Bodycote Plc · LSE:BOY

Bodycote — FY2015 Earnings Presentation

33 slides from Bodycote's earnings presentation, Feb 25, 2016

  1. Slide 1: 2015 Full Year Results

    2015 Full Year Results 25 February 2016

  2. Slide 2: Introduction

    Introduction Stephen Harris Group Chief Executive 2

  3. Slide 3: Agenda

    Agenda Summary Financial review Business review Outlook 3

  4. Slide 4: Summary

    Summary  Revenue – Down 4% at constant currency – Group – excl. Energy* 0.4% – Energy* -22.1%  Headline operating margin – 18.0% (2014: 18.2%)  Business development – Restructuring virtually complete – Brazil sold – Investment accelerated for future growth  Final dividend – 10.3p, up 5.1%  Bala

  5. Slide 5: Financial review

    Financial review David Landless Group Finance Director 5

  6. Slide 6: 2015 Results summary

    2015 Results summary £m 2015 2014 Constant Currency Total change Revenue 567.2 609.1 (25.0) -4% (16.9) (41.9) -7% Headline: Operating profit 102.1 111.1 (6.7) -6% (2.3) (9.0) -8% M argin 18.0% 18.2% Profit before tax 99.2 107.8 (6.2) -6% (2.3) (8.6) -8% Restructuring charge (20.0) - Headline tax rat

  7. Slide 7: Divisional summary

    Divisional summary Constant £m 2015 2014 Currency Total change exchange rates ADE Divisions Revenue 243.5 263.0 (21.2) -8% 1.7 (19.5) -7% Headline Operating Profit 59.2 70.6 (12.4) -18% 1.0 (11.4) -16% M argin 24.3% 26.8% AGI Divisions Revenue 323.7 346.1 (3.8) -1% (18.6) (22.4) -6% Headline Operati

  8. Slide 8: Headline operating profit bridge

    Headline operating profit bridge £m 111.1 -0.1 -9.4 1.2 104.4 -2.3 2.8 -1.2 102.1 2014 Price minus Sales volume Start-Ups Share-based Central costs 2015 Foreign 2015 cost payments Constant exchange increases currency translation 8

  9. Slide 9: Cash flow

    Cash flow £m 2014 2015 180 Headline EBITDA = £166m 160 Headline EBITDA = £150m 140 Depreciation Capex 1.0x depn Depreciation 120 Capex 1.2x depn Working Capital 100 Tax, Interest 80 & Other Working Capital Tax, Interest Headline & Other 60 Headline Operating £75m Operating Restructuring Profit 40 Pr

  10. Slide 10: Restructuring

    Restructuring  Half year restructuring programme, £20m charge (£9m non-cash impairment) – Brazil and India Sold September – Oil & Gas Fixed cost reduction completed July – AGI Europe Exiting low margin activity 3 facilities closed, further 2 in process of closure Rationalised an additional 5 sites

  11. Slide 11: Notes

    Notes Taxation  Headline tax rate 24.4% (2014: 22.7%)  Headline tax rate expected to be c.28% in 2016 – Historical tax losses now largely exhausted – Proportion of profits from higher tax jurisdictions Currency  Every cent change in the US dollar is worth c.£300k of operating profit  Every cent

  12. Slide 12: Five year perspective

    Five year perspective At 2015 exchange rates Sales Headline margin £m % 571 592 567 18 18 552 17 17 512 15 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Headline operating profit ROCE £m % 19.9 20.7 110 17.9 19.0 96 101 102 16.3 79 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 12

  13. Slide 13: Business review

    Business review Stephen Harris Group Chief Executive 13

  14. Slide 14: Aerospace & Defence

    Aerospace & Defence Revenue: £135m Constant currency growth: 0.6% Revenue £m 80 70 60 50 40 30 20 10 - H1 H2 H1 H2 2014 2015  Civil Aerospace up 1.1%  Good growth on new generation engines, particularly in France  UK Aerospace down 8% 14

  15. Slide 15: Energy

    Energy Revenue: £66m Constant currency decline: -22.1% Revenue £m 50 45 40 35 30 25 20 15 10 5 - H1 H2 H1 H2 2014 2015  Sharp fall in Oil & Gas  Impact mitigated by HIP PF  IGT and power generation soft  Energy business continues to generate good returns 15

  16. Slide 16: Automotive

    Automotive Revenue: £153m Constant currency growth: 3.7% (Like-for-like growth*: 6.6%) Revenue £m 85 80 75 70 65 60 55 50 H1 H2 H1 H2 2014 2015  Like-for-like* car & light truck revenues up 8%  Heavy truck revenues declined marginally  LPC, CiD and S3P Specialist Technologies delivered strong gro

  17. Slide 17: General Industrial

    General Industrial Revenue: £213m Constant currency decline : -5.2% Revenue £m 140 120 100 80 60 40 20 - H1 H2 H1 H2 2014 2015  Capital equipment demand weak  Commodity price weakness affected industrial machinery  Downward pressure from slowing growth in China and embargo on global trade with Ru

  18. Slide 18: Headline operating margin bridge

    Headline operating margin bridge % 18.2% -1.3% 0.1% 18.0% 0.5% 17.8% 0.1% 0.1% 0.2% -1.1% 0.5% 0.7% 18

  19. Slide 19: Improving the mix: The Bodycote Margin Model

    Improving the mix The Bodycote Margin Model Margin analysis 40% Customer A: Customer B: HIGH PENETRATION Customer C: SECURE PENETRATION Increase penetration Secure position Increase without loss of profitability 30% penetration Increase profitability 20% Margin 10% 0% Customer E: IMPROVE OR REDUCE C

  20. Slide 20: Improving the mix: The Bodycote Margin Model

    Improving the mix The Bodycote Margin Model Margin analysis 40% Customer A: Customer B: HIGH PENETRATION Customer C: SECURE PENETRATION Increase penetration Secure position Increase without loss of profitability 30% penetration Increase profitability 20% Margin 10% 0% Customer E: IMPROVE OR REDUCE C

  21. Slide 21: 2015 Revenue & headline operating profit split

    2015 Revenue & headline operating profit split 2015 Revenue 2015 Headline operating profit Specialist Technologies 25% (2014: 24%) 39% (2014: 38%) Classical Heat Treatment 60% 75% 21

  22. Slide 22: Investing in future growth: Specialist Technologies

    Investing in future growth Specialist Technologies New facility now operational LPC: Capacity expansion in Poland and S3P: New facility the Netherlands planned for Germany ST: Increased investment in UK HIP PF: New facility capacity to be constructed S3P: New facility operational in France S3P: New

  23. Slide 23: Investing in future growth: Classical Heat Treatment

    Investing in future growth Classical Heat Treatment AGI Further expansion into rapid growth New ADE facility planned for Poland countries Greenfield AGI in Wroclaw, Poland, now operational New facility planned for Northern UK New facility under construction in Toulouse New facility planned for South

  24. Slide 24: Summary and outlook

    Summary and outlook The Group delivered a resilient performance in 2015. Automotive and aerospace revenues moved ahead. However, the decline in oil price combined with downward pressures on our general industrial business led to Group revenues falling by 4% at constant exchange rates. The speed and

  25. Slide 25: Slide 25

  26. Slide 26: Definitions

    Definitions Term Definition Headline Operating Profit Operating profit before exceptional costs and amortisation of acquired intangibles Headline Profit Before Tax Profit before tax, exceptional costs and amortisation of acquired intangibles Headline Operating Cash Flow Cash generated by operations,

  27. Slide 27: 2015 Statutory income statement

    2015 Statutory income statement £m 2015 2014 Revenue 567.2 609.1 Headline operating profit 102.1 111.1 Amortisation of acquired intangible fixed assets (4.2) (3.9) Acquisition costs - (0.2) Reorganisation costs (20.0) - Operating profit 77.9 107.0 Net finance costs (2.9) (3.3) Profit before tax 75.0

  28. Slide 28: Cash flow detail

    Cash flow detail £m 2015 2014 Headline operating profit 102.1 111.1 Add back: Depreciation and amortisation 49.6 53.9 Share-based payments (0.4) 1.9 Profit on disposal of fixed assets (2.1) (1.4) Net capex to depreciation Headline EBITDA 149.2 165.5 ratio 1.2 times Net capital expenditure (61.3) (53

  29. Slide 29: Specialist technologies

    Specialist technologies What are they? HIP Services  Application of high temperature and pressure to densify cast material  Removal of porosity defects improves strength, toughness and machinability  Can eliminate internal voids created by additive manufacturing methods HIP  Method of manufactur

  30. Slide 30: Net finance charge/facilities

    Net finance charge/facilities £m 2015 2014 Net interest payable 0.3 0.2 Financing and other costs 2.3 2.5 Pension finance charge 0.3 0.6 Net finance charge 2.9 3.3  Committed facility headroom of £230m at 31 December 2015  The remaining life of the £230m committed facility is 3.5 years  Closing n

  31. Slide 31: Pension analysis

    Pension analysis £m 2015 2014 UK Funded 2.7 1.0 Other Western Europe Funded 2.0 1.6 Other Western Europe Unfunded 12.6 13.7 Western Europe Total 17.3 16.3 North America Funded 0.5 0.6 Emerging Markets Unfunded 0.1 0.1 Total retirement benefit obligations 17.9 17.0 £m 2015 2014 Western Europe Unfunde

  32. Slide 32: Financial information

    Financial information Shares in issue 2015 2014 Financial ratios 2015 2014 Weighted average 190.0m 190.2m Net Debt : Headline EBITDA net cash net cash Headline EBITDA Interest Cover 498x 827x Exchange rates 2015 2014 Gearing (Net Debt:Total Equity) net cash net cash EUR Average (P&L) 1.38 1.24 Closi

  33. Slide 33: Divisional summary – 2015 H1 v H2

    Divisional summary – 2015 H1 v H2 £m ADE Divisions H1 H2 Total Revenue 128.8 114.7 243.5 Headline operating profit 31.5 27.7 59.2 Margin 24.5% 24.1% 24.3% AGI Divisions H1 H2 Total Revenue 171.0 152.7 323.7 Headline operating profit 27.6 25.8 53.4 Margin 16.1% 16.9% 16.5% 33

Bodycote — FY2015 Earnings Presentation on 6ix