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Highlights

  • Andrew Simms of Berenberg assigns a Buy rating to Bodycote with an AUD 16.41 price target, implying a 27.59% upside.

  • BOY's H1 2025 adjusted operating profit dropped 14.7% YoY to £54.3m amid revenue decline and weaker mix.

  • Management reiterates full-year guidance and expands profit optimisation programme to deliver at least £15m in gains.

Bodycote Plc (LSE:BOY), a leading provider of heat treatment and specialist thermal processing services, has received a bullish recommendation from Berenberg’s analyst Andrew Simms. Issuing a Buy rating, Simms set a price target of AUD 16.41, reflecting an upside potential of 27.59% from the current price of AUD 12.86.

The rating likely to be driven by Bodycote’s steady strategic execution and optimism around H2 margin improvement, despite a challenging macro environment and weaker H1 performance.

H1 2025 Results Impacted by End Market Softness

For the half-year ended 2025, Bodycote reported revenue of £351.9 million, representing a 3.6% organic decline year-on-year. The drop was primarily attributed to sluggish Industrial and Automotive market demand, coupled with delivery phasing issues in the Specialist Technologies segment.

Adjusted operating profit came in at £54.3 million, down 14.7% from £65.9 million in the prior year period, largely due to lower volumes and unfavourable mix. The adjusted operating margin also slipped to 15.4% from 17.6%. However, statutory operating profit rose to £41.2 million from £30.8 million, benefitting from a lower level of exceptional charges.

Strategic Programmes Underpin Future Outlook

Despite top-line and margin pressures in H1, management affirmed that performance remains in line with expectations issued in the May trading update, and the full-year guidance is unchanged. The company reported sequential growth in almost all end markets through H1, and expects margin expansion in H2, driven by benefits from its strategic initiatives.

Bodycote continues to advance its “Optimise, Perform and Grow” strategy. Notably, the “Optimise” programme has been upgraded, with the anticipated profit benefit raised to at least £15 million (previously £12–14 million). Net execution costs for the programme have also been lowered to £10–15 million from the earlier estimate of £25–30 million, reflecting successful asset disposals and disciplined cost control.

The company also announced an additional £30 million share buyback.