HIP capacity is used both for HIP PF and HIP services. Demand for HIP services from the aerospace and industrial gas turbine markets is buoyant and we expect further growth in this area for some considerable time. As a result of the HIP PF growth and the HIP Services growth trends, we are starting to see capacity constraints ahead. Our initial capacity pinch-point is in North America. In response to this we have agreed to invest over $20m of expansion capital to this area which will be deployed over the next eighteen months.”

Speciality Stainless Steel Products

Bodycote stated, “Speciality Stainless Steel Products (S³P) continues to exceed our expectations, with demand for these specialist processes continuing to outstrip supply. Sales grew by 21%, we added 25% more capacity during the year and a further 50% capacity increase is under construction to meet the increasing opportunities we have.”

Aerospace, automotive and energy offer growth prospects

“Bodycote has continued to develop in line with the strategic direction that we outlined at the start of 2010. Our differentiated focus on each of Automotive & General Industrial and Aerospace & Energy is delivering results. Some of the evidence of this is the increased rate of securing larger long term contracts that has been a notable feature of the business in 2011. The new agreements with Rolls-Royce and Precision Castparts Corp reflect our strategic focus on the secular growth markets of aerospace and energy.”

“The agreement with automotive supplier, ZF Lenksysteme, in China is a good example of our ‘hub and spoke’ expansion strategy for the emerging markets, where we develop new work at a hub location and move out to a new Greenfield facility once volumes justify. The business with this customer has been developed at our ‘hub’ site in Wuxi, China, and will now be transferred to a new greenfield site being built in Jinan, China. This will make way for further business development at Wuxi while at the same time helping the expansion of our services to other customers near the new plant in Jinan.”

Edited by: Paul Whittaker, Editor, [email protected]   

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February 29, 2012

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