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Bodycote: trading statement
Bodycote’s sales for the year to date are up 9%, of which 5% is organic. Organic growth was slightly weaker in the second half.
A significant part of the organic growth will represent the passing on of higher energy costs to customers through price rises. This may mean weaker margins in the smaller businesses (metallurgical coatings and isostatic pressing), but in the core heat treatment business operating profit is up 14% so obviously any damage done by higher energy prices is being more than offset by improvements elsewhere.
Bodycote’s organic growth is reasonable and it has improved margins despite high energy prices. In addition acquisitions are reasonably rapidly earnings accretive. This makes the prospective PE of × (at 212p) and 2.9% yield look reasonable.
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