**Summary of Bodycote plc 2025 Interim Results**
**Overview**
Bodycote plc, a global leader in thermal processing services, reported its 2025 interim results, highlighting strategic progress despite challenging market conditions. The company maintained its full-year outlook, emphasizing resilience and continued execution of its **Optimise, Perform, and Grow** strategy.
**Financial Highlights**
**Revenue**£369.0 million, down 7.5% YoY (organic decline of 4.6%), primarily due to weak Industrial and Automotive markets and delivery phasing in Specialist Technologies.
**Adjusted Operating Profit**£55.1 million, down 17.5% YoY, reflecting lower revenue, mix, and FX impact.
**Adjusted Operating Margin**14.9%, down from 16.7% in 2024, due to lower revenues and divisional mix.
**Statutory Operating Profit**£41.2 million, up 33.8% YoY, driven by lower exceptional charges.
**Basic Earnings Per Share**21.3p (adjusted), down 14.8% YoY
15.5p (statutory)up 52.0% YoY.
**Interim Dividend**: 6.9p per shareunchanged from 2024.
**Strategic Progress**
1. **Optimise Programme**
Enhanced to deliver at least £15 million in annual profit benefit (up from £12-14 million).
Net execution costs reduced to £10-15 million (from £25-30 million).
Contractual process initiated to dispose of 10 Automotive and Industrial sites in France for £20 million, reducing program costs.
2. **Perform and Grow**
Service quality initiatives rolled out, showing early benefits (e.g., 25% reduction in turnaround time and 6% improvement in OTIF at a Minnesota plant).
Targeted capacity expansions and investments in growth areas like Aerospace and Sustainability.
3. **Sustainability**
Achieved 100% renewable electricity sourcing for UK sites.
Launched **B Carbon Smart** program to help customers reduce environmental impact.
**Market Conditions**
**Challenging end markets**Weakness in Automotive and Industrial sectors, partially offset by strength in Aerospace, Defence, and industrial gas turbines.
**Sequential improvement**Core revenue grew 4.3% in H1 2025 vs H2 2024, with momentum in Aerospace and Defence.
**Divisional Performance**
**Specialist Technologies**Revenue down 7.7% organically, impacted by Oil & Gas project completion and delivery phasing. Expected H2 improvement with new contract wins.
**Precision Heat Treatment**Revenue down 1.8% organically, resilient despite challenging markets. Growth in Aerospace, Defence, and industrial gas turbines.
**Non-Core**Revenue down 21.1% organically due to site consolidations under the Optimise program.
**Cash Flow and Balance Sheet**
**Adjusted Operating Cash Flow**£37.7 million, down 23.4% YoY, due to lower profit and higher capital expenditure.
**Net Debt**£112.5 million (excluding lease liabilities), up from £68.3 million in 2024, driven by dividend payments and share buybacks.
**Share Buyback**Additional £30 million announced, supported by strong balance sheet and low leverage.
**Outlook**
Full-year guidance unchangedin line with market expectations.
Expected H2 profit improvement driven by Optimise benefits, Aerospace recovery, and improved Specialist Technologies performance.
Macro environment remains uncertain, but confidence in medium-term financial targets.
**CEO Commentary (Jim Fairbairn)**
Trading in line with expectationswith strong demand in AerospaceDefenceand industrial gas turbines.
Significant progress on strategic initiatives, including expanded Optimise program and growth investments.
Focus on cost control and strategy execution to transition Bodycote into a higher-quality, more resilient, and faster-growing business.
**Conclusion**
Bodycote demonstrated resilience in a challenging environment, with strategic initiatives driving long-term growth. The company remains confident in its ability to deliver on its medium-term financial targets, supported by a strong balance sheet and focused execution of its strategic pillars.