Bodycote Navigates Mixed Markets with ‘Optimise’ Program Showing Promise

Bodycote PLC (LON: BOY), the thermal processing specialist, released a trading update indicating a mixed performance across its end markets.

While Aerospace & Defence showed strong growth, Automotive and Industrial sectors remained challenging. The company's “Optimise” program, designed to streamline operations, appears to be gaining traction and contributing to improved profitability.

Core revenue saw organic growth of 2.2% year-on-year for the four months ending October 31, 2025, reducing the year-to-date decline to 1.4%. However, including the impact of Non-Core plant closures, Group organic revenue growth was a more modest 0.3% for the period, with a year-to-date decline of 2.7% at £613 million.

The company anticipates increased profit in the second half of the year compared to the first, driven by Specialist Technologies and benefits from the “Optimise” program. H2 operating profit is expected to be broadly in line with H2 2024. This guidance suggests a degree of stability despite the headwinds in certain markets.

Bodycote's “Optimise, Perform & Grow” initiatives are progressing, with the sale of 10 French Automotive and Industrial sites nearing completion. The company expects to fully exit over one third of the remaining Non-Core sites by year-end, projecting a £4-5 million full-year “Optimise” benefit to Core operating profit.

The company is confident of reaching at least £15 million run-rate benefits by mid-2027. The program’s success is crucial for enhancing efficiency and profitability in the long term.

Driver Breakdown:

• Aerospace & Defence: Strong growth driven by LEAP engine-related work, indicating a robust demand in this sector.
• Automotive & Industrial: Continued challenges, particularly in Europe, although comparators have become easier resulting in a more modest year-on-year decline in the period compared with H1.
• Specialist Technologies: Improved momentum driven by Aerospace, offset by weakness in Oil & Gas and Industrial markets.

Bodycote is also making organic investments, including upgrades to US Precision Heat Treatment sites and capacity expansion in HIP, with most initiatives expected to go live in late 2026 and early 2027. The company continues to build its M&A pipeline to accelerate growth through bolt-on acquisitions.