Bodycote Plc · LSE:BOY
Bodycote — H1 2011 Earnings Presentation
31 slides from Bodycote's earnings presentation, Jul 28, 2011
Slide 1: 2011 Interim Results
2011 Interim Results 28 July 2011
Slide 2: Introduction
Introduction Stephen Harris Chief Executive Plasma nitriding Low temperature surface treatment for high hardness, wear resistance and enhanced fatigue properties. 2 2011 Interim Results
Slide 3: Agenda
Agenda Highlights Stephen Harris Financial Review David Landless Business Review Stephen Harris 3 2011 Interim Results
Slide 4: Highlights
Highlights Bodycote outperforming the markets Progress on strategic growth initiatives Broad-based market recovery has continued Low cost base sustained following restructuring Sales up 17%, Headline Operating Profit up 92% 92% Headline Operating Cash Conversion Interim dividend increa
Slide 5: Financial Review
Financial Review David Landless Finance Director Thermochemical ceramic coating Eliminates porosity in thermal sprayed coatings by thermochemically diffusing corrosion resistant, super hard ceramic particles into the substrate. 5 2011 Interim Results
Slide 6: Summary
2011 Interim Results Summary H1 2011 Margin H1 2010 Margin Increase % £m % £m % Revenue 288.2 246.3 17% Headline EBITDA1 70.6 24.5% 48.2 19.6% 46% Headline operating profit2 43.2 15.0% 22.5 9.1% 92% Headline profit before taxation 2 40.8 19.6 108% Headline operating cash flow3 39.8 29.7 Net debt 33.
Slide 7: Operating Profit Bridge
Operating Profit Bridge (£m) 23.8 -3.9 -2.6 -0.7 -0.7 4.8 43.2 22.5 7 2011 Interim Results
Slide 8: Cash Flow
Cash Flow £m H1 2011 H1 2010 Headline Operating Profit 43.2 22.5 Add back non-cash items: Depreciation and Amortisation 24.9 24.0 Share-Based Payments 2.5 1.7 Headline EBITDA1 70.6 48.2 Capex to depreciation: 6m 2011: 0.8x Net Capital Expenditure (20.6) (15.7) 6m 2010: 0.7x Working Capital (10.2) (2
Slide 9: Net Debt / Finance Charge
Net Debt / Finance Charge £m H1 2011 Opening balance (51.3) Movement in net debt due to: Free cash flow 28.4 Dividends paid (10.8) Closing balance (33.7) £m H1 2011 H1 2010 Net interest payable 0.7 0.9 Financing costs 1.1 1.2 Other charges 0.3 0.3 Pension finance charge 0.3 0.5 Finance charge 2.4 2.
Slide 10: Refinancing
Refinancing Revolving Credit Facility (RCF) refinancing completed 27 July 2011 £125m RCF (replaces £110m and $20m RCFs) Five year term to 31 August 2016 Margin reduced by 100 basis points Financial covenants unchanged Other terms more favourable Existing €125m RCF maturing 31 July 2013 r
Slide 11: Business Review
Business Review Stephen Harris Chief Executive HIP Product Fabrication Hot isostatic pressing (HIP) of powder metal (PM) was used to manufacture superconducting dipole cryomagnet end covers for the Large Hadron Collider (LHC). 11 2011 Interim Results
Slide 12: Daily Sales Trend – Group
Daily Sales Trend – Group Constant Exchange Rates (£m) 2.0 2011 1.0 2010 0.0 12 2011 Interim Results
Slide 13: Four Year Perspective – Costs
Four Year Perspective – Costs At constant currency (£m) 300 Sales Variable 150 Semi Fixed Structural - H1 2008 H1 2009 H1 2010 H1 2011 13 2011 Interim Results
Slide 14: Divisional Summary
Divisional Summary ADE Divisions Constant £m H1 2011 H1 2010 Currency increase Revenue 115.9 98.4 21% Adjusted Headline OP (1) 26.2 15.0 79% M argin 23% 15% Emerging Markets (exc. Brazil) +33% AGI Divisions Constant £m H1 2011 H1 2010 Currency Increase Revenue (2) 172.3 147.9 15% Adjusted Headline O
Slide 15: General Industrial Sector
General Industrial Sector Bodycote H1: £122m up 23%* * At constant currency Performance Markets H1 Future Trend Heavy machinery General capital goods Restocking benefit – supply chain Bodycote Growth is about twice market rate Benefiting from many new accounts Significant restocking benefit in
Slide 16: Automotive Sector
Automotive Sector Bodycote H1: £75m up 12%* * At constant currency Performance Markets H1 Future Trend European car production US car production Heavy trucks Technology driven change Bodycote Growth higher than market Future growth drivers in excess of market: Demand for smaller, lighter, stro
Slide 17: Aerospace & Defence Sector
Aerospace & Defence Sector Bodycote H1: £58m up 13%* * At constant currency Performance Markets H1 Future Trend New civilian aircraft build rate Spares requirement Defence – very program specific Supply chain restocking Bodycote Strategic partnerships and outsourcing e.g. Rolls-Royce new 10 year c
Slide 18: Energy Sector
Energy Sector Bodycote H1: £35m up 18%* * At constant currency Performance Markets H1 Future Trend Oil and gas production Oil and gas exploration Power generation Supply chain restocking Bodycote Oil & Gas – outperforming the market Current IGT production at a low point - strong growth ahead S
Slide 19: H1 Sales Trends by Market
H1 Sales Trends by Market At constant currency (£m) Aerospace & General Industrial Automotive Energy Defence 80 150 80 40 100 40 08 08 20 11 40 11 08 08 09 50 10 10 09 10 11 11 09 10 09 0 0 0 0 Sales still below 2008 levels in all market areas 19 2011 Interim Results
Slide 20: KPIs – Four Year Perspective
KPIs – Four Year Perspective Sales* H2 (£m) H1 Margin* (%) 290 207 254 14% H1 H2 15% 323 11% 12% 228 246 289 9% 5% 08 09 10 11 -1% Average 08 09 10 11 Headcount 7,503 6,020 5,602 5,517 Headline Operating Cash Flow (£m) 08 09 10 11 H2 H1 H2 47 Headline 38 32 H1 10 Operating 40 25 25 30 Profit*(£m) 30
Slide 21: Strategic Progress
Strategic Progress Sustain the low cost base in • Headcount static the upturn • Margins improved to 15% • Capex 0.8 times depreciation Selective investment • More investment ahead – growth projects • Plant operational efficiency Enhance business processes • Commercial – pricing, new accounts Expand
Slide 22: Summary
Summary Top Line Growing ahead of the markets Positioned for strong growth in energy and aerospace Strong emerging markets growth Gaining traction on chosen proprietary technologies (S3P, HIP PF, CPP): sales up 55% Bottom Line Benefiting from efficiency, mix and lower cost base Headline
Slide 23: Outlook
Outlook The first half of 2011 has seen a continued and broad- based recovery in Group revenues. The near term macro- economic indicators are mixed and year on year comparables for the Group are more challenging in the second half than the first. Nevertheless the Board’s expectations for the full ye
Slide 24: Capital Markets Day November 2011
Capital Markets Day 17 November 2011 London 24 2011 Interim Results
Slide 25: Bodycote
Bodycote
Slide 26: H1 2011 Statutory Income Statement
H1 2011 Statutory Income Statement £m H1 2011 H1 2010 Revenue 288.2 246.3 Headline operating profit 1 43.2 22.5 Amortisation of acquired intangible fixed assets (0.5) (0.5) Operating profit 42.7 22.0 Net finance costs (2.4) (2.9) Profit before taxation 40.3 19.1 Earnings per share (pence) H1 2011 H1
Slide 27: Pensions – net deficit
Pensions – net deficit £m H1 2011 2010 UK Funded 0.3 0.6 Other Western Europe Funded 0.8 0.7 Other Western Europe Unfunded 10.2 9.5 Western Europe Total 11.3 10.8 North America Funded 0.4 0.5 0 Emerging Markets Unfunded 0.2 0.3 Total retirement benefit obligations 11.9 11.6 27 2011 Interim Results
Slide 28: Financial Information
Financial Information Average shares in issue H1 2011: 185.5m (H1 2010: 185.1m) Exchange rates: Currency Description H1 2011 H1 2010 Euro Average (P&L) 1.14 1.15 Closing (B/S) 1.11 1.24 US Dollar Average (P&L) 1.61 1.53 Closing (B/S) 1.61 1.51 SEK Average (P&L) 10.22 11.31 Closing (B/S) 10.13 11
Slide 29: Geographical Summary - ADE
Geographical Summary - ADE ADE Revenue (£m) H1 2011 H1 2010 Growth Western Europe 55.9 45.3 23% North America 59.3 52.7 13% Emerging Markets 0.7 0.4 75% 115.9 98.4 18% Adjusted HOP (1) (£m) H1 2011 H1 2010 Growth Western Europe 11.8 6.6 79% North America 14.3 8.6 66% Emerging Markets 0.1 -0.2 26.2 1
Slide 30: Geographical Summary - AGI
Geographical Summary - AGI AGI Revenue (£m) H1 2011 H1 2010 Growth Western Europe 123.2 102.0 21% North America 23.2 21.0 10% Emerging Markets 25.9 24.9 4% 172.3 147.9 16% Adjusted HOP (1) (£m) H1 2011 H1 2010 Growth Western Europe 19.0 9.5 100% North America 3.8 3.2 19% Emerging Markets 2.2 0.5 340
Slide 31: Bodycote
Bodycote