Bodycote reports lower revenue and profit, announces £80m buyback

(Sharecast News) - Bodycote reported lower revenue and adjusted profit for 2025 on Wednesday amid mixed market conditions, as the heat treatment specialist said it continued to execute its strategic transformation and announced a new £80m share buyback programme. The FTSE 250 group generated revenue of £727.1m for the year, down 4% from £757.1m in 2024.

Adjusted operating profit declined 11.4% to £114.3m, while the adjusted operating margin fell to 15.7% from 17.0%.

Its adjusted basic earnings per share decreased 8.6% to 44.4p.

Statutory operating profit rose to £83.6m from £37.9m a year earlier, reflecting a lower level of exceptional charges.

Statutory basic earnings per share increased to 31.0p from 10.8p.

Operating cash flow declined to £88.6m from £115.5m, while the board maintained the full-year dividend at 23.0p per share.

On a core basis, which excludes non-core sites included in the group's Optimise programme, revenue was broadly stable on an organic basis at £671.6m, down 0.3% from £682.1m, with improved momentum in the second half when core revenue grew 3.2% year-on-year.

Core adjusted operating profit fell 8.5% to £113.0m and the adjusted operating margin declined to 16.8% from 18.4%.

Bodycote said the year was characterised by mixed demand across its end markets, with accelerating growth in aerospace and defence, and industrial gas turbines, partly offsetting weaker demand in oil and gas and challenging conditions in automotive and industrial markets.

The company also continued to reshape its portfolio, including the disposal of 10 non-core sites in France during 2025 and the acquisition of Spectrum Thermal Processing in early 2026 to strengthen its aerospace and defence presence in North America.

"2025 was a year of significant progress in executing our strategy, improving the quality of the group's portfolio and positioning us for growth," said chief executive Jim Fairbairn.

"The Optimise programme is well underway and is delivering benefits in line with our expectations."

He added that the group continued to invest in organic growth projects and expand through acquisitions.

"We are continuing to invest in a number of organic growth projects in specialist technologies and in our faster-growing target end markets.

"I am pleased with the development of our merger and acquisitions pipeline, and in early 2026 we completed the acquisition of Spectrum Thermal Processing, enhancing our A&D footprint in North America."

Fairbairn said demand trends varied across markets during the year.

"Market conditions were mixed in 2025, with continued challenges in automotive and industrial markets partly offset by accelerating growth in aerospace and defence and industrial gas turbines.

"Core organic revenue was broadly stable for the year but grew in the second half."

Looking ahead, the company said it expects to return to growth in 2026.

"In 2026 we expect to deliver core organic revenue growth, supported by continued strong demand in aerospace and defence and industrial gas turbines," Fairbairn said, adding that automotive and industrial markets were likely to remain subdued in the near term.

Alongside the results, Bodycote announced a new £80m share buyback programme expected to be completed by the end of 2027.

The company said the programme reflected its strong balance sheet and commitment to disciplined capital allocation.

It said the buyback would be conducted in two tranches of up to £40m each.

The initial tranche would be carried out by Barclays Bank, which would purchase up to 12,301,205 shares until the company's annual general meeting on 27 May, after which further purchases could be authorised by shareholders.

Any shares repurchased under the programme would be cancelled in order to reduce the company's share capital.

Bodycote said it expected to improve operating margins in 2026 as volumes recovered and further benefits from the Optimise programme were realised, while continuing to monitor elevated geopolitical uncertainty.

The group said it remained confident in achieving its medium-term financial targets.

At 0834 GMT, shares in Bodycote were up 2.97% at 729p.

Reporting by Josh White for Sharecast.com.