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Jet engine

Bodycote has more than 40,000 customers serviced by more than 180 facilities around the world. These facilities are organised into two customer focused businesses; the ADE business and the AGI business. Our ADE business is focused on aerospace, defence and energy customers, who tend to think and operate globally.

Strategically we have focused on building customer relationships to enable our participation in long term programmes particular in the civil aviation market. Not only do we have a competitive advantage as a result of our scale and capabilities, but our global reach allows customers to work with us on multiple projects simultaneously, making us a valued business partner.

A large number of Bodycote's global customers fall within our ADE business and Bodycote intends to continue to leverage its unique market position to increase revenues in the aerospace, defence and energy sectors. We have more than 60 facilities around the world including Hot Isostatic Pressing (HIP) and Surface Technology facilities, alongside our Classical Heat Treatment plants.

The following review reflects constant currency growth rates unless stated otherwise.

Revenue in 2018 was £288.0m, an increase of 7% (5% at actual rates). Civil aviation registered good growth, particularly in the second half of the year as some of the supply chain issues that have been holding back industry growth appeared to ease, particularly in North America. Oil & gas revenues also registered strong growth, while revenues from Industrial Gas Turbines declined as the OEMs cut back on production.

Headline operating profit was £68.7m, an increase of 8% (7% at actual rates). Consequently, return on sales improved to 23.9% (2017: 23.5%). Statutory operating profit grew to £67.8m (2017: £62.7m).

Net capital expenditure in 2018 was £25.3.m (2017: £32.1m), representing 1.1 times depreciation. We have invested in new HIP capacity in North America and Europe, as well as opening a new facility in Rotherham, UK to support the growth in the civil aviation business.

Return on capital employed increased to 21.7% (2017: 21.4%), with improved profitability and continued careful management of the balance sheet.

ADE revenue by market sector and geography

£m

ADE revenue by market sector and geography chart

Market sector

  • Aerospace and Defence 158.0
  • Energy 52.8
  • Automotive 9.9
  • General Industrial 67.3
  • Total 288.0

Geography

  • Western Europe 137.7
  • North America 149.1
  • Emerging Markets 1.2
  • Total 288.0