Skip navigation
Newswire

UPDATE 2-UK engineer Bodycote eyes costs as H1 profit falls

(Adds FD interview more details, updates shares)

By Santosh Menon

LONDON, Aug 27 (Reuters) - British metals engineer Bodycote International met forecasts with a 17-percent fall in headline half-year profit on Wednesday and said it aimed to cut costs further, with its economic environment unlikely to improve soon.

The firm, which coats, welds and tests metals for aerospace and automotive firms and power generators, said manufacturing demand was not expected to recover until 2004, and in the case of the commercial aviation and power sectors not before 2006.

But Finance Director David Landless told Reuters that the power breakdown in many parts of the U.S. this month and talk of possible shortages in the UK could result in investments to boost capacity coming sooner than anticipated.

Until that happened, said Chief Executive John Hubbard, "self-help" was the key to improving performance.

Landless said that such measures included more job losses, notably the shedding of more than 100 jobs in the second half of 2003, mainly in France.

Bodycote, which originally made underwear, has already laid off over 1,000 people in the last two years, bringing its workforce down to around 7,000.

The firm posted pre-tax profit before exceptional items and goodwill amortisation of 17.7 million pounds ($28 million) for the six months to June 30, against 21.3 million last year.

Analysts forecasts had ranged between 16.5 and 19.8 million.

Shares in the firm were 3.7 percent lower at 154.05 pence by 0955 GMT, valuing it at around 400 million pounds. The shares, up by around 94 percent in 2003, have outperformed those of its UK engineering sector peers by about 45 percent this year.

Bodycote said half-year sales, at 228.1 million pounds, were slightly higher than in the same period last year, but six percent higher than the second half of 2002.

"I think the general expectation among customers...is that 2004 will be somewhat better than 2003. We expect to see some uptick, but I don't think it's going to be some spectacular hockey stick in terms of underlying demand," Landless said.

Bodycote maintained its interim dividend at 2.25 pence.